Subsequent price increase for rents threatens already in July

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Since inflation has not slowed down noticeably in recent months, many tenants are already threatened with the subsequent price increase in July – because category rents are then expected to rise by about 5.5 percent. This would be the fourth increase in 15 months and would affect around 135,000 households if the government does not take countermeasures. AK, ÖGB and the tenants’ association are alarmed and are once again calling for the introduction of a rent brake.

Fourth increase in 15 months
“Four increases in 15 months of a total of almost 24 percent – that is no longer feasible for many,” said Walter Rosifka, housing law expert of the Chamber of Labor (AK), in a dispatch on Monday. “For a 70-square-meter apartment, that means a total increase of 790 euros for the year within 15 months. That drives the inflation for all”, also says Helene Schuberth, chief economist with the Austrian Federation of Trade Unions (ÖGB). Housing costs are now a “heavy financial burden for every third tenant,” while the real estate industry is reaping high profits.

Affected by the impending increase, he said, are all households living in buildings to which the Tenancy Act applies – for example, in private old buildings constructed before 1945 – and whose rental agreement was concluded before March 1, 1994. That’s about 135,000 of them. Category rents are raised when inflation exceeds the five percent mark. For the increase in July, the index figure of March 2023 is decisive, at that time inflation was 9.2 percent, according to Statistics Austria.

Indirectly, however, the mechanism does not only affect category tenants, as an increase in category rents impacts operating costs for almost all tenants. That’s because the management fees charged to the tenant or tenants’ operating costs are capped at the Category A amount, according to AK and the tenants’ association.

The government must therefore counteract this with a brake, all three institutions agree. Such a rent brake would have to come for all inflation-related rents – not only for category rents. “Without political intervention, the rent-price spiral will continue to spin,” says Schuberth. “The government must now either act or clear the way for a policy that takes tenant protection seriously,” also demands Elke Hanel-Torsch, chairwoman of the Vienna Tenants’ Association.

The ÖGB also calls for ending fixed-term contracts, as contract extensions are usually linked to rent increases. In addition, the union wants more funds for the construction of new apartments and a vacancy tax for private apartments that have been empty for a long time.