In practice, the question often arises as to whether a rental property is covered by the Tenancy Act (MRG), which provisions of the Tenancy Act apply to the specific rental property and, as a result, what rent can be required. In addition to the Tenancy Act, the Tenancy Act (Midterm Tenancy Act) and the Housing Act (WGG), which set special upper rent limits, may also apply.
The scope of the Tenancy Act includes the letting of flats, individual parts of the flat and business premises (such as magazines, workshops, workspaces, offices) of any kind. As a starting point, MRG only covers the room rent, which therefore requires a structural delimitation of what is rented. Lease agreements for built-up non-delimited premises or undeveloped areas are therefore not subject to MRG (although it could be agreed). For the basic applicability of the MRG, an oral or written lease agreement is also required for premises for residential or commercial purposes. MRG also applies to the leased areas, such as gardens, parking, loading or storage areas, provided there is a uniform item of inventory.
danger: Rented things in a building with no more than two independent apartments or business premises are not subject to the MRG, but always to the general provisions of the ABGB. Even if a building has two apartments or commercial premises, and rooms have subsequently been created by converting the attic, the MRG does not apply.
Certain companies (housing, garage, transport, airport, freight forwarding or storage companies) and housing, socially educationally supported housing, company flats, half-year contracts and holiday flats are also exempt from the Tenancy Act.
Scope of MRI
If a rental property is covered by MRG, a distinction must also be made as to whether MRG is fully applicable (full scope) or only partially (partial scope).
MRG’s sub-use area is essentially based on the year of construction of the building in the case of residential properties and privately financed construction, as well as the type and construction (loft conversion or extension). Within the sub-area of the MRG, essentially only the provisions on protection against dismissal, limitation and termination of the tenancy agreement, right to retire in the event of death and the rules on the increase of certain minor rents apply. According to the OGH’s jurisprudence, the MRG’s rules regarding subletting and contract assignment also apply in the partial scope of application.
The full scope of the MRG only applies to old buildings (buildings approved before 1 July 1953 or rented flats in buildings approved before 9 May 1945) and subsidized new buildings with more than 2 rental properties. The question of whether a leased property is covered by the full scope of application or the partial scope of application is particularly relevant because the provisions on lease formation only apply in the full scope of application (see below).
MRG lists three different types of rent calculation:
- The reasonable principal rent
- Benchmark the rent and
- Category D rental
Apart from a few other exceptions, an appropriate head rent can only be agreed for rental properties in the sub-application area. Here, an appropriate amount can be requested at the time of entering into the rental agreement based on size, type, condition, location, equipment and condition.
In MRG’s full scope of application, the rent must be calculated according to the indicative rent. The main rent is calculated based on the equipment category of the rented apartment (A, B or C), taking into account any allowances and deductions and especially the so-called location allowance. Overall, MRG standardizes four different categories of apartments, although most of the rented apartments today are in equipment category A (usable condition, minimum size of 30m2at least one room, kitchen/kitchenette, anteroom, toilet and modern bathroom facilities as well as central or underfloor heating).
practical tip: The location supplement is added to the reference rent. However, a location supplement can only be granted for apartments that are particularly well located in relation to other apartments in the district or neighboring neighbourhoods. The tenant must be expressly informed of the conditions relevant to the location supplement at the latest when the tenancy agreement is entered into. It is advisable to note the location supplement in writing in the rental agreement and to formulate the above-average location precisely. With regard to the localization supplement, it must be noted, however, that the Supreme Court’s practice is incoherent, and a new result may come in each individual case.
time-limited deduction: Time-limited deduction is a reduction of 25% in the statutory rent for time-limited tenancies, which are generally covered by the full scope. On the other hand, the annual deduction regulation does not apply to tenancies that are not covered by the MRG or the partial scope of application of the MRG or other provisions (e.g. WGG).
Example of a family home: Since January 1, 2002, tenancies in one- and two-family houses are not subject to the MRG, but to the general provisions of the ABGB. Therefore, the rental agreement should regulate all important points (rent, duration, termination provisions, etc.). In the ABGB, there are no rules on maximum rental amount or on operating costs, which is why the operating costs in the rental agreement, as well as an index adjustment, must be regulated. A fixed-term lease is valid for the entire fixed term, without termination modalities neither the tenant nor the landlord can terminate early (an earlier termination would only be possible by mutual agreement). A permanent rental agreement, on the other hand, has no legal protection against termination without corresponding provisions, so that the rental agreement can be terminated at any time with one month’s notice.
Apartment shared apartment: For an apartment according to WGG (these are increasingly rented out by private individuals), the principle of cost-covering remuneration for the cooperative applies. The rent must be neither higher nor lower than what is necessary to cover the capital costs of the building, the ongoing administration costs and reserve formation, including a lump sum for the administration. Since the WGG amendment 2019, the full applicability of the MRG and the respective guide rent without additions and deductions applies for subsidized residential property 15 years after the sale to a tenant/authorised user, even if the temporary deduction is already in effect.