Austrian authorities implement extensive regulations on rental prices
In a move aimed at providing more security and stability for tenants, the Austrian Government has announced new regulations in the rental market of Vienna. The coalition, formed by the Freedom Party of Austria (FPÖ) and the Austrian People's Party (ÖVP), has agreed on State interventions to curb inflationary rent increases.
Vice-Chancellor Andreas Babler (SPOE) and economics minister Wolfgang Hattmansdorfer (OVP) presented the details of the new rental regulation. According to the new rules, landlords of residential properties will no longer be able to fully pass on inflation to their tenants. Instead, the rent increase will be capped, with yearly adjustments based on inflation rates.
If yearly inflation surpasses 3 per cent, the rent may only be increased by half the general price increase. For instance, with the current inflation rate of 4.2 per cent in Austria, rents could only be increased by 3.6 per cent.
The new regulations will primarily affect apartments in older buildings, with the rent cap for apartments in buildings constructed before 1945 in Vienna set at €6.67 per square metre as of 2025. For these apartments, even tighter regulations will apply, with rent increases capped at 1 per cent in 2026 and a maximum of 2 per cent in 2027.
The minimum duration for a rental contract will also be increased from three years to five years. This reform aims to reduce rent increases and provide more certainty for tenants. However, the new regulations will not apply to single and double family houses.
Economists predict that the new interventions may make property letting less attractive, burdened by regulations. Libertarian pundit Christian Ebner wrote that the government's actions may kill off the rental business model, discouraging investment in rental properties. Some fear that this could lead to a housing shortage, as was the case in Berlin after far-reaching rent controls were introduced.
As a result, vacant flats may increasingly be sold rather than rented out, leaving those who cannot afford to buy with fewer housing options. However, the rental regulation in Austria is expected to result in a decrease in rent in real economic terms for some tenants.
The Conservatives, Austrian People's Party (OVP), have given in to demands from their junior partner, the Social Democrats (SPOE), to implement these measures. The move has been criticised by some, who argue that it may limit supply and potentially lead to a housing shortage. However, the Austrian Government remains optimistic that the new regulations will strike a balance between protecting tenants and maintaining a healthy rental market.
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