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Large landlords in Germany consider rent increases as inflation soars
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BERLIN (Reuters) – Germany’s largest residential landlord Vonovia will increase rents if high inflation rates persist, its chief executive officer said, as consumer prices in Europe’s biggest economy have reached the highest level in nearly half a century.
BERLIN (Reuters) – Germany’s largest residential landlord Vonovia will increase rents if high inflation rates persist, its chief executive officer said, as consumer prices in Europe’s biggest economy have reached the highest level in nearly half a century.
“If inflation is permanently at four percent, rents will also have to rise accordingly each year in the future,” Rolf Buch, overseeing a portfolio of some 565,000 apartments, told business daily Handelsblatt in an interview published on Wednesday. “We cannot pretend that inflation will not affect rents.”
Vonovia rival LEG, owner of about 166,000 flats, also said inflation would be reflected in rental fees if it persists. “The rental market will not decouple itself from the general price development,” an LEG spokesperson told Reuters.
As in other European countries, prices in Germany have risen sharply in recent months, pushed higher first by supply chain problems after the pandemic and then by the war in Ukraine.
Consumer prices increased to 8.7% in May, a level not seen since the winter of 1973/1974 during the first oil crisis.
Average rental prices at Vonovia increased 3.1% in the first quarter, Buch said. He expects rising energy prices to cost tenants up to two months’ rental fees per year.
LEG increased rents by an average of 2.7% in the first quarter, according to the spokesperson.
It is a particularly sensitive issue in Germany, where rents have traditionally been relatively stable over many decades, leading to a culture where middle-class families live in rented homes throughout their lives.
Inflation has become a concern for large parts of the population with 94% of Germans not expecting prices to fall any time soon and 56% expecting prices to continue to rise, a Forsa poll showed on Wednesday.
German Chancellor Olaf Scholz on Wednesday called on the government, trade unions and employers to discuss joint measures against high inflation.
“We need a targeted effort in a very unusual situation,” Scholz said. Credit-financed subsidies were not a solution, he said, in particular as Germany plans to return to a constitutionally enshrined debt brake next year.
(Reporting by Riham Alkousaa; Editing by Kirsten Donovan)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
Rental prices refer to the amount of money tenants pay to landlords for the use of residential or commercial property. These prices can fluctuate based on market conditions.
A landlord is an individual or entity that owns property and rents it out to tenants. Landlords are responsible for maintaining the property and ensuring it is habitable.
The Consumer Price Index (CPI) is a measure that examines the average change over time in the prices paid by consumers for a basket of goods and services.
The housing market refers to the supply and demand for residential properties, including buying, selling, and renting homes. It is influenced by economic factors like interest rates and employment.
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