Read news from:
Austria
SHARE
COPY LINK

COST OF LIVING

What new subsidy payment is Vienna offering for renters?

A new payment bonus for renters has been approved by the Vienna City Council, totalling €55 million - here's who is entitled to it and how much you can get.

Published: 31 May 2023 13:38 CEST
What new subsidy payment is Vienna offering for renters?

Austrian rents are about to become more expensive (again), as The Local reported. Another round of rent increases is due in July, with the so-called “category rents” expected to rise by approximately 5.5 per cent. 

This would mark the fourth increase within 15 months and significantly burden about 135,000 households affected by the changes. In addition, other homes will also see a cascading effect leading to higher operating costs for nearly all renters in Austria. 

The Chamber of Labour (AK), the Austrian Federation of Trade Unions (ÖGB), and the tenants’ association are expressing alarm and renewing their call to implement rent control measures, as reported.

READ ALSO: What will become more expensive in Austria in June?

New one-off payment for renters

Because of the increases, the Austrian capital Vienna has approved a new “Gemeindebau-Bonus“, which should provide relief for hundreds of thousands of Viennese currently living in the social apartments (Gemeindewohnungen). 

The €55 million payment is set to come to renters in September 2023, according to a decision by the Vienna City Council on Tuesday, May 30th. 

“Community building in Vienna has always stood for social cohesion. Through the multi-stage Gemeindebau-Bonus, the City of Vienna and Wiener Wohnen show what it means to look and act socially accurately,” said Housing Councillor and Deputy Mayor Katrin Gaál (SPÖ) in a press statement.

“Especially in the current difficult times, it is particularly important that people receive tangible support and do not have to fear losing their apartment,” she added.

According to the Viennese authorities, renters in the social apartments will receive half a net monthly rent in the first step starting at the beginning of September.

READ ALSO: What is it like to rent a home in Austria?

How will the payments work?

The new “multi-stage Gemeindebau-Bonus” comprises three measures that specifically benefit the residents of Wiener Wohnen’s municipal housing complexes, according to the City of Vienna.

At the beginning of September 2023, all tenants of a municipal apartment will receive a special payment in the form of a credit for half a net monthly rent.

At the end of the calendar year 2023, those tenants whose rent was increased in the years 2022-2023 will receive an additional credit in the form of a payment bonus. The amount of credit is based on the extent of the increases that took place in the period. 

READ ALSO: What cost-of-living payments could residents in Austria receive in June?

Additionally, the government wants to facilitate the agreement of installment payments for tenants who “fall behind financially” to pay their outstanding rental debts.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

Why is Austria’s economy faring so badly compared to the rest of the EU?

Of the 15 countries that joined the EU before 2004, Austria had the lowest growth and highest inflation between 2019 and 2023.

Published: 3 July 2024 14:30 CEST
Why is Austria's economy faring so badly compared to the rest of the EU?

According to calculations by the liberal think tank Agenda Austria, Austria’s economy has not been performing well compared with other EU countries.

Of the 15 countries that joined the EU before 2004, Austria had the lowest growth and highest inflation between 2019 and 2023. While life became around 22 percentage points more expensive, real gross domestic product per capita (GDP) shrank by 1.6 percentage points in the same period.

Some of Austria’s neighbours, such as Germany, also saw high inflation, but prices rose 19.3 percent with the gross domestic product (GDP) per capita decreasing by 0.9 percent from 2019 to 2023. Italy, on the other hand, saw a 17.2 percent price increase but its GDP rose by 4.8 percent over the same period.

So why are things so much worse for people in Austria than elsewhere?

‘Partly home-made’

According to Jan Kluge an economist with Agenda Austria the answer is multifactorial. 

Luge says that Austria’s inflation has skyrocketed compared to its neighbours, particularly as the federal government spent money with aid programs during the coronavirus and inflation crisis. 

“The high inflation is therefore partly homemade”, he told Kurier.

This aid was also afforded to companies that were not financially sound.

“We have created zombie companies. In other countries, companies were allowed to go bust during the pandemic. We dragged ailing companies along with us and are still doing so today,” Kluge said.

READ ALSO: Can my landlord in Austria increase the rent whenever they want?

Following a sharp decline in insolvencies during the pandemic, Austria is now experiencing massive bankruptcies. Creditforum estimates that 7,500 companies will go bankrupt this year. 

Kluge attributes this – in addition to the rise in interest rates, high energy costs and strict regulations – to inadequate aid money. “Insolvencies are now slowly catching up because many have finally run out of steam”, he said.

According to Kluge, Austria’s weak performance is even more worrying when compared globally.

This is because the performance European economic area had already deteriorated compared to the USA during the 2008 financial crisis. In other words, Austria is weakening within an EU that is also under performing.

What can be done?

Liberal think tank Agenda Austria, which says its focus is on “market-based solutions”, has a list of “recommendations” for the Austrian economy, although they might not all go down well with workers or unions.

They start by calling for an end to “election sweets”, as they call them.

This means politicians should “stop handing out election gifts”, as any populist measure and handout contributes to rising prices.

“Popular interventions in prices are also strongly discouraged. Prices have an important function. Switching them off does not combat inflation; it only hides it. And only in the best-case scenario”, the think tank said.

They also recommend that the government “get a grip on the spending spree,” suggesting the adoption of a spending brake model based on Swedish or Swiss tools. 

READ ALSO: What is the ‘friendship economy’ in Austria and how does it work?

Additionally, Agenda Austria advocates for reducing labour costs which would continue to boost prices in Austria. They pointed out that tough wage negotiations led to increases in salaries in 2024.

They suggested: “To counteract this, the government can lower taxes on labour, thus reducing the increase in labour costs and counteracting a wage-price spiral.”

Finally, the liberal think tank also recommends that the government promote lively competition, increase supply, and ” let the market work.” They also mention that consumers can benefit from a range of products “from abroad,” even if domestic ones “naturally give us the best quality in every situation.”

SHOW COMMENTS