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RENTING

How tenants in Austria can save money from July 2023

Starting Saturday, a new law comes into effect in Austria that will save tenants a fee that can typically amount to the equivalent of two months rent.

Published: 30 June 2023 17:11 CEST
How tenants in Austria can save money from July 2023
Tenants could see some relief around a particular brokerage fee starting in July. (Photo by Abi Tripp / Unsplash)

Saturday’s big change for tenants concerns the payment of brokerage fees, also known as “Provision.”

The federal government has announced an amendment to the renter’s law, introducing the buyer’s principle, or Bestellerprinzip, for apartment rentals.

Under the current system, tenants are responsible for various fees, including a security deposit and the first month’s rent when they move into a new apartment. One of these fees is the Provision, a brokerage fee equivalent to two months’ rent, which tenants must pay even if they find the apartment online or if the property owner is the one who engages the services of a brokerage firm.

However, starting in July, the responsibility of paying the brokerage fee will be on the party that hires the real estate agency.

Unless the property is privately rented directly by the owner without involving a brokerage firm (in which case there should be no fee), the cost will now need to be paid by the individual or entity that engages the agency’s services.

This change aims to provide a fairer and more transparent system for tenants, relieving them of the financial burden of paying the brokerage fee when not using the services of a real estate agency for apartment rentals.

READ MORE: CONFIRMED: Austria to scrap broker’s fee on apartment rentals in 2023

Some rents to increase

However, renters aren’t completely off the hook when it comes to rising costs.

Starting from July 1st, Austria will see a 5.51 percent increase in category rents, impacting approximately 135,000 households nationwide.

READ ALSO: Renting in Austria: When can my landlord increase the rent, and by how much?

The Rent Law Act mandates that if inflation surpasses 5 percent, the Minister of Justice must declare a rent increase.  This adjustment applies to all tenants residing in buildings governed by the Tenancy Act (MRG) and whose lease agreements were entered into before March 1st, 1994.

Therefore the effects are generally limited to those on very old leases.

Member comments

  1. Maybe I’m not reading this correctly. Apparently we still have to pay the fee if the agent posts the apartment online? But if an apartment is posted online, the agent/agency has been hired by the landlord, correct? Or do we (tennant) still have to “hire” the agency? If this is the case, the law is completely useless. Greatful for some answers/clarity. Thanks in advance

    1. Hi! If the apartment has been posted online, it may have been done so by the landlord (in which case there should be no fee for anyone) or by the agency that the landlord hired (in which case the landlord pays for the service). Tenants will only pay a brokerage fee if they hire an agent.

      I hope that clarifies things, but long story short: the person that hires a brokerage firm pays for the service.

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For members

PROPERTY

Is it better to rent or buy in Austria right now?

There are 4.12 million primary residences in Austria, and 48 percent of them are owned by the people living there. But with fluctuations in the rental market, is it better to buy or rent a home in Austria this year?

Published: 31 May 2024 12:39 CEST
Is it better to rent or buy in Austria right now?

Austria’s property market is going through a significant shift: property prices fell last year for the first time since 2010, while rents continued to rise sharply, particularly in the private sector, according to a Statistik Austria analysis.

Real estate prices fell by 2.6 percent overall in the previous year. Existing apartments and houses, in particular, became cheaper (down 3.7 percent). By contrast, prices for new builds remained virtually unchanged (down 0.1 percent). At 2.6 percent, the price fall in Austria was more significant than the EU average (minus 0.3 percent).

There was no drop in prices for new builds, which the slump in building permits and residential construction activity can explain. While the figure was 78,800 in 2021, it fell to 64,200 in 2022 and plummeted to 46,600 in the previous year. The last time there were fewer building permits was in 2005.

In a European comparison, the net area for which building permits were granted in the previous year fell by 28 percent in Austria, the second sharpest decline – just behind Sweden with a drop of a third and followed by Germany with a decrease of more than a quarter, according to Tobias Thomas, head of Statistics Austria.

READ ALSO: How much does it cost to live in Vienna in 2024?

However, Thomas expects prices to rise again in the future as the population grows and drives demand.

Rentals particularly expensive

In contrast, the trend in rents was different. These increased significantly by 7.6 percent (including so-called operating costs, the Betriebskosten) in the previous year. In absolute figures, this meant €625.3 or €9.4 per square metre per month. 

The increase was roughly in line with inflation, which rose by 7.8 percent overall in 2023.

There are clear differences between the various forms of rent. According to Statistics Austria, social housing – over half of the main rents are in this sector – pushes down the average rent. In 2023, the rent, including operating costs in council apartments, was €7.7 per square meter per month and €8.1 for cooperative apartments.

The highest rents were found on the open market, at an average of €11.1. Apartments with contracts concluded only in the last two years are also particularly expensive. On the other hand, the older a rental agreement is, the cheaper it is.

READ ALSO: Why people have stopped buying property in Austria

Despite the increase, rents are still very controlled in Austria. Austria’s long history of preferring renting rather than buying has led to many legal frameworks favouring tenants.

On the other hand, buying gets you out of monthly rental payments, which are expected to continue rising. However, you need to have the cash right now, as a deposit of around 20 percent is necessary for a mortgage. 

Which makes more sense?

Of course, whether it makes more sense to rent or buy will depend on several factors, including where you want to live, how long you will live there, and whether you have money for a deposit. 

Austria’s Raiffeisenbank created a tool to determine if renting or buying makes more sense. 

The tool – available here – lets you calculate if renting or buying pays off more.

“That is the value at which buying makes sense from an economic point of view,” says Markus Dejmek, Head of real estate agency ImmoScout24 in Austria, reports the Austrian Press Agency. 

 “However, buying a property is seldom purely economically motivated. People want to create sustainable values. Nevertheless, there are the known, expensive places and (there are) cheaper areas.”

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