OAustria’s government wants to limit the increase in state-regulated rents. Over the next three years, increases are to be limited to 5 percent. The rule does not apply to the private housing market. In addition, the fees for state services will not increase in 2024, which also applies to the motorway toll and the discounted rail climate ticket; Energy companies are threatened with a higher skimming off of “chance profits”. This was announced by Chancellor Karl Nehammer (ÖVP) after his black-green coalition had unsuccessfully discussed a rent brake for months. The government has been doing poorly in polls for some time.
The new anti-inflation package was announced shortly before a special session of parliament during the summer break, which the opposition parties FPÖ and SPÖ had requested because of the high inflation in Austria. The cost of living in Austria last rose by 7 percent in July. That was more than in the euro area with 5.2 percent and 6.2 percent in Germany. Without the change in the law that the coalition brought to parliament on Wednesday, rents in non-profit housing would rise by up to 15 percent in 2024, Nehammer said. He wants to prevent that.
Kogler: 1.2 million tenants relieved
The Austrian plans can only be transferred to Germany to a limited extent, where the SPD parliamentary group in the Bundestag recently called for a rent cap. So far, the rents in the communal, cooperative or old building apartments, which are widespread in Austria, have risen every two years by the inflation that has accumulated to date. The price cap is intended to break the cost spiral. In the coming year and then in 2026, rents in subsidized housing may rise by a maximum of 5 percent, those in old buildings (category and benchmark rents) only again in 2025. In addition, the tenancy law is to be changed in such a way that large price jumps are excluded.
Vice Chancellor Werner Kogler (Greens) said that 1.2 million tenants would be relieved. That is 75 percent of all tenancies. Nehammer called on the opposition to agree to the application, as he takes up their demands.
According to Statistics Austria, the average rent including operating costs in the first quarter of 2023 was 9.1 euros per square meter per month. That was 7.8 percent more than in the same quarter of the previous year. However, the rents differ depending on the location and age of the contract. New rentals in Vienna, for example, are currently being offered on internet portals at more than twice the average value.
The new price rule refers to state-regulated tenancies, Nehammer said. Tenants in privately financed apartments do not benefit from this. He put forward constitutional reasons for doing so. One does not intervene in the free drafting of contracts. Nehammer was certain that inflation would fall once the tourism season ended in September. “We will keep life affordable,” he said.
It should also help that the fees for state services are frozen. At the federal level, this had already been decided for services such as issuing a driver’s license or passport or arranging a marriage. The federal government now wants to give the municipalities 150 million euros so that they in turn waive higher fees for municipal services. In addition, neither the motorway toll nor the climate ticket for discounted rail travel would become more expensive in the coming year.
“Among the best in Europe”
The wave of inflation has led to a broad debate about state aid and interventions in the credit market, for example, or skimming off “chance profits”. Here, the government is primarily targeting energy companies: If the prices for oil and gas do not fall, “the skimming off of profits will increase significantly,” said the Chancellor. Up to now, the “chance profit” that was 20 percent above the average profit of previous years has been skimmed off in part. In the future, the threshold for the levy should already apply from 10 percent. A tightening of competition law should also ensure more price transparency.
Nehammer accounted for government aid paid out or pending against inflation, the anti-inflation bonus and the abolition of cold progression by increasing social benefits and pensions by 9.7 percent next year. Although this is expensive for the state budget, it will relieve citizens of 40 billion euros from 2024 to 2026. Kogler calculated that Austrians are “among the best in Europe” because of the high level of direct funding in a comparison of net purchasing power.
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