© Reuters. FILE PHOTO: Apartment buildings are seen from above at sunset in Berlin’s Charlottenburg, Germany, March 17, 2016. REUTERS/Fabrizio Bensch
BERLIN (Reuters) – Germany’s biggest landlord-tenant Vonovia will raise rents if high rates of inflation persist, its chief executive said, as consumer prices in Europe’s largest economy reached its highest level in nearly half a century.
“If inflation is consistently at 4%, rents will also have to rise proportionally each year into the future,” Rolf Buch, who oversees the 565,000-unit portfolio, told Business Daily Handelsblatt in a published interview. on Wednesday. “We can’t pretend that inflation won’t affect rents.”
Vonovia’s rival LEG, which owns about 166,000 apartments, also said inflation would be reflected in rental fees if it persisted. A LEG spokesperson told Reuters: “The rental market will not decouple from the overall evolution of prices.
As in other European countries, prices in Germany have surged in recent months, soaring first due to post-pandemic supply chain problems and then to the war in Ukraine.
Consumer prices rose to 8.7% in May, levels not seen since the winter of 1973/1974 during the first oil crisis.
Average rents in Vonovia increased 3.1% in the first quarter, Buch said. He hopes rising energy prices will force tenants to pay rent for up to two months a year.
LEG increased rents by an average of 2.7% in the first quarter, according to the spokesperson.
It’s a particularly sensitive issue in Germany, where rent has traditionally been relatively stable for decades, leading to a culture where middle-class families live in rental homes for life.
Inflation has become a concern for a large segment of the population with 94% of Germans not expecting prices to fall anytime soon and 56% expecting prices to continue to rise, a Forsa poll showed. seen on Wednesday.
German Chancellor Olaf Scholz on Wednesday called on the government, unions and employers to discuss joint measures against high inflation.
“We needed a targeted effort in a very unusual situation,” said Scholz. Credit-funded subsidies are not a solution, he said, especially as Germany plans to return to the debt reduction momentum enshrined in its constitution next year.
