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THE VIENNA TENEMENT: HISTORICAL GLORY IN THE CHANGING TIMES
WHAT IS A RENTAL PROPERTY?
Investment properties are essentially rental buildings with multiple residential units that are leased long-term. The word "Zins" here refers to "rent." Accordingly, not only buildings constructed before 1945 fall under the definition of investment properties, but also newer structures, in which apartments are offered for rent. Overall, the stock of investment properties in this country is larger than commonly assumed. However, cooperative apartments and subsidized housing do not fall under this category.
OLD AND NEW BUILDING
Rental properties built after June 30, 1953, are considered new constructions and are subject to the rental law to a limited extent. The returns on new buildings are generally higher, and the maintenance costs are lower. The aesthetics of new rental properties may vary, but they offer long-term investors opportunities, especially in properties with a high proportion of old tenants, to increase the income potential as old tenants vacate.
COSTS AND REVENUES
The value of a rental property depends on yield, location, size, condition, and occupancy rate. An accurate assessment requires know-how and expertise. Renovations are expensive, especially facade renovations can become costly. Repairs and maintenance can increase ongoing costs, which can be difficult to recover with capped rent rates.
For an accurate estimation of the purchase price, a professional should be consulted. Our experts for rental properties will be happy to advise you!
HISTORICAL EXCURSION
The founding period between 1848 and 1918 marks an era of growth, social change, and especially an impressive construction boom in Vienna. This era shaped the city with characteristic Gründerzeit rental buildings, which still adorn the cityscape today. The term "Zinshaus" comes from the fact that these buildings were often designed as investment properties for rental purposes. They house a mixture of rental apartments and occasionally commercial spaces on the ground floor.
The origins of these rental houses lie in the population explosion during industrialization. The significant immigration to Vienna created an enormous demand for housing. The Gründerzeit is divided into the early Gründerzeit (around 1840 – 1870), the high Gründerzeit (around 1870 – 1890), and the late Gründerzeit (around 1890 – 1918).
The first city expansion took place during the reign of Emperor Franz Joseph I, who ordered the demolition of the fortifications and the construction of the Ringstrasse in 1857. This magnificent boulevard became the highlight of the 19th century and shaped the city's development.
The architecture of the Gründerzeit apartment buildings reflects societal changes. In the early Gründerzeit, plain facades dominated, while the high Gründerzeit was inspired by representative elements taken from the Ringstraße. The late Gründerzeit brought about increased development of the land areas, but at the expense of living quality.
PEACE INTEREST
The peace rent, introduced in 1917, marked the end of the heyday of rental properties. This form of rent regulation established that rent was to be calculated based on the economic conditions of the year 1914. As a result, landlords' returns were limited, and the rental properties from the founding period became less attractive to owners and landlords.
Introduction and Background of the Peace Tax
The peace rent, also known as the peace crown rent, was introduced in Austrian tenancy law as a legally defined maximum rent for rental contracts before August 1, 1914. This was done in response to the war-related over-crowding of apartments, particularly to protect soldiers and their families from rent increases and evictions. The strategy consisted of a combination of rent control, monetary devaluation after the war, and comprehensive tenant protection.
Development and impact on tenants and landlords
The main goal of the rent freeze was to limit rents by freezing them at this maximum rate. Over the years, this led to a kind of property-like right for tenants, which provided financial relief but meant a creeping expropriation for landlords, causing the significant construction of private rental buildings that occurred before 1914 to come to a standstill due to a lack of achievable returns. The municipal housing construction that took place instead during the interwar period was financed through taxes. Necessary repairs to old buildings could be financed by landlords through a government-approved allocation process according to § 7 of the Rent Law (later § 18 of the Tenancy Law), in cases of insufficient rental income. Since these preservation works had a strong impact on the effective rent, they became known as § 7 renovations.
Today, over 100 years later, the issue of租金 is once again at the center of heated debates, as the government works on a new rental law that could show certain parallels to the situation before 1917.
FUTURE PERSPECTIVES AND CHALLENGES
Currently, the Gründerzeit tenement houses in Vienna are undergoing a transformation process. Between 2007 and 2019, nearly 12% of these historical buildings disappeared, mainly due to conversion into condominiums, sale, or demolition.
The conversion from rental to ownership apartments opens up lucrative opportunities for landlords. However, this has effects on the urban landscape and social mixing. Alternatively, some opt for demolitions to erect new buildings so that rent price regulations do not take effect.
The loss of historic rental buildings from the Gründerzeit period thus leads to a decrease in affordable housing in central locations. This threatens social mixing and the characteristic flair of Vienna. Legal challenges, particularly in the tenancy law, are at the center of these developments. The city of Vienna faces the challenge of balancing heritage protection and housing needs.
To promote the preservation of these historical buildings, financial incentives and funding programs are necessary. Investors could be motivated to invest in the renovation and upkeep of these architectural jewels.
The future of the Gründerzeit rental houses in Vienna remains uncertain. The city and its residents face the challenge of preserving the heritage while simultaneously meeting current housing demands. Open questions remain regarding the impact on rental prices, the urban landscape, and the quality of life in Vienna. It remains to be seen how the city will handle this tension between history and progress.
Sources and Links
https://www.mieterschutzverband.at/allgemein/mieterschutz-in-oesterreich-von-1917-bis-heute/
https://www.derstandard.at/story/2000131457822/should-there-be-fewer-rental-apartments-in-vienna
https://www.wohnnet.at/finanzieren/investment/was-ist-ein-zinshaus-4296503
https://publikationen.ehl.at/view/872529523/
Gentrification in Vienna is said to be overestimated according to a new study.
https://www.buergerleben.com/the-development-of-the-founder-epoch-house/
https://www.derstandard.at/story/2000131457822/should-there-be-fewer-rental-apartments-in-vienna
https://www.otto.at/de/marktberichte/zinshaus-marktbericht?gclid=EAIaIQobChMIv7m1xL7NgwMVxItoCR0nmwAyEAMYASAAEgIwuvD_BwE
https://www.baunetz.de/meldungen/Meldungen-Bauen_fuer_die_Metropole_8221143.html
Image: Ludwig Förster and Theophil Hansen, Reger House, Riemergasse 2, 1948/49 in: General Construction Newspaper 17 (1852) Sheet 438