The end of the AirBnB business model in Vienna?
Austria's vibrant capital, known for its cultural diversity and historical significance, is about to undergo a significant change in the real estate world. Vienna's building regulations have undergone an overhaul that will come into force on July 1, 2024 and is particularly important for commercial landlords. This change aims to significantly transform the landscape of short-term rentals, especially models such as AirBnB.
The answer to the question in the title is therefore "YES": for commercial landlords such as apartment building owners, foundations and larger family estates, the model of renting out all or the majority of a building in the short term is therefore probably obsolete. Private landlords (of individual apartments) will have to apply for a permit in future, but this will be approved if the following conditions are met:
Restrictions for short-term rentals
The new regulation stipulates that the permissibility of short-term rentals - a practice made popular by platforms such as AirBnB - is now subject to stricter conditions. From July 2024, such rentals outside of residential zones will only be possible with an exceptional permit. This permit will be issued under the following conditions
Location of the dwelling: The dwelling in question must not be located in a residential zone or in areas such as "grassland - recreation area - allotment garden area" or on land temporarily used for allotment gardening.
Financing: No housing subsidies may have been used for the construction of the apartment.
Residential use in the building: The majority of the apartments in the building in question must continue to be used for residential purposes.
Commercial use limit: No more than 50% of the building's usage units may be used for commercial purposes for short-term accommodation.
In addition to the public law permit, it is important to note that the permissibility of short-term rentals also depends on private law requirements, such as the condominium agreement or the rental agreement.
Impacts and adaptation strategies
This change poses a significant challenge for commercial landlords. Many have relied on the AirBnB model to maximize their income or have specialized in this segment as property developers. It is now time to adapt business strategies and develop alternative use concepts for real estate. Possible adaptation strategies could be ...
to only search for individual apartments or floors of apartments and put them together in a portfolio so as not to exceed the above-mentioned hurdles.
to switch to renting larger premium/luxury apartments, because many high-income earners cannot afford to own, but can afford to rent, and where the rent cap of the Rent Act does not apply (currently and probably also in the future), and therefore good returns can be achieved
Alternatively, invest in financial investments such as high-yield bonds or equity funds, which yield higher returns than Viennese real estate
Conclusion
The amendment to Vienna's building regulations is a clear sign that the city administration is taking the long-term quality of housing and the protection of residential zones seriously. Commercial developers and landlords of affected properties must now adapt to changing market conditions and proactively look for alternative solutions as outlined above.
This article provides an overview of the upcoming changes to the Vienna Building Code and their impact on the short-term rental business model. It is recommended that you seek further information and professional and legal advice to make the best possible decisions for your real estate investments.
