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Living in Austria: New program brings rather small steps!
On March 1, 2025, the new government will present measures to ensure affordable housing. However, experts see limited effects.
Living in Austria: New program brings rather small steps!
The new government program of the coalition of ÖVP, SPÖ and NEOS focuses on the topic of “affordable housing”. This is the first time in years that the SPÖ under Andreas Babler has had its own department for housing issues. Experts describe the measures as a step in the right direction, but fear that no fundamental changes are to be expected in the housing market. Michael Klien, an expert from WIFO, emphasizes: “This government program will not be a bomb.” This was also confirmed Small newspaper, which pointed out that major effects in the housing sector are not to be expected.
Details about the rent cap and its implementation
The program provides for a gradual cap on rents in the regulated market, with rent increases being limited to a maximum of three percent from 2028. If inflation rises above three percent, rents may only be increased by half. However, it is critically noted that these regulations have little influence, especially for fixed-term rental contracts. Klien pointed out that the increases often only become apparent with new contracts, which makes direct regulation more difficult. In addition, the rent cap does not apply to new buildings, which could jeopardize the willingness to invest in the area of non-profit housing, as reported by 5min.at emerges.
The government also plans to increase the minimum term of rental contracts to five years. However, experts agree that this will hardly change the already strong trend towards awarding fixed-term contracts. Critics in the residential construction industry warn of a decline in renovations due to reduced rental income, which could lead to a decline in the building stock. However, Klien sees opportunities for an investment boom, as there is a prospect that the energy quality of the buildings will be taken into account when setting rents. Despite the planned measures, the need for comprehensive tenancy law reform is signaled, which has been neglected over the last two decades.