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THE VIENNA TENEMENT: HISTORIC GLORY IN THE PASSAGE OF TIME
WHAT IS A RENTAL HOUSE?
Investment properties are essentially rental buildings with multiple units that are rented out 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 housing and subsidized apartments are not included.
OLD AND NEW BUILDING
Residential buildings constructed after June 30, 1953, are considered new buildings and are subject to rental laws to a limited extent. The returns on new constructions are generally higher, and the maintenance costs are lower. The aesthetics of new residential buildings may vary, but they offer long-term investors opportunities, especially in properties with a high proportion of old tenants, to increase 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 assessment requires know-how and expertise. Renovations are expensive, especially facade renovations can become costly. Repairs and maintenance can increase ongoing costs, which is difficult to recoup when rental rates are capped.
For an accurate estimation of the purchase price, a professional should be consulted. Our experts for rental properties are happy to advise you!
HISTORICAL EXCURSION
The Gründerzeit between 1848 and 1918 marks an era of growth, social change, and above all, an impressive construction boom in Vienna. This era shaped the city with its characteristic Gründerzeit apartment buildings, which still adorn the urban landscape today. The term "Zinshaus" originates 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 buildings 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 (approx. 1840 – 1870), the high Gründerzeit (approx. 1870 – 1890), and the late Gründerzeit (approx. 1890 – 1918).
The first expansion of the city took place during the reign of Emperor Franz Joseph I, who ordered the dismantling of the fortifications and the construction of the Ringstraße in 1857. This grand boulevard became the hallmark of the 19th century and shaped the city's development.
The architecture of the Gründerzeit apartment buildings reflects societal changes. In the early Gründerzeit, simple facades dominated, while the high Gründerzeit was inspired by representative elements taken from the Ringstraße. The late Gründerzeit brought an increased density of construction, but at the expense of residential quality.
PEACE INTEREST
The peace rent, introduced in 1917, marked the end of the heyday of rental houses. This form of rent regulation stipulated that the rent was to be based on the economic conditions of the year 1914. As a result, the income of landlords was limited, and the Gründerzeit rental houses became less attractive to owners and landlords.
Introduction and background of the peace interest
The peace rent, also known as the peace crown rent, was introduced in Austrian tenancy law as a legally established maximum rent for rental contracts 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 goal of the peace rent 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 provided financial relief, but for landlords, it meant a gradual expropriation, causing the significant construction of private rental houses, which had been thriving before 1914, to come to a halt due to the lack of achievable returns. The municipal housing construction that began in its place during the interwar period was financed by taxes. Necessary repairs to old buildings could, in the case of insufficient rental income for property owners, be financed through an officially approved cost allocation procedure according to § 7 of the Rent Law (later § 18 MRG). Since these maintenance works had a significant impact on the effective rent, they were known as § 7 renovations.
Today, more than 100 years later, the topic of rents 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, almost 12% of these historical buildings disappeared, primarily due to conversion, sale, or demolition.
The conversion of rental apartments to condominiums opens up lucrative opportunities for landlords. However, this has an impact on the cityscape and social mixing. Alternatively, some rely on demolitions to build new constructions so that rent regulations do not take effect.
The loss of historic rental buildings from the Gründerzeit era leads to a decrease in affordable housing in central locations. This threatens social diversity and the characteristic flair of Vienna. Legal challenges, particularly in the tenancy 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 support programs are necessary. This could motivate investors to invest in the renovation 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 simultaneously meeting current housing demands. Open 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 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-apartments-in-vienna
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-founders-era-house/
https://www.derstandard.at/story/2000131457822/should-there-be-fewer-rental-apartments-in-vienna
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