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THE VIENNA TENEMENT: HISTORICAL SPLENDOR IN THE COURSE OF TIME
WHAT IS A RENTAL HOUSE?
Investment properties are essentially rental buildings with multiple residential units that are rented out long-term. The word "Zins" here stands for "rent." Therefore, buildings constructed not only before 1945 but also newer structures that offer apartments for rent fall under the definition of investment properties. 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
Apartment buildings that were constructed after June 30, 1953, are considered new buildings and are subject to the rental laws to a limited extent. The returns on new buildings are generally higher, and the maintenance costs are lower. The aesthetics of new apartment buildings may vary, but they offer long-term investors opportunities, especially in properties with a high proportion of old tenants, to increase the income potential when old tenants vacate.
COSTS AND REVENUES
The value of a rental property depends on yield, location, size, substance, and occupancy rate. An accurate estimate requires know-how and expertise. Renovations are expensive, and facade renovations can be particularly costly. Repairs and maintenance can increase ongoing costs, which can be difficult to recover when rent is capped.
For a precise estimate of the purchase price, a professional should be consulted. Our experts for rental properties are happy to assist you!
HISTORICAL EXCURSION
The Gründerzeit between 1848 and 1918 marks an era of economic upswing, social changes, and above all, an impressive construction boom in Vienna. This era shaped the city with the characteristic Gründerzeit apartment buildings, which still adorn the cityscape today. The term "Zinshaus" comes from the fact that these buildings were often designed as investment properties for renting out. They contain a mix of rental apartments and occasionally also commercial spaces on the ground floor.
The origins of these tenement houses lie in the population explosion during industrialization. The significant immigration to Vienna created an enormous demand for housing. The Gründerzeit can be divided into the Early Gründerzeit (approx. 1840 – 1870), High Gründerzeit (approx. 1870 – 1890), and Late Gründerzeit (approx. 1890 – 1918).
The first city expansion took place during the reign of Emperor Franz Joseph I, who ordered the dismantling of the fortifications and the construction of the ring road in 1857. This grand boulevard became the highlight of the 19th century and shaped the city's development.
The architecture of the Gründerzeit rental houses reflects the societal changes. In the early Gründerzeit, plain facades predominated, while the high Gründerzeit was inspired by representative elements taken from the Ringstrasse. The late Gründerzeit brought increased development of the ground areas, but at the cost 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 stipulated that rent was assessed based on the economic conditions of the year 1914. As a result, the earnings of landlords were limited, and the Gründerzeit rental properties 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 agreements before August 1, 1914. This was done in response to the war-related 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 objective of the rent freeze was to limit rents by freezing them at this maximum rate. Over the years, this led to a kind of ownership-like right for tenants, which meant financial relief but a creeping expropriation for landlords, causing the significant construction of private rental houses before 1914 to come to a standstill due to a lack of achievable returns. The municipal housing construction that began in its place during the interwar period was tax-funded. Necessary repairs to old buildings could, in the case of insufficient rental income for the homeowners, be financed through a government-approved allocation process under § 7 of the Rent Act (later §18 MRG). Since these preservation works significantly affected the effective rent, they became known as § 7 renovations.
Today, more than 100 years later, the topic of rent is once again at the center of heated debates, as the government works on a new rental law that could exhibit 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 historical buildings disappeared, mainly due to conversion into condominiums, sale, or demolition.
The conversion from rental to ownership apartments offers landlords lucrative opportunities. However, this has an impact on the urban landscape and social mix. Alternatively, some are opting for demolitions to construct new buildings so that rent control regulations do not take effect.
The loss of Gründerzeit rental houses thus leads to a decline in affordable housing in central locations. This threatens social mixing and the characteristic flair of Vienna. Legal challenges, particularly in the rental law, are at the heart 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. This could motivate investors to invest in the restoration and maintenance of these architectural jewels.
The future of the Gründerzeit tenement houses in Vienna remains uncertain. The city and its residents face the challenge of preserving the heritage while also 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 manage 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-buildings-in-vienna
https://www.oeaw.ac.at/isr/forschung/innovation-und-urbane-oekonomie/wiener-zinshausmarkt-die-transformation-des-gruenderzeitlichen-baubestandes
https://www.wohnnet.at/finanzieren/investment/what-is-a-rental-building-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-era-house/
https://www.derstandard.at/story/2000131457822/should-there-be-fewer-rental-buildings-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's House, Riemergasse 2, 1948/49 in: General Construction Newspaper 17 (1852) Sheet 438