Rent Value Protection Under Pressure: Government Promises Solution by Autumn

The current VfGH ruling on value adjustment clauses in rental contracts and possible repayments to tenants is making the real estate industry nervous. The federal government had already promised changes to rent value adjustments upon taking office. The Vice Chancellor responsible for housing, Andreas Babler (SPÖ), together with Justice Minister Anna Sporrer (both SPÖ) and the coalition partners ÖVP and NEOS, now wants to find a solution by autumn.

Government working on legal repair

Value adjustment clauses in rental contracts have long occupied tenants, commercial landlords, and the courts. Two years ago, the Supreme Court (OGH) declared the invalidity of value adjustment clauses if the rental contract did not explicitly mention a two-month waiting period regarding possible rent increases. The Constitutional Court (VfGH) recently decided in the case that the Consumer Protection Act (KSchG) may prohibit certain value adjustment clauses in rental contracts. According to the Chamber of Labor, this does not mean that affected tenants will automatically get money back. Each individual case must be clarified in court. The Tenants' Association therefore expects an increase in inquiries from tenants in the near future. However, many affected are hesitant, said Tenants' Association President Georg Niedermühlbichler in the Ö1 "Morgenjournal" of ORF radio.

Real estate industry pushes for quick solution

The real estate industry still sees many open legal questions and hopes for a quick solution from the legislator. "There are still a number of important individual questions open, which the Supreme Court (OGH) has to assess in individual processes," said the managing director of the Austrian Association of Real Estate Industry (ÖVI), Anton Holzapfel, on Tuesday in a statement. "Which statute of limitations is to be applied? Is it 3 years or 30 years for which a possibly invalidly agreed value adjustment must be repaid?"

"There is still a certain state of shock," described the President of the Association of Austrian Project Developers (VÖPE), Andreas Köttl, the current mood in the industry to the APA. Although "excessive results" have been emerging for two years, "relatively little has been done against it," criticized the VÖPE chief the impending "interventions in the past." "This is a situation where there is massive political need for action," emphasized the board director of ARWAG Holding-AG, Thomas Drozda. "It is very, very relevant to create security because the threat potential goes into the billions," also stated the federal chairwoman of ARGE Eigenheim, Isabella Stickler.

The government, in office since March, was already aware of the legal problem. The government program does not yet outline a concrete solution, but merely states: "Creation of clarity on a legal level regarding value adjustment clauses for all long-term obligations and the statute of limitations as well as shortening the statute of limitations."

Claim for repayment to be restricted

The "Presse" (Tuesday edition) reports on a not yet public draft law regarding value protection clauses. Changes are to be made in the Consumer Protection Act and the General Civil Code. "The claim for reimbursement of services unjustly received based on a value protection agreement expires within three years from the knowledge of the legal invalidity and the reimbursement claim, but no later than five years from payment," the newspaper quotes from the draft law.

The Association of the Real Estate Industry criticizes that since the Supreme Court ruling on value protection clauses two years ago, the then turquoise-green government has not repaired the legal situation. The economic impacts in a "worst-case scenario" are "more than threatening," warned the real estate industry association. Rents would be permanently frozen, and revenues significantly reduced. As a result, the property valuations in the balance sheets of institutional investors such as banks and insurance companies would also have to be massively devalued. The necessary capital for thermal renovations and decarbonization measures would also be lacking.

Babler wants a solution by autumn

Vice Chancellor Andreas Babler (SPÖ) referred on July 10 in the "Question Hour" of the National Council regarding a repair of the value protection clause, according to parliamentary correspondence, that "his department, together with the Ministry of Justice, is working intensively on a solution." The goal is to pass a resolution in the autumn, "so that the rent price brake will have full effect as early as next year," it was said from Babler's office to the "Presse." Details of the planned legal changes were not disclosed upon APA request. "For the past, we will newly regulate the limitation periods for rent reimbursement claims," it was said from the Vice Chancellor's ministry. "This is intended to create a social and fair balance in the interest of tenants but also planning security for landlords." The Minister responsible for consumer protection, Korinna Schumann, also announced negotiations in the summer in the "ZIB2" (Monday). She also hopes for an agreement by autumn.

The NEOS also want an agreement in the coming months by autumn. "The decision of the Constitutional Court clearly shows how important it is that we finally ensure legal certainty with value protection clauses," said NEOS spokeswoman for construction and housing Sophie Wotschke to the APA. This is "of central importance for our economic location, especially for the real estate industry," on which a third of Austria's gross domestic product (GDP) depends. The FPÖ demands in the matter "a rapid, balanced new regulation." "It is clear that indexations should not be rejected across the board, but must be fair and transparent," said FPÖ construction spokesman Michael Oberlechner in a statement. "A real balance of interests" is "necessary."

Greens criticize plans

From the perspective of the Greens, the three-party coalition wants to "exclusively take care of the interests of large landlords" and is proceeding "non-transparently." Tenants would not benefit from the sought-after solution, said the Member of the National Council, housing and construction spokeswoman Nina Tomaselli in a statement sent to the APA. "Even the SPÖ, as the supposed tenant party, wants to take away tenants' court-won claims," said the opposition politician, referring to previous court rulings, which are attributable to EU legislation. A legal change that contradicts European consumer laws is most likely EU-illegal.

(APA/Red)

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