Coalition agrees: From July 2023, the client pays the broker

Until now, tenants have always had to pay the broker, even if the landlord has used him. In the future, the “Bestellerprinzip” will apply.

The Austrian People’s Party (ÖVP) and the Green Party have now agreed on the reform of brokerage fees after all: From July 1, 2023, the Bestellerprinzip will apply to apartment rentals, Justice Minister Alma Zadić (Greens) and Youth State Secretary Claudia Plakolm (ÖVP) announced on Sunday. This means that only those who commission a real estate agent will have to pay him. For tenants that means in sum annually more than 55 million euro relief with conclusions of a contract.

So far always tenants must pay broker fees – at a value of up to two gross monthly rents -, even if the landlord consulted a broker. The government bill to amend the Real Estate Agents Act will be adopted next Wednesday in the Council of Ministers, Zadić and Plakolm announced in a joint press release.

Zadić: “Decades of injustice”

“We are thus clearing up an injustice that has lasted for decades. As everywhere else, the same now applies to renting: Whoever orders, also pays. With this, we relieve all apartment seekers who would have previously paid high broker commissions,” said a pleased Zadić, who had already presented the first draft in 2021.

Plakolm also expressed himself now “glad that we have come to an agreement here”. For young people, he said, the switch to the Bestellerprinzip was a great step. They would save almost a third of the start-up costs for their own apartment.

At the same time, things had recently come to a head: Zadić and Plakolm did present an agreement in March 2022. But then – as the Greens complained at the end of November – the ÖVP objected to the provision that is intended to prevent the abolished brokerage commission from being reintroduced through the back door.

“Comprehensive and strict anti-circumvention protection”

The bill now agreed upon provides for “comprehensive and strict protection against circumvention”, according to the press release. Double cashing in and the concealment of contractual relationships will be prevented, among other things by means of prescribed transparent documentation. Tenants will not be required to make payments other than the broker’s commission when concluding a contract. Violations will be subject to administrative penalties.

Of course, the original target date of January 1, 2023 can no longer be achieved, as the amendment still has to be approved by Parliament. But now no more obstacles would stand against an entry into force with 1 July 2023, it said in the common dispatch.

Almost four million main residence apartments

According to the study, there are almost four million main residential apartments in Austria, of which around one fifth are private main rental apartments. About half of these are rented on a temporary basis. Each year, about 82,000 fixed-term leases (averaging four and a half years) and 35,000 open-ended leases are signed. Of the tenants with a fixed-term contract, one in three currently does not receive an extension – and thus has to make an expensive change of residence.

From a fixed term of over three years, brokers can demand the highest possible commission for this. Thus by the conversion to the orderer principle annually in sum a financial discharge of 55 million euro would result.

Criticism from real estate economy and chamber of economics

Criticism came from the Austrian federation of the real estate economy (ÖVI). Approximately the bill is not yet at all present. “A political foul of the special class is that the industry concerned was not merged for one year at all more into deliberations”, ÖVI president Georg Flödl in a dispatch was indignant. Also the “polemic argumentation of the alleged unfairness” is more than surprising. Because already so far a commission payment was to be paid only if there was an assignment and fee agreement. The tenant would soon not have to pay for services he received. “This understanding of fairness is not comprehensible, at the end of the day tenant and landlord will lose equally,” said Flödl.

ÖVI and the Austrian Federal Economic Chamber (WKÖ) warned of far-reaching negative consequences for landlords, tenants and the real estate market in general. “There the government parties made the future tenants and tenants no beautiful Christmas present at all”, so Gerald Gollenz, Obmann of the WKÖ professional association of the real estate and fortune trustees in a dispatch. After the entry into force of the law it will come on the market to unpleasant and unexpected changes, so professional association deputy Michael Pisecky: “The orderer principle will change the market, but unfortunately not to the positive. It is actually irresponsible that one runs from political side seeing eye into this problem, since we know from Germany, how the market developed thereby to the worse.” The market becomes “more unclear, the offer smaller and living becomes also not cheaper by the orderer principle for tenants”. Because the decisive and most important factors are the current housing costs, Gollenz said.

Source: Standard.at, 18.12.2022

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