So You’d Like to Buy a House in Austria
As a foreigner it’s much easier than it used to be, but complications mean you’re owning long-term
With interest rates at all-time lows (around 3%), buying property becomes awfully tempting, even for foreigners. In many cases with the cost of one’s rent, one could carry the loan necessary to own the property. For under €1000 you can make the payments on a €170,000 loan.
But beware before you sign: once you buy, you’ll want to stay put. Transaction costs for buying and selling are usually 10% and more in Austria, so once you own your own digs, there’s no easy relocating from Bundesland to Bundesland. And you’ve pretty much married Austria. It’s always possible to get a divorce, but it will cost you.
The good news, though, is that buying property as a foreigner is a lot easier than it used to be. Until quite recently, only Austrians were allowed to own property in Austria without a lot of special permissions.
However, EU legislation 2006 now requires member states to give one another’s nationals equal rights. Woe betide EU outsiders though. You’ll need special permission from the District where you’d like to settle before you can purchase property. You will have to go through a time-consuming review by a fearsome body call the Ausländergrundverkehrskommission – the Foreigners Trafficking in Property Commission, which will usually add four to six months to the duration of the transaction.
In most of Austria you can purchase property for a secondary residence. In border zones like Burgenland and Vorarlberg, however, this is not the case. You need to register with the local authorities and the property must be your principal residence. This is to avoid an influx of cross-border residents who are not paying their share of the municipal services. Secondary residences are exempt from most municipal taxes.
Thus, the first step in buying property in Austria is to decide where you want to buy, as many of the regulations depend on that decision. You don’t want to have to go before the Grundverkehrskommission in more than one district if you can help it.
Once you’ve chosen your location, you need to decide on whether to buy privately or through a real estate agent. The real estate agent’s fee is 3% in Austria to the buyer (although sometimes the fee is split with the seller as well). Many homes and flats are also sold privately.
The next step is to arrange financing. There’s nothing worse than finding the house of your dreams and losing out as your financing can’t be pulled together quickly enough. Austrian banks will finance up to about 70% of purchase price for foreigners; for Austrians it goes up to 90% under some conditions, so there is still discrimination on the financing level.
But here again, be careful; Austrian bankers, as in many other countries, can fall far short of full disclosure. They will blithely promise you financing, and then cancel it later as your deals should close for reasons you are hearing about for the first time. Or the bankers might change the conditions at the last minute (additional 2% interest rates, 50% financing instead of 75% financing).
The lending rules are full of loopholes which allow them to change the conditions of your loan on a whim.
So make sure you have your financing offer in writing. The bankers will resist this as they prefer to make their offer contingent on the property to be acquired. Due to the vagaries of the loan process, it is even prudent to have two offers from different financial institutions. If the first one starts to waver, you can always go to your alternative or if you have the nerve for it, even play them off against one another.
If you are buying on your own, you should check derstandard.at and willhaben.at for private announcements. Be aware 90% of all ads will be from real estate agents, even if the same property is also available privately. Even if you want to buy privately in the end, you should also review the real estate agents offers to get a feel for the market in your targeted zone. Vienna is very expensive, by Austrian standards, about three times more expensive than anywhere in the countryside and most towns and cities.
Once you have a feel for your market, you should also put your boots on the ground and do a street by street search. You will often see houses or flats with a simple scrawled For Sale sign with a telephone number. These are private sales.
You can also visit the local pubs and restaurants and the town council (Gemeinde) and inquire if anyone is selling property locally. If the people there like the look of you or you come recommended, they will be remarkably forthcoming, and you can sometimes find out about properties coming up for sale before the first real estate agent does.
That said, a good estate agent can save you a lot of time as he or she will be out patrolling the local territory and should be plugged into everything that’s available and coming up. The agent should know how long the properties have been on the market and whether they’ve attracted other offers up.
If you are a very busy person or you have limited knowledge of German, it is highly recommended to find a good agent and stick with her. Here again, be careful though. Some collude with the sellers to pass a dud deal off on an unwitting foreigner.
The biggest kinds of dangers you have to worry about are hidden structural flaws or local rules about reconstruction and zoning. If you fall on the wrong side of the Austrian regulations, the fines are enormous and the system is not lenient. If you buy a protected historical house, basically you can forget about that airy renovation or new larger windows. You are stuck with a damp and dark, albeit historically authentic grotto.
Which brings up the next "gotcha" in the Austrian housing market. Renovations in this country are very, very expensive, largely due to the high price of manual labor. You can buy a house for €100,000 to €150,000 and find that the renovations to bring it up to modern heating and insulation standards will cost more than the property itself. On top of that you have to live through a year or two of renovation. Renovation costs and hassle make those already renovated €250,000 and €300,000 houses look much more attractive than at first glance. Someone else has probably already spent €150,000 to €250,000 which you are recouping at about 50¢ on the Euro.
On the plus side, however, the quality of construction is generally very high and Austrian builders are at the forefront of ecologically sound housing technology (the famous Passivhaus concept in both pure and hybrid forms). By doing your own renovation, you can get exactly what you want, and you will have the latest and greatest in terms of insulation and heating technology, both of which have improved enormously over the last ten years.
Given the high costs and risks of renovation, you would do well to find a builder or an architect before you purchase. Find that person based on personal recommendation of past clients (not a friend’s brother or cousin). Check out past projects carefully. Any good builder or architect will have a portfolio ready and be delighted to show it off. You should bring your inspector to see whatever properties you are thinking seriously of buying. It is much better to know what you are getting yourself into before you buy.
Now that you’ve found a property that you like, and you’ve had it inspected by your builder, you are ready to make an offer. Austrian property prices are negotiable. Most properties seem to be listed at 5 or 10% above what the owner realistically will accept. Overpriced properties stay on the market a long time. In your negotiations, you should be very careful to make an inventory of what you would like to stay in the house. Otherwise, the legal sale condition of a house in Austria is empty. You don’t want to come back and find all the beautiful fixtures gone.
While you should be thorough, be prepared to do all of the above relatively quickly. Good deals won’t last. So be organized ahead of time with whatever team of bankers, builders and estate agent you want on your side.
If you offer is accepted, it will be time to visit the notary. In a straight-forward purchase you don’t usually need a lawyer and having one will add another 2 to 3 % to the price.
What you need is a reputable notary who will make sure that both sides are protected in the transaction. The initial notary interview will take about two hours, after which the notary will prepare the contract in about a week – faster upon request.
You will have between two and three days to read over the contract. If your German is shaky or if you have a limited knowledge of real estate and/or Austrian law, now is the time to grab a lawyer acquaintance and have him or her go over the contract for any danger points. This should only cost a few hundred euros, as you will only get advice, rather than phone calls. Any legwork you will have to do yourself.
Be very careful with title: Any debts which the previous owner had may be registered for a fee against his/her property, usually in line right after the bank. If these checks are not made carefully, you may become owner of both the property and the debts, particularly if the previous owner is no longer solvent. An independent notary or lawyer will warn about these potential issues before you sign.
Still, even with all this, most international buyers find property in Austria worth the effort. Prices here are generally lower than in neighboring Switzerland or Bavaria, and currently even in the Slovak capital of Bratislava. And the sheer beauty of the country side in one of Europe’s most successful and most shock-cushioned social market economies ensures that the community you buy in is likely to still be there into the next generation.