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THE VIENNESE APARTMENT BUILDING: HISTORICAL GLORY IN THE CHANGE OF TIME
WHAT IS A RENTAL HOUSE?
Rental properties are essentially apartment buildings with multiple rental units that are rented out long-term. The word "Zins" here refers to "rent." Consequently, not only buildings erected before 1945 fall under the definition of rental properties, but also newer structures that offer apartments for rent. Overall, the stock of rental 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 buildings and are subject to limited provisions of the rental law. Returns on new buildings are generally higher, and maintenance costs are lower. The aesthetics of new rental properties may differ, but they offer long-term investors opportunities, especially in properties with a high proportion of long-standing tenants, to increase revenue potential when older tenants leave.
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 façade renovations can become costly. Repairs and maintenance can increase ongoing costs, which are difficult to recoup when rent is capped.
For an accurate estimate of the purchase price, a professional should be consulted. Our experts for investment properties are happy to assist you!
HISTORICAL EXCURSION
The founding era between 1848 and 1918 marks a period of prosperity, social changes, and especially an impressive construction boom in Vienna. This era shaped the city with the characteristic Gründerzeit apartment buildings that still adorn the urban landscape today. The term "Zinshaus" comes from the fact that these buildings were often designed as investment properties for rental. They house a mixture of rental apartments and occasionally also commercial spaces on the ground floor.
The origins of these rental houses lie in the population explosion during the industrialization. The high influx of people to Vienna created an enormous demand for housing. The Gründerzeit is divided into Early Gründerzeit (approximately 1840 – 1870), High Gründerzeit (approximately 1870 – 1890), and Late Gründerzeit (approximately 1890 – 1918).
The first expansion of the city 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 rental houses reflects the social changes. In the early Gründerzeit, plain facades predominated, while the high Gründerzeit was inspired by representative elements borrowed from the Ringstraße. The late Gründerzeit brought about increased land development, but at the cost of living quality.
PEACE INTEREST
The peace rent, introduced in 1917, marked the end of the heyday of rental buildings. This form of rent control stipulated that rents were to be based on the economic conditions of 1914. As a result, landlords' profits were limited, and the historic rental buildings 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 rental law as a legally established maximum rent for rental contracts before August 1, 1914. This was done in response to wartime overcrowding of apartments, particularly to protect soldiers and their families from rent increases and evictions. The strategy consisted of a combination of rent control, currency devaluation after the war, and comprehensive tenant protection.
Development and effects on tenants and landlords
The main goal of the rent freeze was to limit rents by freezing them at this maximum rate. This led over the years to a kind of property-like right for tenants, which meant financial relief for them, but a creeping expropriation for landlords, causing the significant construction of private rental houses, which had been very significant before 1914, to come to a standstill due to lack of achievable returns. The municipal housing construction that began in its place during the interwar period was tax-funded. Necessary repairs to older buildings could be financed in the case of insufficient rental income of the property owners through a procedure subject to official approval according to § 7 of the Rent Law (later § 18 of the Rent Law). Since these maintenance works had a strong impact on the effective rent, they were known as § 7 renovations.
Today, more than 100 years later, the issue of rents is once again at the center of heated debates, as the government is working on a new rental law that might show certain parallels to the situation before 1917.
FUTURE PERSPECTIVES AND CHALLENGES
Currently, the Gründerzeit rental buildings in Vienna are undergoing a transformation process. Between 2007 and 2019, almost 12% of these historic buildings disappeared, primarily due to conversion to condominium ownership, sale, or demolition.
The conversion of rental apartments into condominiums opens up lucrative opportunities for landlords. However, this has an impact on the urban landscape and social mixing. Alternatively, some resort to demolition in order to construct new buildings, so that rent regulations do not take effect.
The loss of historic rental buildings from the Gründerzeit period leads to a decline in affordable housing in central locations. This threatens social diversity and the characteristic flair of Vienna. Legal challenges, particularly concerning rental law, are at the center of these developments. The city of Vienna is facing the challenge of balancing heritage protection with the need for housing.
To promote the preservation of these historical buildings, financial incentives and support programs are necessary. Investors could thus be motivated to invest in the renovation and maintenance of these architectural gems.
The future of the Gründerzeit tenement houses in Vienna remains uncertain. The city and its residents face the challenge of preserving the heritage while simultaneously meeting current housing demands. Unanswered questions remain regarding the impacts on rental prices, the cityscape, and the quality of life in Vienna. It remains to be seen how the city will navigate this tension between history and progress.
Sources and links
https://www.mieterschutzverband.at/allgemein/mieterschutz-in-oesterreich-von-1917-bis-heute/
https://www.wohnnet.at/finanzieren/investment/what-is-a-rental-building-4296503
https://publikationen.ehl.at/view/872529523/
https://www.oeaw.ac.at/detail/news/gentrifizierung-in-wien-wird-laut-neuer-studie-ueberschaetzt-1
https://www.buergerleben.com/the-development-of-the-founder-era-house/
https://www.baunetz.de/meldungen/Meldungen-Bauen_fuer_die_Metropole_8221143.html
Image: Ludwig Förster and Theophil Hansen, Reger's House, Riemergasse 2, 1948/49 in: General Building Newspaper 17 (1852) Page 438