As of 1 April 2022, new reference values for rent will apply again. Because of Corona, the adjustment that was actually due last year was suspended. Instead, the Austrian government has now decided to increase the reference value rent by 5.85 per cent (category values 5.56 per cent) and to increase it again next year, in 2023. After that, there will be a change back to the 2-year cycle.
WHAT IS THE REFERENCE VALUE RENT AND WHERE DOES IT APPLY?
Reference values for rent are usually set every 2 years by the Austrian Ministry of Justice. They serve to adjust rents to inflation. The reference value rent is legally anchored in the Austrian Act on Tenancy Law (“Mietrechtsgesetz” – MRG), which has been applied since the 1st of January 1982 as the successor code to the “re-announced Tenancy Act” dating from 1929. The MRG refers to the Reference Value Act (“Richtwertgesetz” – RichtWG), from which the reference value is derived. The reference value is the amount determined for a standard apartment under tenancy law – a kind of fictitious comparative apartment. However, a number of parameters are linked to this standard apartment and the amount of the reference value (e.g. condition of the apartment, equipment category and location), so that different reference values (in euros per square metre) result, which also vary from province to province. The MRG also regulates whether and when the applicability of the MRG (and thus the reference value rent) is given at all.
THE CRUCIAL QUESTION IS: DOES THE “MRG” APPLY AT ALL?
The now determined reference value increase is linked to the (full) applicability of the MRG as well as further (preliminary) conditions which must apply or be complied with in order for a rent increase to be legally effective. Contracting parties must therefore in principle check once whether the MRG is “competent” for a given tenancy agreement, whether a rent and value protection clause has been agreed in a legally binding manner, and whether or how claims from this value protection clause are or have been asserted. The new guideline values can in principle be applied to the following types of contracts
- category rental agreements concluded before 1.3.1994
- indicative tenancy agreements concluded after 28.2.1994
- reasonable and free rent agreements
In case of any uncertainty as to whether and to what extent the MRG applies and whether or how rent increases become legally effective, we recommend that you seek legal advice from the tenants’ association, your responsible property management company or a lawyer familiar with real estate law.
THEORETICAL APPLICABILITY IS NOT YET ACQUIRED LEGAL EFFECTIVENESS
In the event that the new reference values are valid for an existing contract, this must also be communicated accordingly and implemented with legal effect. In the case of existing reference value tenancy agreements and valid value protection agreements contained therein, rent increases can be set as of the rent period May 2022. A number of formal requirements stipulated by the MRG must be observed for a legally binding request for an increase. Deadlines, method of service, due date, etc. are precisely regulated here. We recommend that you contact competent authorities in order to avoid making mistakes in terms of deadlines and/
HIGHER RENTS: IN PRINCIPLE YES, BUT …
It is a fact that the reference value for rents has now been raised again after a “Corona break”. However, this is neither a reason to panic nor to rejoice, as the validity and the how and when of applicability must be examined carefully in each individual case. Legal experts – including us – can help to clarify uncertainties and avoid mistakes.
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