Real Estate in Austria

In accordance with the latest data of the International Service of Real Estate Research, the Austrian real estate market has been recognized in 2007 as one of the most stable markets and it remains the least vulnerable one to general instability in this sphere caused by the hypothec crisis in America. This fact is also confirmed by the current investment volumes which exceed the indices of the last year by 17 % and amount to € 2,8 billion. The local property market is virtually not influenced by the exchange fluctuations. On the contrary, the forecasts testify to the continuation of the positive real estate market trend.

The real estate market as any other aspect of living in this country is strictly regulated. 

The demand for the property from the part of foreigners is high, given the possibility to holiday the year round and the classical beauty of surrounding landscapes. The bills excluding superfluous speculations at this market were drafted at the governmental level.

Purchasing property in Austria should not be considered as a business: the state that cares for its citizens has created all the conditions making the local real estate market the stable one and precluding foreigners possessing liquid cash from speculations at this market. There are laws restricting such an opportunity.

The significant number of restrictions on purchase, near-full taboo on change of the destination of agricultural lands and high taxes in the case of prompt resale – all these factors are inherent to the real estate in Austria and add stability to the country. For example, if a foreigner sells a property within 10 years after its purchase, the capital gains are taxed at 34 % of the property value, unless there has been at least a 30 % reconstruction of the property.

Obtaining permission to buy property from the local municipality is mandatory, even for the Austrians.

High taxes and a severe immigration policy, on the one hand, make the life somewhat complicated but, on the other hand, they guarantee social security, safety in the country and stability.

The real estate in Austria is not a super-profitable purchase from the point of view of the price growth: it makes only several per cents a year which slightly exceeds the inflation. The point is the stability of these prices and what a person moving to Austria receives.

An important factor stirring up the interest for the property in Austria is a tourist component. Possessing marvelous natural beauty and being at the same time one of the cultural and tourist centers of Europe, Austria offers to its citizens and travelers a huge selection of resorts, many of which enjoy international fame, interesting cultural programs, excellent sport facilities and clubs. The Austrian ski resorts are well known for a long time, the equestrianism, golf and other aristocratic kinds of leisure have since decades formed specific interest for this country.

Moreover, Austria also offers a wide selection of institutes and universities, any specialization for different budgets. The Austrian education is highly reputed in the whole world and, given relatively modest prices (for example, the study at a Viennese institute costs some € 4,000 in a year), it is a serious alternative to an education in Russia, America or the U.K.

The Austrian government seeks to support young families in every possible way, including those of the immigrants; there are free courses of the German language both for children and parents. If we take prices for kindergartens in Austria, a state-run kindergarten for instance costs 10 % of the aggregate income of the household. The schools and gymnasiums in Austria are free.

Austria is a choice of the life. Choice of a quiet, safe, leisurely life. Choice of a quiet business, of a secure life for the family. One of the main reasons behind purchasing property in Austria is a desire to improve the life quality. It is precisely this criterion that ensures for Austria a leading position

The real estate prices in Austria are slightly higher and sometimes substantially lower than in Moscow, St. Petersburg or Kiev. So, in Vienna (this city occupies since many years the third place in the rating of the most comfortable cities for living; such criteria as the infrastructure, security, accessibility of goods and services, cultural riches etc. are taken into consideration) the prices average out to € 2,200 for a sq m.

The apartment prices in Vienna start from around € 80,000. It will be a small apartment requiring renovation.  For the amount of € 250,000 – 300,000 it is possible to acquire a spacious three-room apartment. If we take a somewhat higher segment of lodging in terms of quality, the prices are still relatively acceptable. For example it is possible to buy for € 400,000 an apartment in the entirely new high-rise building, with area of some 100 sq m, located at the 25^th floor, with a huge living room and arresting views of the city. The apartments are delivered to the owners with high-quality finishing, including the water-closet and kitchen area.  

The necessity of a repair, even of a face-lift, is a substantial factor reducing the property price. The construction and repair are also well systematized and regulated by legal acts, the guarantees of the construction company are mandatory. When speaking on the prices for repair, a general overhaul of an apartment would amount on the average to some € 800 for 1 sq m and more. However, nobody will prohibit you from making a face-lift on your own; there is no need to obtain an official permission for such repair. In the case of a general overhaul related with alterations, it is necessary to obtain an official permission and invite qualified specialists for its realization. Therefore, the necessity of a repair, as already mentioned, is considerably reducing the property price.

Any Austrian apartment house is being run by a managing organization of tenants which is formed like a joint stock company. In fact, the state is not engaged into the operation of the house – everything, from the façade and courtyard to the turret on the roof, is a collective property of the tenants. However, the state reserves the function of control over the condition of the house and, in the case the house appearance would not meet the appropriate requirements, it may interfere.   

In order to cover the maintenance costs, payments are collected from all tenants. The amount of dues is being fixed in the purchase time and is to be paid monthly. For a 100 sq m apartment, these dues can make up from € 100 to € 300 (excluding power, water and heating which are being paid for separately).

These funds are transferred to a special account and a decision as to its expenditures is being taken collectively. In addition to everyday operation and supervision, it may be a repair of the façade or doorways, replacement of service lines, installation of a new lift, landscapes works and repair of the roof or even a construction of a penthouse on the roof. The decisions are being taken collectively; it is not possible to keep away, as they like to do in our country. When a commercial apartment building is being sold, they always indicate in the advertisement whether the necessary ownership ratio has been achieved (more than 50 % of the house’s residential area) allowing the owner to freely take decisions regarding a disposal of the “house capital” for the renovation of the house. 

A decision can be also taken as to the involvement of a loan for the renovation, the redemption of which will be effected from the same monthly payments.

The electricity price is € 0.14 for a kilowatt, the water costs € 1.0072 for a cubic metre. There is no real estate tax in Austria, on the other hand, there is a “land tax” amounting for a private house to around € 100 in a year.

Austria is a unique country in many ways, therefore foreigners who are going to purchase real estate in Austria, should be well aware of some peculiarities of the paperwork when purchasing property in this country.

The first and necessary condition is the availability of “legal funds”.  In addition to a business in Austria or any other country (if this is the case, the vendor might ask you to produce a confirmation from the tax office), it can be an account at any of the Austrian banks; however, it should exist and be credited at least 6 months before the purchase.  

There are a number of restrictions for foreigners seeking to purchase real estate in Austria: for instance, foreigners cannot buy land plots or houses in Tyrol without meeting several conditions. The land which is being purchased, should “work” – if it is a farm there should be at least 5 cows. Generally, each of 9 federal states of Austria has its own rules regulating property purchase.

There is one common “rule of thumb”: each deal has to be approved by the authorities.

The EU laws prescribe that payments should be effected through the banks. Cash payments upwards of € 150,000 are channeled to the Central Bank which will examine the personality of the payer.

A very important remark concerning the Austrian banks: they are very reliable as this country has one of the best laws on the banks in the world. The information is provided to nobody, except for cases when the person making the request is able to prove to the Austrian court that the money was earned in the illegal way (mafia, drugs or crime to be punished with death penalty).

Virtually all transactions with real estate are handled by a lawyer and a notary. Before your viewing visit to the property object, it would be advisable to consult a lawyer specializing in this sphere. When viewing a property, the potential buyer signs for each entity a separate agreement where are stated the address of the property, date of visit, buyer’s name, his or her contact information, price of the entity and a full description of the property. The commission of the realtor (broker) should also be specified. All this is required by law. The legislation also regulates the value of the services of a realtor (broker) – 3 % + 20 % VAT of this amount, i.e., the buyer pays 3,6 %.

If you will like the object, but you wish to bargain, you should officially propose your price. In response to your proposal, the owner will accept in writing or provide his or her suggestion of the price. Consequently, all the bargaining will be fixed on paper.

The payment for the property is implemented directly to a lawyer who is entitled to such actions. The funds will be deposited in a special “Anderaccount” or in a trustee account and will pass over to the vendor only after approval of the deal by authorities and fulfillment by the vendor of all obligations. It implies entering changes into the land cadastre. However, before the owner will change the data in the cadastre, the lawyer should inform him that he, the lawyer, has received funds from the buyer. In this way, the law guarantees the honesty of both the buyer and the vendor.

If the authorities will turn down the realization of the deal, the funds for the property will be returned. However, payments to the lawyer, notary and broker are mandatory. The broker, in the case of a refusal from the part of the authorities, collects not the payment but a fixed rate. In order to avoid such situation, we would advise to consult, before visiting the property, a lawyer who specializes in this sphere. The lawyer will carefully study your documents and provide a conclusion whether the deal is possible. Besides, you may approach a lawyer also for the legalization of your long-term stay in Austria.

Your documents may be reviewed for the period of up to 12 months: this is a maximum terms, normally it takes from 3 to 6 months.

The purchase agreement signed by the vendor and the buyer before a notary and its registration in the Tax Office are proofs of the ownership until the court will issue the verified copy of the page where the new owner is registered in the Cadastre. In Austria, the system of the land property registration functions at the highest level.

The ownership records are stored in the District Courts; each land plot has its own registration number thus enabling special programs to easily trace the whole history of the property. All the lawyers and notaries possessing a license for work with real estate, have access to this information. The copies of all transactions with real estate are stored in the books of land property registration, therefore, the search for information regarding ownership rights is very simple.

Any transaction with real estate should be registered by the local tax authority collecting tax for the transfer of the ownership right at the rate of 3,5 % of the property value. After this tax is paid, a certificate will be issued allowing for registration of the deal at the local court.

For the registration of land, a tax is levied amounting to 1 % of its value. The registration of the hypothec will cost the same 1 %.  

The fees of the lawyer and notary are roughly the same and make up from 1,5 % to 5 % (in the most cases, it does not exceed 2,5 %. This discrepancy is caused by a calculation following rather a complicated schema). The mandatory registration of the parties’ signatures in the court involve small additional expenses.  

And 3,6 % of the property value is paid to the real estate agent (due 3 % + VAT). This is a standard fee in all the agencies, its volume is restricted by law.

The buyers from the non-EU states should consider some additional expenses: the permission of the local authorities managing property transfer could cost up to € 1,100. 

Finally if your property in Austria will be sold during 10 years term after the purchase, the difference in sale and purchase prices is liable to the income tax.