Investor Presentation • Jun 26, 2019
Investor Presentation
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Statement on the Rent Freeze Plans of the Berlin Government and Assessment of Spillover Risk June 26, 2019
On June 18, the Berlin State Government ("Senat") approved a proposal for Berlin-specific rental regulation, mainly consisting of the following points:
The draft legislation is expected for the end of August and the plan is to implement the law in January 2020.
Legislation as described above would only exacerbate the supply/demand imbalance and make the problem for people in Berlin worse, as it would disincentivize much needed investments and new constructions.
The majority of legal experts consider a law as proposed by the Berlin State Government to be unconstitutional because (i) the Berlin State Government lacks the legal competence and (ii) such law would be an undue and severe infringement on owners' property rights including the legal right to adequate economic utilization.
| Chancellor Angela Merkel, CDU | "We need to create an environment that is conducive to investments;" "Regulation only to the effect that it increases transparency;" "We need to be careful not to be overly and utterly bureaucratic."1 |
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| Dr. Jan-Marco Luczak, CDU, member of Federal Parliament, rental legislation expert and deputy spokesman for rental legislation |
"Berlin has no legal competence; a rent freeze law would be unconstitutional. We need sustainable solutions instead of populist and unconstitutional window dressing."2 |
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| Horst Seehofer, CSU, Federal Minister for the Interior, Construction and Homeland |
"We should stick to the instruments of our social market economy; what we need that is the first and foremost task."3 to do is to build, build, build – |
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| Dorothee Stapelfeld, SPD, Minister for Urban Development in Hamburg |
"Pure populism … [a rental freeze] is not the right path." "Rental legislation is governed in our national Civil Code. [Die Linke] is trying to jump on the except there is no bandwagon."4 bandwagon – |
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| Spokesperson for Urban Development for the Greens in Hamburg |
"Ill-conceived kneejerk reaction."4 | ||
| Ina Scharrenbach, CDU, Minister for Construction in North-Rhine Westphalia |
"Only more new construction is the best and most sustainable protection for tenants."5 |
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| Tarek Al-Wazir, Greens, Minister for Economic Affairs and Housing in Hesse |
"The [Frankfurt] Lord Mayor's plan for a rent freeze may serve his own interest. But it will not bring benefits to tenants, quite the opposite actually."6 |
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| Jürgen Lenders, CDU, parliamentary secretary in Hesse |
"Outrageous and highly questionable from a constitutional point of view."6 | ||
| Hans-Joachim Grote, CDU Minister for the Interior in Schleswig Holstein |
The 10% rent cap on new lettings ("Mietpreisbremse") will be abolished. It was inadequate and a disincentive for new investments. The Mietpreisbremse will be replaced by measures for affordable housing.7 |
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| Cooperative housing associations in Berlin, who collectively own 90k apartments |
governs Berlin."8 "Craziness |
Even in a worst-case scenario of spillover into states with similar government coalitions as in Berlin, more than 80% of Vonovia's portfolio would still be unaffected.
| March 31, 2019 | Resi rent |
Fair value | Lead party |
Coalition partner |
|---|---|---|---|---|
| North-Rhine Westphalia |
27.9% | 23.2% | ||
| Saxony | 10.7% | 9.8% | ||
| Berlin | 11.6% | 16.3% | ||
| Schleswig Holstein |
8.1% | 6.9% | ||
| Baden Württemberg |
10.2% | 10.4% | ||
| Lower Saxony | 6.9% | 6.3% | ||
| Hesse | 8.5% | 8.8% | ||
| Bavaria | 6.0% | 7.8% | ||
| Bremen1 | 2.6% | 2.7% | ||
| Hamburg | 3.5% | 4.3% | ||
| Brandenburg | 1.4% | 1.5% | ||
| Rhineland Palatinate |
1.2% | 1.2% | ||
| Thuringia | 0.7% | 0.6% | ||
| Saxony Anhalt | 0.3% | 0.3% | ||
| Mecklenburg W.Pommerania |
0.2% | 0.1% | ||
| Saarland | 0.0% | 0.0% | ||
| TOTAL | 100% | 100% | ||
| CDU/ Greens CSU |
SPD | FDP | Die Linke |
Freie Wähler |
1 Expected coalition after the recent state election.
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Tables and diagrams may include rounding effects.
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