Vonovia: German property landlord expands across Europe

Recently there was the shareholders' meeting of Vonovia, the largest commercial residential rental company in Germany. On the eve it was announced that the controversial company now also wants a foothold in the Netherlands. Housing activists and organized tenants are protesting.

(A translation of a press release from the 'Platform of Critical Rent Shareholders', translation photo action last year at Vonovia van right auf wohnen)

For several years now, the DAX-listed real estate trust Vonovia – a product of the sale of social housing in Germany to financial investors – has also been the largest private landlord in Austria and Sweden and has a stake in a French housing company. On June 26, it announced the first step of its expansion into the Netherlands. Tenant activists and critical observers in Germany, Sweden and the Netherlands fear that the growing power of these and other transnational commercial landlords will fuel the rise in rents across Europe. They demand a redistribution of Vonovia's high rental income through rent ceilings and rent reductions, climate-friendly housing renovations and a solidarity fund to support social housing.

The buildings in the Husby district of Stockholm are everywhere with yellow flags demanding an abolition of rents. Husby, one of the most deprived neighborhoods in the Swedish capital, has been hit hard by Corona. “Here in Husby, I know a lot of people who have lost their income, and who are now very concerned about the expenses coming at the end of the month,” said Ilhan Kellecioglu, a tenant advisor and researcher in the area. “When people are forced to prioritize, rent always comes first. Food, for example, comes second. But what happens if there is no money in your account at all? Anyone who has recently been able to earn a living as a flex employee or through other insecure work is suddenly without income. We see that the rent debt is increasing rapidly.” With the “Gelevlaggen” campaign, Kellecioglu and many others are demanding three months rent-free for those affected by the pandemic and the end of all evictions. But what can they expect from one of the main landlords in the district, for-profit Vonovia, better known here as “Hembla”?

Built in the 1970s, the municipality sold part of the social housing to private owners in 1998. The new owners have not done much to restore the housing blocks. Then the Blackstone-managed fund took over five years ago and raised rents on new leases. Rent increases during a contract are not possible due to Swedish regulations. So landlords looking to bring in more have to wait for the old tenant to leave. Then they can do some renovation in the apartment and rent it out at much higher prices – a great business opportunity for strategic landlords like Vonovia.

In 2019, Vonovia bought the Hembla portfolio from Blackstone. “So far Vonovia has not improved anything. Like Blackstone before, they don't do some renovation until after a tenant leaves the apartment. And then they make rents 40 % higher than before,” says Kellecioglu. “At the same time, the service and maintenance remain poor. The landlord's local office is only open four hours a week. Some people have holes in their kitchen walls, windows are broken. Many of the tenants are large families and complain about the communal washroom. Several machines are out of order and have not yet been repaired.”

Expansion of the German model of financialized industrialization of the housing market

“As far as I understand, VONOVIA in Husby is doing exactly the same as they have done here in our city and around the area,” said Knut Unger, a speaker and organizer of the local tenants' union in Witten, Ruhr, Germany. For two decades, Unger has been observing the development of the “financialized rental extraction machines” as he calls them. “After 2000, private equity funds bought up former social housing estates through tax-free share transactions. Most of these were residences of workers in the local steel industry. They transformed them into assets of the global financial market, extracting the rental income and doing nothing in terms of maintenance or renovation. After the German recovery from the financial crisis, the funds floated their housing associations on the stock exchange. A rapid concentration process followed. Capital has now been invested in so-called 'modernisation', standardized home insulation projects that allow huge rent increases in Germany. After many protests and changes to the legal system, Vonovia decided in 2018 to stop major work on the insulation and shift the method to limited renovations of individual vacant apartments for new lettings. As in Husby, they are demanding rents that are in part 40% higher than the usual local rent for comparable apartments. Although the industrial Ruhr area is not a hotspot of the German housing crisis, VONOVIA succeeds in increasing the rents of previously affordable housing in this way”.

Unger owns some shares of Vonovia and can therefore confront the board of Vonovia with questions and counter-motions at the shareholders' meetings every year. This year, he and other “critical shareholders” are demanding that the company not pay a dividend, but use the money for rent reductions, only do renovations for climate measures and a solidarity fund for those who have suffered loss of income during the Corona crisis. He also demands that the board of Vonovia takes a step back because of a continuously opaque calculation of the bills for expenses and rent-increasing modernization costs. “They are not satisfied with raising rents, they also make money by issuing bills for energy, landscaping and outsourced construction costs, within their complex trust structure. It's like a monopoly; they dictate prices for all things housing. I fear that they now want to export this model and its implementation in an automated digital system to other countries.”

For Unger, the transnational expansion is a necessary consequence of the companies' need for rapid growth, and of its limitations in Germany. “They can't let rents rise forever faster than income. A new tenant movement has made increasingly radical demands and is developing new ones, including the expropriation of large private landlords. Politicians reacted to this and introduced stricter rules, such as the rent freeze in Berlin. But Vonovia is forced to grow and expand to satisfy the greed of the capital markets. That is why they are eager to scale up their financially optimized industrial model and extend it to the former social housing in other countries.”

In the Netherlands, it was announced that Vonovia plans to take a minority stake (2.6%) in Vesteda. Vesteda is one of the largest commercial landlords in the rental sector in the Netherlands, with 29,000 homes and a profit of more than 1 billion euros in 2018. They own and are known for both social housing and commercial ('free sector, unregulated') real estate. that they are trying to raise rents and reduce maintenance.

Deep access to the Dutch housing market


(Knut Unger in March 2020 in front of Vonovia Finance Europe in Amsterdam, where there are already warnings about the company's entry into the Dutch housing market, photo Boudewijn Ruckert)

Kees Stad is a housing activist in Amsterdam, a member of Bond Precaire Woonvorm and one of the founders of the Woonopstand platform, which organized demonstrations and actions for the international day of action last March, which was interrupted by the Corona crises. His comment:
“Vonovia's partnership with Vesteda will mean that they can tap deep into the Dutch housing market and look for the real estate that can be lifted out of the social sector and thus further freed from rent regulation. It will certainly mean more efficient rental extraction for the commercial part of the stock. Of course they are not the only ones who want this. It was announced last week that Blackstone is also stepping up operations, as local venture capitalists have done before.

“All of this is happening at a time of climate crisis and corona crisis, when house prices in the Netherlands are skyrocketing. People are forced to spend an increasing share of disposable income on housing costs. They cannot afford to spend even more on climate action and on dividends. The exact opposite must happen: rents must fall, tenants must regain control of their homes. We will join the German movements demanding the socialization of large commercial real estate companies such as Vonovia and their expropriation and socialization. This will be the only real solution to the housing crisis.”


Note: on Monday evening a campaign was held on the eve of the shareholders' meeting (which by the way takes place via the internet, you know the model by now) there will be a joint campaign from 6-7:30 pm (a virtual counter-event to the Annual General Meeting 2020 of Vonovia SE together with the German Tenants' Association NRW, the Tenants' Forum Ruhr and the umbrella organization of ethical shareholders. Among the speakers are representatives of tenant unions, tenant grassroot groups and researchers. The meeting will be hold in German and be streamed at YouTube) See Press release here.

A joint meeting was organized on Tuesday 30 June with, among others, housing activists from Sweden and the Netherlands. This one was too to follow on youtube:

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