While many countries struggle to contain housing costs, Austria is setting an example of how governments can step in to make living affordable again. The new coalition of the conservative ÖVP, the center-left SPÖ, and the liberal NEOS has agreed on a set of landmark housing reforms. These include a rent freeze in 2025 for most regulated rentals—such as older apartments and social housing—stronger tenant protections, and, for the first time, limits on increases in unregulated rents.
25% in Two Years: Why Austria Needed Urgent Rent Reform
Between 2021 and 2023, rents in Austria increased up to 25%. Automatic inflation-based adjustments hit tenants hard, especially those in older apartments or social housing. The result: a growing number of people struggling to keep a roof over their heads.
The SPÖ had long called for a legal rent freeze. With public pressure mounting, the new government coalition responded. Their housing plan halts rent increases for over a million homes in 2025 and caps them in the years that follow—1% in 2026, and 2% in 2027.
Who Benefits from the Rent Freeze?
The new rent regulations apply to a broad segment of Austria’s population:
- 516,000 older apartments with category or reference rents
- Around 697,000 cooperative apartments exist in Austria, about half of which are fully paid off—and thus covered by the rent freeze.
- 220,000 municipal housing units in Vienna (which already froze rents until 2025)
Altogether, more than a million households are protected. Without intervention, average rents would have gone up by 3.16% this April alone—costing tenants an estimated €138 million.
A First in Austria: Rent Limits for the Free Market
What makes this reform even more notable is the government’s decision to extend protections to unregulated rentals for the first time in history. These include new buildings, single-family homes, and employee housing—segments that have typically been excluded from rent controls.
Starting in 2025, landlords may raise rents by only half of the inflation rate that exceeds 3%. For instance, if inflation is at 6%, they may raise rents by only 4.5%. Beginning in 2028, this rule will apply across the board.
This is a pioneering move—balancing inflation realities with the need for housing stability.
Longer Lease Terms Bring Stability to Tenants
In Austria, rental contracts can currently be limited to just three years. This leaves tenants in a state of uncertainty, with no guarantee of being able to stay in their home. The new housing package extends the minimum lease term to five years, giving people more security and time to plan their lives.
This change is especially important in urban areas, where housing pressure is highest and short-term leases are common.
Social Housing Funds Must Go Back to Housing
One of the most overlooked, yet powerful elements of the reform is the reallocation of Austria’s housing subsidies. Until now, states had discretion over how to use nearly €3 billion in federal housing funds each year—often diverting the money to infrastructure or public spaces instead of actual housing.
From now on, these funds must be used strictly for building affordable housing. A long-standing demand of the SPÖ and housing activists is finally becoming law.
