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THE VIENNA TENEMENT: HISTORICAL SPLENDOR IN THE CHANGE OF TIME
WHAT IS A RENTAL PROPERTY?
Rental properties are essentially apartment buildings with multiple units that are rented out long-term. The word "interest" here refers to "rent." Accordingly, not only buildings constructed before 1945 fall under the definition of rental properties, but also newer constructions that offer apartments for rent. Overall, the stock of rental properties in this country is larger than commonly assumed. However, cooperative housing and subsidized apartments are not included.
OLD AND NEW BUILDING
Rental properties built after June 30, 1953, are considered new construction and are subject to limited rent control laws. Returns on new developments are usually higher, and 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 earning potential when old tenants leave.
COSTS AND REVENUES
The value of a rental property depends on yield, location, size, substance, and occupancy rate. An accurate appraisal 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 recover under capped rents.
For an accurate estimate 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, societal changes, and especially an impressive building boom in Vienna. This era shaped the city with the characteristic Gründerzeit rental apartment houses, 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 also commercial spaces on the ground floor.
The origins of these tenement houses lie in the population explosion during industrialization. The strong influx of immigrants to Vienna created an enormous demand for housing. The Gründerzeit is divided into the early Gründerzeit (approximately 1840 – 1870), the high Gründerzeit (approximately 1870 – 1890), and the late Gründerzeit (approximately 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 grand boulevard became the highlight of the 19th century and shaped the city's development.
The architecture of the founder era rental houses reflects societal changes. In the early founder period, unadorned facades dominated, while the high founder period was inspired by representative elements taken from the Ringstraße. The late founder period brought about increased development of the building sites, 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 rents were to be based on the economic conditions of the year 1914. As a result, the income of landlords was limited, and the Gründerzeit rental properties became less attractive for owners and landlords.
Introduction and background of the peace interest
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 overoccupation of apartments, especially to protect soldiers and their families from rent increases and evictions. The strategy consisted of a combination of rent control, currency devaluation after the end of 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 ownership-like right for tenants, which provided financial relief but meant a gradual expropriation for landlords, causing the significant construction of private rental buildings before 1914 to come to a halt due to a lack of achievable returns. In its place, the municipal housing construction of the interwar period was tax-financed. Necessary repairs to old buildings could, in the case of insufficient rental income, be funded through an officially approved allocation process according to § 7 of the Rent Act (later § 18 of the Rent Law). Since these maintenance works had a strong impact on the effective rent, they were known as § 7 renovation.
Today, more than 100 years later, the issue of rent is once again at the center of heated debates, as the government is working on a new rental law that may bear certain parallels to the situation before 1917.
FUTURE PROSPECTS 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 to condominium ownership, sale, or demolition.
The conversion of rental apartments into condominiums offers landlords lucrative opportunities. However, this impacts the urban landscape and social mix. Alternatively, some opt for demolitions to build new structures so that rent control regulations do not take effect.
The loss of Gründerzeit rental buildings leads to a decline in affordable housing in central locations. This threatens social diversity and the characteristic charm of Vienna. Legal challenges, particularly in 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 support programs are necessary. This could motivate investors to invest in the renovation and maintenance of these architectural gems.
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 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/was-ist-ein-zinshaus-4296503
https://publikationen.ehl.at/view/872529523/
https://www.buergerleben.com/die-entwicklung-des-gruenderzeithauses/
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 Building Newspaper 17 (1852) Sheet 438