Buying a Property
Buying property in Vienna
First of all, we should mention that about 75% of the people living in Vienna are renting. Even for people in higher classes this is not uncommon and not at all something to be ashamed of. Austrian rental contracts follow tight tenant protection laws and affordable places can be found even in the most desired parts of the city. However, buying property can offer you security in the long term and bring along some other clear advantages as well, like permanence or it being an excellent investment. Bear in mind that once you’ve bought a house, you’ll want to stay put. Transaction costs of 10% or more are normal in Austria, so a quick turnaround will end up very costly. The housing market is also not targeted at people who want to make money from renting out their flats, since income taxes on rent hover around 50%. But with all-time low interest rates, buying property still remains a good choice, if you’re planning on staying awhile.
Buying property in Vienna when you’re a foreigner
Until recently, only Austrians were allowed to buy property in Austria, without a lot of special restrictions. Nowadays, it has gotten a lot easier for foreigners to buy something in Austria. Since 2006, you actually now have the same rights as any other Austrian, if you’re a EU citizen. However, if you’re not from the EU, things are not as simple…
You would need permission from the local authority in the district you want to live in and go through a time-consuming and stressful review by the Ausländergrundverkehrskommission – the Foreigners Trafficking in Property Commission – before you’re allowed to buy property in this district. You should bear in mind that this will take about 4-6 months. Make sure that you have decided on the district you want to live in, since you don’t want to go through this process in multiple districts if it isn’t absolutely necessary.
Where do you want to live?
When deciding on where you want to live, you should take into account that although it is possible to buy a secondary residence in most parts of Austria, it is not always allowed. For example in border regions, such as Burgenland and Voralberg, you would have to register with the local authorities and you can only buy a house if it will be your main residence.
If you want to live in Vienna, you can choose from 23 districts described HERE.
Real estate agent or private?
Now, you will have to decide on whether or not you want to work with a real estate agent. Within Vienna, most properties are sold with the help of a real estate agent, but there is a private market as well. Making use of a real estate agent has clear advantages, such as an elaborate knowledge of the properties on the market and their true value, saving time, help with the paperwork, information about what is allowed in the environment and what not… but beware, it comes with an extra fee of 3-4% of the property cost. This fee usually gets charged to the buyer, but it can be split between buyer and seller as well. If you sign with a real estate agent to get all of the advantages, make sure you pick a trustworthy one. They have proven valuable in negotiating you the best deals, however, it has happened before that real estate agents make deals with Austrian owners to sell an overpriced house to an ignorant foreigner.
If you want to look on your own, you should follow the same steps as described HERE.
Arranging your finances
It is possible for foreigners to get a mortgage in Austria. However, you need to be able to pay 30% of the property by yourself, before they give you a loan and closing costs are 1.2% of the total loan amount. Make sure that you get your offer in writing, because bankers can change the terms of your loan almost whenever they feel like it. The laws are full of loopholes, they might change the conditions on a whim. Since you don’t want your offer to fall through when you have finally found your dream house, it might be a good idea to have two separate offers from different financial institutions.
What are the additional fees when buying property?
- 3.5% real estate transfer tax
- 3% fee for the contract installers excl. VAT
- 0.8% fee for credit bank loans in a single order or contract term 1-5 years, and the remainder 1.5%
- 1.2% lien registration fee
- 1% registration fee (land)
- Certification costs and disbursements (individual)
- Pro rata cost of the value opinion (when procuring of residential property)
– generally this all amounts to 10-11% of the property price
Before you sign…
Pay attention to:
- The title of the property: if this is not taken care of properly, you might, for example, buy a house together with the debts of the previous owner. An independent lawyer or notary will warn you before you sign, if there’s a risk connected to the property.
- Hidden structural flaws: be aware that renovations can be very, very expensive
- To avoid nasty surprises after buying, it can be a good idea to take an architect or builder with you, while visiting the property you really like.
- Local rules about reconstruction: if you buy a protected historical house, for example, you cannot make any changes that affect the outside of the building.
- Furniture arrangements: Austrian houses and flats are generally sold empty. If you want to keep some of the furniture, you will have to make a deal.
- Price negotiation: Austrian purchase prices are usually open for negotiation, which often makes an offer that is 5-10% lower than the asking price acceptable.
Closing the deal
If your offer is accepted, you have to visit a renowned notary, who should protect both sides in the transaction. The first talk will last about two hours and then he will make up a contract in a week. They will give you two to three days to read through the contract and finally sign. It might be a good idea to ask a lawyer to check the contract for any pitfalls, if your feeling for the German language is not fully developed yet or if you don’t know anything about Austrian laws and/or real estate.