The large housing provider Vivawest has to turn down hundreds of thousands of people every year. The company is met with a lot of frustration for this. The managing director sees many challenges in the housing market, but one thing gives him hope.

Some housing providers have already stopped building. Vonovia, for example, announced a break last year. Vivawest, on the other hand, one of the largest housing providers in North Rhine-Westphalia, is still building. Nevertheless, the company is struggling with the current rental market – as are the people who apply for apartments at Vivawest. Uwe Eichner, CEO, explains in an interview what challenges and solutions currently exist.

FOCUS online: Mr. Eichner, last year Vivawest was able to rent out 10,000 apartments from its portfolio. But at the same time they had to reject 290,000 applicants. How much frustration do you get from these people?

Uwe Eichner: The pressure on our employees in the customer centers is huge. It becomes increasingly difficult to decide between applicants when you know that you can only make one person happy and 29 people will be pissed afterwards. The situation is more tense than it was 20 or 30 years ago.

How do you try to mitigate the frustration?

Eichner: We make it clear that we are a company that builds – that is now the exception. We create almost 1,000 new apartments every year. That’s not enough, but they are important. And some of it should cost so little that even people with low incomes can afford it.

What do you think is the problem in the housing market?

Eichner: On the one hand, construction costs have risen enormously and are currently very high. In addition, the standard for apartments in Germany is also high. Each square meter of living space currently costs us around 5,000 euros to build. To make it profitable, you can quickly add up to a rent of 20 euros per square meter. This is not only unaffordable for the cashier at the supermarket checkout.

And on the other hand, the state is unfortunately regulating us very heavily at the moment. This protects the tenants who have an apartment. But this also interferes with the income that we investors need. This cannot lead to more living space.

However, surveys show that a slim majority of Germans would like even more government intervention in the housing market.

Eichner: I can completely understand that given the situation. But it would lead to the exact opposite of what people want. No matter how good we are as entrepreneurs, if the investments don’t pay off, we won’t build new apartments.

So people have to prepare for further rising rents?

Eichner: Yes, there will be higher rents, you have to be honest. Inflation will not be able to leave the rental market unaffected. This is of course socially explosive. But if politicians want to prevent this, it is also their job to find an appropriate solution.

What can that look like?

Eichner: For example, it is clear that this market needs to be subsidized. Otherwise, people with low incomes will be pushed out. This shouldn’t happen. The federal government is currently providing the states with 3.15 billion euros for social housing construction. But we would need 20 billion euros.

That’s a lot of money, are there cheaper ways?

Eichner: We have to set the priorities correctly. The energy efficiency of buildings is important. But just pouring money into insulation is the wrong approach. The first centimeter of insulation brings a lot, the second centimeter less and the third even less. Still, the third one costs us as much as the first. We won’t achieve climate neutrality anyway; zero-energy houses are hardly ever built. What is more important for climate neutrality is that we move away from oil and gas for apartments, then it would no longer be so important to insulate expensively.

These are the demands on politics. Regardless, what can your industry do?

Eichner: We have a high level of innovative strength, which will help us to build faster and, in some places, more cheaply. However, I believe that we should not rely on single-family homes, especially in metropolitan areas. We need settlement construction like it used to be – only this time with more foresight in mind, for example barrier-free from the start.

Unfortunately, this approach is not always met with enthusiasm. Every municipality first looks at its architecture and urban development. But you don’t have to reinvent architecture with every house. Why not build a perfected structure on two streets at the same time? This shouldn’t be a prefabricated building, but a middle ground between that and single-family homes.

The lack of living space also comes from the fact that older people, for example, live alone in a large and possibly not barrier-free house, while young families squeeze into small apartments. A house swap would be beneficial for both of them. Does that happen to you?

Eichner: In theory, this is the right approach, because the needs for an apartment change very often over the course of life. In practice, however, apartment exchanges often don’t work for two reasons: Many people have lived in our apartments and the corresponding neighborhoods for decades. This is an emotional topic for them, so the motivation to change is often not particularly high. We try to support the exchange, for example by organizing moving assistance.

The idea becomes even more difficult to implement because we are obliged to renovate the apartments to make them more energy efficient after we move out. A seamless exchange is not possible because the apartment has to be empty for a while.

Another approach would be to design new buildings so flexibly that over the course of decades two apartments can easily be combined or one apartment can be converted into two.

Eichner: Converting an existing apartment is far too expensive. That’s why this rarely happens with us. The idea of ​​merging two apartments as the family grows sounds great. But if two apartments become one, one apartment is lost. The flexibility would be nice, but that would only be relevant if we had less pressure on the housing market again.

Could the loss of an apartment be compensated for by adding another floor to the house?

Eichner: In the past, the attics were used to dry laundry. This is no longer the case today; usage is suboptimal. Creating new living space there can be one way. But it’s not cheap and it’s not barrier-free either. In addition, in many cities, when we build two additional apartments on top, the building department head asks where the additional parking spaces are. And then, according to the rules, we should build a playground behind the house where maybe only pensioners live. It is very complex, so we in Germany are not the masters of flexible housing construction.

What encourages you that, despite all the challenges, the situation will improve in the coming years?

Eichner: I am convinced that politicians will react. There will be a construction initiative that will enable us to offer state-subsidized affordable housing. The naivety has given way to the realization that we can solve the problems with small adjustments.