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RENTING

EXPLAINED: What the new rent cap means for tenants in Austria

The Austrian government finally agreed on its controversial rent cap bill - but details could still be debated in courts. Here's what will change for tenants next year.

Apartments in Vienna.
Apartments in Austria. Photo by Hervé Papaux on Unsplash

Rents in Austria have increased sharply this year – mainly because they are all somehow tied to inflation, which skyrocketed in Austria in 2023. Regardless of whether you live in an old building (with specific and stricter regulations) or a new one regulated by private contracts, you probably saw your monthly payments rising substantially.

Since April this year, the guideline or reference rates, which are adjusted to inflation by the Justice Ministry, for flats in older buildings had risen in cost by 8.6 percent.

“Category rents”, which are levied in Austria for leases concluded between 1982 and the end of February 1994 and are also linked to inflation, rose by 5.5 percent in August. And rents have increased fourfold in new buildings, where rental contracts are usually linked to inflation.

The increases put pressure on the Austrian government, which promised solutions and proposed a three-year rent brake to help curb the rising cost of housing.

This week, the Buildings Committee approved the government proposal, which should be approved by the National Council early next year.

The plan had points criticised by the Chamber of Labor (AK) and the Austrian Trade Union Federation (ÖGB), who say that the cap comes too late – especially as it does not reverse rent increases of the last few months and years. The cap will, therefore, not help people who can no longer afford their rent. 

The changes for tenants in old buildings

The rental brake will have a significant impact on tenants in the so-called “old building” (Altbau) in Austria (which is governed by stricter tenancy laws). 

READ ALSO: Altbau vs Neubau: What’s the difference and which should I rent in Austria?

For tenants of an Altbau and “category rents”, there can be no more rent increases until at least April 2025. After that, rent increases will also be capped at 5 percent – some types of buildings (governed by “category rental agreements”) could have higher increases if inflation climbed over the 5 percent mark.

From 2025, rents in old buildings will be adjusted for inflation once a year (instead of once every two years), always on April 1st.

Benefits for tenants of cooperative apartments

People who rent in buildings owned by non-profit developers (Genossenschaftswohnungen such as Sozialbau, for example) will benefit from the fact that their rent will not increase as much as inflation as of April 2024, as the 5 percent cap is also valid in most cases (buildings that are “fully financed”, or ausfinanzierten).

Non-profit associations in Austria have criticised the decision to limit the full benefit of the rent freeze to fully financed buildings, which are already the cheapest segment in cooperative apartments. 

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

Inflation average 

For old buildings, a new type of calculation will start in April 2027. Then, rents will no longer be increased based on the inflation of the year before but rather on the average of the previous three years. 

And there is another cap, according to the bill. If the average exceeds five percent, only half of the portion exceeding the five percentage points will be taken into account. So, if the average inflation were to be 10 percent, rents could increase by 7.5 percent only. 

What about people in the private sector?

The rental cap benefits mostly tenants in public buildings, cooperative apartments or older constructions with already strong government interference. For new, privately owned buildings, the rental cap will not apply. 

Some new buildings have linked a part of their operating costs to the Tenancy Act, connecting it to increases in category rents. Since these are now frozen until April 2025, operational costs in those buildings will also stay the same, real estate expert Clemens Limberg told a Der Standard report.

READ ALSO: EXPLAINED: Which documents do you need to rent a flat in Austria?

The report also stated that it “can be assumed that the interventions will end up before the constitutional judges” since the rent freeze interferes with existing contracts. The government tried to prevent lawsuits by connecting the rent cap to the constitution, but it failed to achieve a majority for that. 

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RENTING

Am I allowed to sublet my rental apartment in Austria?

If you are a renter and want to rent out your apartment or get someone to rent a spare room, you need to know the Austrian laws first.

Am I allowed to sublet my rental apartment in Austria?

With the cost of living on the rise and housing demand increasing, subletting has become an attractive option for many tenants in Austria. It can help offset rental costs or generate extra income. However, it’s important to consider the legal implications and potential risks before proceeding.

Firstly, Austrian law defines a main tenancy when the owner rents a house or flat. If the primary tenant sublets a flat or living space, this constitutes a sublease, according to the definition by the state-backed organisation MieterHilfe.

An entire flat can be sublet or just a part of it (such as a room for sole use, including shared use of the kitchen, bathroom, and toilet).

READ ALSO: The vocab you need to understand apartment ads

Can I sublet the property I rent?

It depends on many factors. Firstly, though, the Tenancy Act, the set of rules that guides every rental agreement in Austria, explicitly does not allow a main tenant to sublet the entire rental property on a permanent basis without the landlord’s permission.

This means that if you want to move out of the place you are renting and then sublet it to someone else, the main tenancy agreement can be terminated. The grounds for termination exist even if the main tenant passes on the rental property in its entirety free of charge unless the rental property has been passed on to close relatives of the main tenant who have already lived there with them.

So, if you are the main tenant in an apartment living with a roommate who sublets, it’s recommended that you make the necessary changes to the rental contract if you leave the place. You should then ask the person who is staying there to be the new main tenant. 

In Austria, rental agreements often include specific points detailing the types of subletting that are allowed—and usually prohibiting subletting the entire place. 

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

What if my rental contract doesn’t specify the rules?

If your contract does not include a clause on subletting, the rules that apply are those in the Tenancy Act.

As mentioned, the complete subletting of the rental property – with you effectively and permanently moving out – constitutes grounds for termination of the rental agreement. 

However, there’s an exception: “The reason for termination is only not given if the main tenant is only temporarily absent (e.g. a one-year stay abroad for training purposes) and it is clear from the outset that the main tenant will be living in the rented property again regularly in the foreseeable future.”

Partial subletting, such as renting out a room, is generally permitted. The property owner can only forbid it in cases where their “important interests are violated.” MieterHilfe mentions an example of the subtenant already known as someone with “unpleasant behaviour” or if there could be issues with overcrowding in the flat. 

READ ALSO: What happens when my rental contract expires in Austria?

There are also specific rules on how much rent can be charged for a sublease. In general, if one of two bedrooms is rented (with shared use of the remaining part of the flat), the main tenant can only charge a maximum of 75 percent of the rent and 50 percent of other rent “components”, such as Betriebskosten, or “operating costs”. 

There are stricter rules for those living in municipal housing and under certain provisions of the Tenancy Act, so it’s always worth consulting with renters’ associations or a lawyer if you have any questions or specifics you’d like to discuss. 

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