Housing policy in Austria is in the authority of the Federal State (Civil Law, i.e. Rent Law, Condominium Law, Limited Profit Housing Law etc.; tax collection) and the „Länder“ (housing subsidy scheme, regional planning, building regulations etc.). Housing markets are strongly influenced by policy action. The following pillars of market intervention may be identified:

 

Unitary rental housing markets

 

Housing theory distinguishes between housing policy regimes with dual rental markets and with integrated or unitary rental markets. In the former, social housing is focused on vulnerable households, social rents are very low, the sector is small and tends to derogate to ghettos. In the latter, social housing is focused both on lower and middle income groups, is – as the case in Austria – not called social housing but “subsidized housing”, has rents below the market level but not very low and hence competes with the private rental sector. It contributes to an integrative development of the housing sector. There are ongoing debates, which of the two models has lower costs for the state, including all follow-up costs. Altogether, the Austrian housing policy system causes public expenditure of approx. 0.9% of GDP, which is below the level of most EU15 countries. Market power and market volume of the “subsidized housing” sector influences the price level of the private market considerably. It was mainly responsible for having no house price boom in Austria before 2008 and no house price crash thereafter.

 

Limited Profit Housing Associations (LPHA)

 

LPHA in Austria comprise altogether 190 housing co-operatives, private-limited and public-limited companies with a total housing stock (rental dwellings and owner-occupied apartments) of 865,000 units, which represents 23% of the total housing stock.

 

All Limited Profit Housing Associations together have a stable housing output of 14,000 to 16,000 units per year. This is more than half of all multi-apartment housing construction in Austria. With this very high market share, LPHA have not only outperformed municipal housing, but also private multi-apartment housing construction.

 

The LPH sector offers affordable apartments to a big groups of population. Despite of a low yield of 3-4%, many LPHA have become financially strong. This results in good financial ratings and strong positions regarding financing of affordable housing. With their considerable output they contribute to a stabilisation of the construction and construction product industry. Housing subsidies lever innovation in building concepts, e.g. ambitious energy standards. Therefore, they not only contribute to climate targets with their own stock, but have become role model for other housing sectors. In some provinces, emphasis is taken on high architectural standards. Plenty of examples prove a significant contribution of LPHA projects to the built environment. Both with quality and costs, the LPHA sector influences the private housing market, as both sectors compete for quite some demand groups.

 

Housing allowances

 

Demand side allowances are a supplement to supply side subsidies (“subsidies for bricks and mortar”). The public spends some € 400m per year on this (2010). Formerly, housing allowances only were targeted to dwellings, which were constructed with subsidies. This was necessary because of a subsidy scheme that allowed for moderate, but not for very low rents. Lowest income groups should be empowered to afford decent dwellings even though. Over the previous decade, most “Länder” (exception Lower Austria) have introduced allowance schemes also for the commercial rental housing sectors. This was necessary, because the private markets decreasingly offered affordable dwellings, resulting from advanced refurbishment activities.

 

Rent regulatons

 

Austria has highly regulated rental markets. Still, the State trusts not only in regulatory measures, but also applies price influencing mechanisms with subsidized new construction. There are quite low rent levels in place for private dwellings in the old housing stock (mainly the big “Gründerzeit” stock from the late 19th century in Vienna), mainly those with rent contracts dating back to before 1994. “Kategorie” rents are as low as 3,25 €/m² (excluding maintenance costs and VAT). For rent contracts in the old housing stock concluded after 1994, the “Richtwert” scheme applies. This is a complicated scheme that tries to combine rent regulation with market information.

 

Rents in buildings erected after World War II or in attic zones of old buildings are regulated more liberal (“angemessen”) or are un-regulated (if no subsidies have been utilized). Rents of single family homes have been taking out of rent regulations a few years ago.