"Big Move": Government Approves Rental Package

The federal government has agreed on a comprehensive rental package in the Council of Ministers. Through a new "Rent Value Protection Act", prices of unregulated rents will be intervened for the first time. As announced in the government program, the rent cap in the regulated sector will be extended and the minimum lease terms will be extended from three to five years. Vice Chancellor and Housing Minister Andreas Babler (SPÖ) called the package a "major breakthrough" after the Council of Ministers on Wednesday.

Rent cap for unregulated sector to come in 2026

The rent cap for the unregulated sector is set to come into effect in January 2026. Specifically, it should look like this: If inflation between two years exceeds three percent, the part of inflation exceeding three percent may only be passed on to tenants of apartments by half. An example: If inflation is six percent, the rent may increase by a maximum of 4.5 percent. "This will protect millions more tenants from a price explosion in times of high inflation," said Babler. With the exception of single-family and two-family houses, the law will apply to all new and existing rental contracts.

In the future, a value adjustment may only occur once a year and at the earliest on April 1st. This is intended to prevent people from having to deal with rent increases multiple times a year. For apartment rents, the law is mandatory - unlike commercial rents, where there will be the possibility to agree on something different.

The price limits for the regulated sector will also be extended. In 2026, the approximately 600,000 benchmark and category rents, as well as all rents based on the "reasonable rent" - that is, for all apartments within the full scope of the Tenancy Law - may only increase by a maximum of one percent, and by a maximum of two percent in 2027.

Babler: "Keeping the brakes firmly applied"

From 2028, the same conditions will apply in the regulated sector as in the unregulated: If inflation is above three percent, landlords may only increase rents by half of the inflation value above that. Non-profit housing associations that are not profit-oriented are exempt from this. "We are keeping the brakes firmly applied," said the Vice Chancellor, who did not hold back on praising the government's work: "Yes, we are starting the political autumn work with this large package against inflation."

For all rental contracts concluded or renewed from November 1, 2025, the minimum term will be extended to five years. "However, this does not apply to small, private landlords. So all those individuals who rent out less than five apartments," clarified ÖVP Economic Minister Wolfgang Hattmannsdorfer.

This exception to the stricter regulation is also "very important" for Deregulation State Secretary Josef Schellhorn (NEOS). "What good is an affordable apartment if there are no incentives for it to come onto the market?" he asked. Future important measures also include debureaucratization for house renovations in rural areas. "In village structures, houses are empty while construction is happening in the commuter belt," he criticized and announced "debureaucratization steps" this autumn. Both Hattmannsdorfer and Schellhorn emphasized that the new law is "not a cap, but a brake."

OGH Ruling Caused Discussion

A ruling by the OGH in the summer, which stated that value protection clauses in long-term rental contracts are generally permissible, caused discussion. Since the rent brake provides a clear legal regulation on how value protection clauses in rental contracts must be structured in the future, the uncertainty caused by illegal clauses in the past will be eliminated, it was stated in a media release on Wednesday. To draw a clear line here, the federal government has agreed that overpaid rents can only be reclaimed retroactively for five years from the enactment of the law, instead of up to 30 years retroactively as before.

As part of an expert group, a proposal will also be developed on how the costs for thermal renovation and decarbonization of the building stock can be distributed fairly and socially balanced. A regulatory mechanism will also be developed to make the implementation of such measures economically more attractive than their omission. A corresponding proposal is expected in the first half of 2026. This is intended to advance the ecological renovation of the old stock.

(APA/Red)

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