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Austria: Hurdles for Short-Term Apartment Rentals

Austria: Hurdles for Short-Term Apartment Rentals

Austria
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Neighbours and communities don't like it, but apartment owners love it, because they can multiply their income. Short-term rental to tourists or businesspeople who stay for just a few weeks is very controversial. Both courts as well as the legislative bodies of the Austrian provinces have found ways to restrict it.

Property owners are increasingly letting their apartments to people who come to Vienna only for a short period of time, as by doing so, they can earn many times the rent allowed under Austria's rather restrictive rent control rules. But many neighbours complain that such visitors can be messy or unruly, and have had the legitimacy of such rentals checked by the authorities.

Condominiums

In condominiums, the owners decide how each unit in the building will be used, e.g. for residential purposes, as office, as a shop, etc. When defining a unit as residential in the condominium contract, owners generally have a narrower definition in mind. The possibility of changing to another manner of use is not a feature of the contract.

The Austrian Supreme Court has decided several times that a condominium owner may enter into a tenancy agreement, but that an accommodation agreement constitutes a change of the dedicated use that requires the prior approval of all other condominium owners. The decisive factor in distinguishing between a tenancy agreement and an accommodation agreement is whether the guest is offered certain services in addition to accommodation, such as cleaning and provision of bed linen and cooking utensils, and whether the agreed rent includes the costs of electricity, heating and water. The presence or absence of a trade licence (for hotels) is irrelevant. Therefore, the essential matter for determining the existence of an accommodation contract is whether the landlord offers services which go beyond the mere provision of living space. Whether the guest accepts typical additional services is less important. The reason why the additional services are offered dis not decisive; the distinction is based on the mere fact that the landlord offers them.

In a condominium, any single other condominium owner may hinder the use of an apartment dedicated in the condominium contract for residential purposes on Airbnb or the like. If the condominium owner does not respect a judgment, he will be subject to penalties which might – in the case of persistent breach – also include imprisonment. However, the burden of proof that the condominium owner has breached the judgment lies with the party that obtained the judgment.

Tenants

If a tenant offers the apartment he is renting on Airbnb, he clearly does not need it for his (or his close relatives') living purposes and sublets the apartment as a whole. This constitutes a good cause for the landlord to terminate the lease agreement with the tenant. Therefore, tenants put their lease agreement at risk if they offer the apartment on Airbnb, unless they have specifically rented the apartment for this purpose, which is typically not the case.

Building code

The City of Vienna has decided to amend the building code to avoid commercial use of apartments. Short-term commercial use for accommodation purposes such as Airbnb normally does not take place in apartments and is therefore not consistent with the "residential" zoning. This change in the building code also applies to house owners and to condominiums where all owners have consented to short-term letting. This legislative measure aims to ensure that there is enough rental space available for the inhabitants of Vienna. The bill was passed on 22 November 2018, but has not yet been published in the official gazette (as at 6 December 2018). Other Austrian provinces are planning similar changes in their building codes, all aiming to secure living space for locals. 

By Peter Madl, Partner Schoenherr

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