In an effort to reduce the spread of COVID-19, the government has ordered all shops and service providers, except those providing certain vital services, to close to customers from 17 March 2020 until 13 April 2020. The closure of shops may entitle tenants to reduced rent and ancillary costs. However, it does not entitle tenants to terminate their lease for cause. This article sets out guidance for affected tenants and landlords.
In early 2019 the Supreme Court passed three decisions confirming and clarifying its 2017 decision which had limited landlords' right to request a location surcharge for rent-controlled apartments in desirable neighbourhoods. Based on the court's judgment, approximately 100,000 apartments no longer qualify for the location surcharge. However, the court's vague criteria for determining whether a neighbourhood is considered above or below average leave scope to include additional indicators.
A new provision in the Vienna Building Code recently entered into force, rendering short-term letting – including through rental services such as Airbnb – illegal in large areas of Vienna. Further, under the new provision, all parts of residential zone buildings that were being used for residential purposes when the provision entered into force – or were built thereafter – may be used only for residential purposes. That said, the new provision may be unconstitutional.
The City of Vienna recently announced its intention to reform the building code. Some building owners consider it unfair that strict maintenance obligations and rent limits apply only to old buildings, whereas buildings constructed after 8 May 1945 can be let at market rent. As a result, many building owners have chosen to tear down historic buildings and erect new concrete and steel structures in their place. Therefore, one of the aims of the reform is to protect the city's historic buildings.
Service charge provisions in shopping centre lease agreements frequently give rise to disputes between landlords and shop operators. In a recent decision on such costs, the Supreme Court offered some insights into shopping centre lease agreements which go beyond service charge provisions.
The Supreme Court recently considered whether a landlord can increase the rent if the majority shareholder of a partnership dies and his or her shares are distributed equally among the remaining partners, none of whom holds a majority in the partnership. In the decision, the Supreme Court offered an insight into how to assess the change of control in a company that is not a corporation.
In the run up to the recent snap elections, Parliament passed a bill exempting rent agreements for residential leases from stamp duty. The stamp duty on non-residential leases – in particular, commercial and retail leases – remains unchanged. However, these leases are being re-evaluated due to recent case law from the tax authorities.
In 2015 Austria introduced an act which allows individuals, under certain conditions, to challenge laws before the Constitutional Court as unconstitutional. This gave hope to many landlords, which saw this as a tool to challenge the existing rent control regulations. The Constitutional Court recently handed down two new decisions on the same matter with surprising results.
The Act on Equal Opportunities for Persons with Disabilities recently entered into full force. The act prohibits, among other things, constructional barriers which prevent or impede disabled individuals from entering a building without help. While the act primarily addresses persons offering goods or services in such buildings, it also has implications for persons publicly offering real estate. In addition, the act has a significant impact on existing and new lease agreements.
While the Rent Act applies to both residential and commercial leases, there are some exceptions that give landlords greater flexibility with regard to their lease agreements. In particular, the act does not apply to buildings which house no more than two units. The Supreme Court recently considered whether a storage room and a separate building contained on the same property should be taken into account when applying this two-unit rule.
In an effort to alleviate the pressure on the real estate market, the Vienna City Council recently amended the Building Code. This amendment authorises the city, among other things, to conclude urban development contracts as a means of expediting private investment in real estate projects. Since the amendment entered into force, the city has concluded several contracts with real estate owners.
Tenants sometimes refuse to vacate a leased premise after the expiry of their contract in the hopes of extending their lease or getting the landlord to pay them off (instead of undertaking a cumbersome eviction process), or for other reasons. The Supreme Court recently demonstrated that such tactics are not without risk, as tenants may face direct damage claims by successors.
Agency agreements typically differ from other agreements with regard to the way in which agents share risk. As such, agents try to limit their risk by including clauses in agency agreements which entitle them to remuneration even if the principal refuses to conclude the agreement. The Supreme Court recently ruled on such a clause and upheld the principal's right to choose whether to conclude the envisaged agreement.
As part of its overall tax reform, the government recently proposed a new act to amend the taxes relating to real estate transactions. As the new act will significantly increase the tax on real estate transactions, in most cases it is advisable to effect share deals involving real property before the act enters into force on January 1 2016.
Under the Tenancy Act, if the shares in a company that rents property are sold, the landlord has the right to increase the rent to market level. Under previous case law, directors were liable only for rent payments that could not be recovered from the renting company directly. However, the Supreme Court recently ruled that a director was liable irrespective of the lessee's ability to pay the outstanding debts.
By law, the buyer of a property automatically enters into existing lease agreements on behalf of the seller. However, the Supreme Court recently rendered a judgment stating that this does not necessarily apply to all clauses contained in a lease agreement, thereby redefining the scope of this provision.
In a recent case involving a tenant who had affixed two mock cameras to the front of his property without obtaining the landlord's prior consent, the Supreme Court analysed the tenant's rights in this context. It ruled that, based on the direction and position of the cameras, an impartial observer would not have the impression of being monitored. Hence, the action was dismissed.
Parliament recently passed a bill to implement the EU Consumer Rights Directive (2011/83/EC). The act affects consumers' rights to withdraw from certain contracts concluded outside the trader's ordinary place of business and those concluded using distance communication. This update focuses on the effect of the act on real estate-related agreements.
Tenancy law stipulates certain formal criteria for fixed-term leases. In particular, agreements must be in writing and specify a definite end date. If these criteria are not met, the landlord cannot enforce the end date. Two Supreme Court decisions on these criteria underline that parties need to agree whether they want to provide for a renewal option or a non-binding declaration of intent before signing a lease agreement.
The Supreme Court recently allowed a direct claim by the first purchaser against the second purchaser in case of a double sale of a property. A direct claim against the second purchaser, such as in the case at hand, is particularly useful in a scenario where the seller is insolvent, as the property is not handed back to the seller and then passed on to the first purchaser, but rather transferred directly between the two buyers.