Vonovia is not concerned the 10% rent freeze planned by Berlin's city government for the next five years will dampen profit forecasts. But it did warn that money for renovations could be spent elsewhere.
The CEO of Vonovia said in comments released on Tuesday that Germany's largest property company would not be seriously affected by Berlin's planned rent-cap as only 10% of its properties were in the German capital.
However, Rolf Buch did warn that renovation works could be put on hold. Money saved could be invested in Sweden, for the German company's Victoria Park subsidiary, he added.
The Berlin Senate or city government agreed last week to freeze rents in the German capital for five years from 2020, giving protection against rent increases for 1.5 million apartments.
The plan came after thousands of residents protested in April against rising rents and demanded 200,000 apartments in the hands of private landlords be expropriated.
The proposal includes a requirement on property owners to apply for renovation permits if work done would require tenants to pay €0.50 ($0.57) extra per rented square meter (11 square feet).
Berlin’s government aims to pass the statute later this year and bring it into force no later than January 2020.
Vonovia, based in Bochum in western Germany, owns around 400,000 rented units in Germany, Austria and Sweden.
Cap on basic rents
Last Saturday, another landlord, Deutsche Wohnen, proposed a cap as of July 1 in cases where a household's basic rent, excluding heating and rubbish disposal, exceeded 30% of its income.
One-in-four newly-rented apartments would go to tenants with social welfare entitlement vouchers, Deutsche Wohnen added.
Michael Zahn, chairman of Deutsche Wohnen, with 70% of its 167,000 units nationwide located in Berlin, warned Monday that the Berlin Senate's "far-reaching" proposals could deter investors from pursing new projects and maintenance.
Last week, property-owners association Haus und Grund had urged its members to raise rents before the Senate's decision became binding.
German Tenants' Association spokesman Ulrich Ropertz described Deutsche Wohnen's move as a "positive news item."
Average rental prices in Berlin have pushed past €10 per square meter per month, according to recent business surveys.
ipj/jm (AFP, dpa, Reuters)