The indexation of rental rates in Austria is going to change

According to the OVP consumer protection spokesman, Peter Weidinger, the government is working on intervening in the indexation of rents. Select European countries have a rental cap, which correlates with the level of inflation. For instance, in Switzerland, rental prices may be increased by up to 40% to match inflation, whilst several other countries have a fixed percentage – Denmark at 4%, France at 3.5%, as well as Spain and Portugal at 2%.

The Chamber of Labour expressed its wish to introduce a 2% cap for Austria until a major tenancy law reform comes into effect. This cap would majorly facilitate the burden of tenants, as in line with the current law, in April 2023, the rental rates are expected to rise by 8.6%. There has never been a rental cap in almost 30 years of the existence of the reference value system. At the moment, the reference values are adjusted every 2 years in accordance with the inflation indicators of the previous 2 years.

The situation can be smoothed with the adjustment of the reference values on an annual basis in accordance with the average yearly inflation indicators over the past 3 years. As a result, in 2022 and in 2033, the increase would reach 1.9% and 4.23% respectively. The downside of this regulation is that if the inflation rate results in the lowered reference values, the decrease will be delayed.

It is worth noting that in Sweden, tenant protection organizations and landlord associations agree on the amount of the inflation compensation every year, similar to wage negotiations in Austria. At the same time, in the Netherlands, rental rates may rise by just one percentage point more than the average salary increase during the year before.