Austrian tenancy law: a brief overview
(Click here to read this post in Dutch.)
Those looking to rent a place to live or run their business from will quickly stumble upon several terms that may be strange, if not completely unfamiliar. Neubau or Altbau? MRG or not? Teilanwendung or Vollanwendung? And what about the different Mietzinsen?
This post offers a brief and general overview of Austrian tenancy law. This may seem simple at first, but quickly become complicated because, depending on the rental property, very different rules may apply.
Application of the ABGB and the MRG
One of the first things people will come across is the difference between tenancy agreements on which only the ABGB (Allgemeines Bürgerliches Gesetzbuch; the Austrian Civil Code) applies and agreements which are also governed by the MRG (Mietrechtsgesetz; or the Austrian Tenancy Act).
This difference is highly important, because the MRG diverges from the general rulework of the ABGB on several important issues. Special rules additionally apply for student homes, senior homes, Genossenschaftswohnungen and other living situations, but these will not be discussed in this post.
Tenancy agreements pursuant to the ABGB
Generally speaking, the rules of the ABGB apply to all agreements not specifically covered by the MRG. These are, in particular, tenancy agreements regarding houses, houses with more than two apartments or company spaces, recreational apartments, parking spaces and other properties in which people normally do not live or work. For such agreements, the ABGB provides a general set of rules, but these are largely dispositive, meaning that tenant and landlord can easily deviate from this rules in their agreement. The legislator has considered the parties´ private autonomy to be important here, and left them as much liberty as possible to set up their agreement as they please.
This means that the parties themselves can – within the general limits of the law – for instance decide on:
The rent
Rights and duties of tenant and landlord
Termination possibilities and notice periods
Summarizing, the ABGB leaves parties with a lot of possibilities. Agreements governed by the ABGB alone are as such more attractive for landlords. This is different for agreements covered by the MRG, which places a much stronger emphasis on tenant protection.
Rent, lease or Prekarium?
An alternative to a tenancy or rental agreement (Mietvertrag) that may be attractive for property owners is a lease agreement (Pachtvertrag), because the MRG does not apply to such agreements. In theory, rent (Miete) only covers the right to use an object, while lease (here: Pacht) typically involves the operation of a living company – and enjoying its profits.
Differentiating between rent and lease can however be difficult and depends on individual circumstances. Some factors offer important indicators in this regard. As an example, the contractual obligation to operate a business, an existent customer base or a lease dependent on turnover strongly point towards a lease agreement, whereas a fixed rent and clear limitations on a property´s allowed usage more typically indicate that a contract is a rental agreement. This is not always easy to determine; the question played an important role in court cases concerning properties in shopping centers.
Another alternative to renting, which is also not covered by the MRG, is the so-called Prekarium or “Bittleihe”. This is a very loose form of “lease” (or more accurately borrowing), with which a property is offered for use in a very informal manner. A condition for this form is, however, that the agreement can be terminated at any time and that no real rent can be required but only a contribution to the running costs.
Of course, tenancy law cannot simply be circumvented by using different terminology. A judge will always examine an agreement in order to determine its actual nature.
Rental agreements under the MRG
In case of doubt, one can use the general rule that the MRG governs all agreements not exclusively covered by the ABGB. In practice, this means that the MRG is relevant especially for rental agreements concerning apartments and larger buildings with several properties. The Act contains many mandatory rules aimed to protect tenants – more on that below. Right at the beginning, § 1 MRG lays down an extensive set of rules on the application of the Act, which are immediately complicated further by the fact that they differentiate between properties, to which the MRG fully applies (Vollanwendungsbereich) and other properties which are covered only by part of the Act (Teilanwendungsbereich).
Both Vollanwendungsbereich and Teilanwendungsbereich provide rules on the following topics:
The minimum duration of a rental agreement
Termination possibilities and modalities
In addition, the Vollanwendungsbereich contains mandatory rules on topics such as:
The maximum permissible rent and ancillary costs
Special rights and duties of tenant and landlord
Compensation for investments made by the tenant
Some of these topics are explored in more detail below.
Termination pursuant to the MRG
Lease agreements covered by the MRG are subject to the following special rules:
If a landlord wishes to terminate an agreement concluded for an indefinite amount of time or a time-limited agreement prematurely, he will need a ground for termination (wichtiger Grund). To that end, § 30 MRG provides an extensive catalogue with possible grounds. This includes, for instance, non-payment of the rent, the tenant´s behavior or an urgent need of the tenant or his family to use the property for themselves. This catalogue is extensive, but also exhaustive: the landlord must base his termination on at least one of these grounds. It is possible to contractually agree on “custom” grounds, but these need to meet high requirements for their validity.
The landlord can moreover terminate only terminate tenancy agreements through court intervention. He must submit his termination to the court, which will then forward it to the tenant. The tenant then has another four weeks to protest the termination. In this event, a court procedure will be initiated, during which the judge will have to decide on the lawfulness of the termination. This procedure can – especially if one of the parties appeals against the decision – be time-consuming.
The minimum duration of a tenancy agreement for an apartment is three years. After a year with a time-limited agreement, the tenant obtains a statutory right to terminate the agreement.
The possibility of an action for eviction (Räumungsklage) should also be mentioned here: together with or instead of the termination mentioned above, the landlord can also file an action to have the tenant evicted immediately. This is possible if the landlord can demonstrate that the tenant is in significant arrears with his rent or uses the rental object in a higly detrimental manner. The tenant will in this case (together with the action for eviction) receive a court summons. The word “immediately” is relative here: this is the start of a procedure that could quickly take up to a year.
Applicability and peculiarities of the Vollanwendungsbereich
Applicability of the Vollanwendungsbereich
§ 1 MRG not only stipulates when the Act applies, but also the extent to which it applies. This is determined by a complicated set of rules in practice often summarized with a difference between Altbau and Neubau: the full MRG applies to older buildings, whereas only parts of it apply to newer buildings (the Teilanwendung).
More accurately speaking, the Teilanwendungsbereich in principle applies for the following tenancy agreements:
Tenancy agreements for apartments and business spaces in buildings built without state support on basis of a permit issued after 30.06.1953.
Tenancy agreements for Eigentumswohnungen (condominiums) in buildings built without state support on basis of a permit issued after 08.05.1945.
Tenancy agreements for attic and roof-based properties that were converted into apartments with permits issued after 31.12.2001, or other extensions built with a permit issued after 30.09.2006.
In addition, special rules apply for industrial zones.
Other tenancy agreements are, in principle, covered by the MRG in its entirety. In case of doubt, it is as such recommended to assume that the Vollanwendungsbereich applies.
Permissible rent in the Vollanwendungsbereich
Whereas the Teilanwendungsbereich leaves the rent to be determined by the parties, the Vollanwendungsbereich introduces three different systems that limit the maximum possible rent: the Kategoriemietzins, the Richtwertmietzins and the angemessene Mietzins.
The Kategoriemietzins is of only limited importance for newer agreements. Its provisions are however still relevant, because they define different categories of apartments (A to D) that are still used today.
The Richtwertmietzins defines a certain standard rent value per square meter. This value differs in every Austrian state and is redefined every few years. The rent calculated with this value is however increased or decreased on basis of many different factors. For instance, the location in the city, the floor, the sanitation and even the layout of the property itself all matter. The general point of reference is offered by an apartment of the A category (see above), or briefly speaking an apartment of at least 30 m² with a kitchen and at least one room in a building that is in an average condition. A lower category will further reduce the admissible rent.
The actual rent may not exceed the rent “calculated” on basis of this system. This does, of course, not make it any easier to determine up until which amount a rent is admissible. The city of Vienna has developed a tool to that end, which can be found here – of course only for informational purposes.
An angemessener Mietzins (appropriate rent) is permitted for tenancy agreements concerning the following properties:
A property not used as an apartment (i.e. for living purposes).
A property in a building constructed with a permit issued after 08.05.1945.
Properties in certain buildings under monument protection.
“Luxury apartments” with a surface of at least 130 m².
Properties for which a tenancy agreement without a time limit was concluded and for which – more than a year after the tenant moved in – the parties have now concluded a written agreement about the rent itself.
For the angemessene Mietzins, the rent needs to correspond to the size, type, location and state of the object. In practice, this means that this rent will not exceed the one of the Richtwertmietzins by much.
Important but often forgotten is, finally, the so-called Befristungsabschlag (reduction due to limitation): for agreements concluded for a limited time period, the maximum permissible Hauptmietzins, i.e. the main rent, is reduced with another 25%. In practice, this is frequently forgotten and left out of agreements.
Other pecularities of the Vollanwendungsbereich
§§ 3-10 MRG contain comprehensive rules about the rights and duties of tenant and landlord. These concern the maintenance of the property, but for instance also the question, when a tenant is entitled to carry out construction work in his property, under what conditions the landlord may enter the property and whether the tenant is entitled to compensation for investments he has made in the object after termination of the agreement. § 12 MRG gives tenants of apartments the possibility to transfer their agreement to other persons, if certain conditions are met.
§§ 14-16 MRG define the composition of the rent, which as such consists of:
The actual rent (Hauptmietzins).
Ancillary costs, in particular the running costs (Betriebskosten). These are defined in § 21 MRG and are paid in advance in monthly instalments.
The rent for other objects rented together with the main property, e.g. a basement or furniture.
VAT, which is 10% for apartments and 20% for other objects (e.g. parking spaces, furniture).
The actual rent is paid in monthly instalments, which should be transferred no later than the 5th of each month. A final bill for the ancillary costs must be presented until the 30th of June each year.
Judicial protection in tenancy law
The district court (Bezirksgericht) decides on disputes arising from tenancy agreements. However, several cities have created a special institution, a so-called Schlichtungsstelle, to deal with issues for which the MRG applies. In Vienna, this service is offered by Magistratsabteilung 50 (link). This organization can render decisions regarding the maximum permissible rent, the ancillary costs and the repayment of deposits. Issues relating to the termination of an agreement or an eviction are always a matter for a court.
The advantage of a procedure before the Schlichtungsstelle is that it – unlike a court procedure – does not require any fees and is always possible without legal representation. If a party is not satisfied with the decision of a Schlichtungsstelle, he can still initiate a regular procedure before the district court. This is also recommended in this case, because an uncontested decision of the Schlichtungsstelle may be used for subsequent enforcement proceedings.
Costs of a tenancy agreement
The conclusion of a tenancy agreement will generate a state fee, to be paid by the tenant (Mietvertragsgebühr). This fee was however abolished for tenancy agreements for residential purposes in 2017.
For other properties, a fee in the amount of 1% of the three-year annual amount (i.e. 18 months, dreifacher Jahreswert) must be paid for agreements not concluded for a limited time. For time-limited agreements this is 1% of the total amount, however no more than the eighteen-year annual amount. Additional rules apply for situations in which the parties waive their right to termination for a certain amount of time.
Summary
With Austrian tenancy law, the following things should be kept in mind:
Tenancy agreements can be governed by the ABGB alone or also by the MRG.
The ABGB applies especially to houses, whereas the MRG is particularly relevant for apartments.
The ABGB offers parties a lot of freedom in how they wish to arrange their agreement. The MRG on the other hand contains many rules that aim to protect the tenant.
Agreements covered by the MRG can only be terminated (preliminarily) on basis of a valid ground. This termination can only be done through a court procedure.
For certain categories of (predominantly older) properties the MRG lays down rights and duties for tenant and landlord, and contains rules for the maximum permissible rent.
People wishing to conclude a tenancy agreement in Austria would therefore do well to not simply use standard forms found on the internet, but to carefully investigate which rules apply on their specific situation and draft an agreement on that basis.
I offer paid support with drafting or examining tenancy agreements and other issues related to tenancy law. You can contact me by sending an e-mail to office@vastenburg.at.