Buying property in Austria

6th November 2017, by Jessica Delaney

Swanky chalets in fashionable Kitzbühel

Swanky chalets in fashionable Kitzbühel

For keen skiers with some cash in the bank, buying a property in a ski resort is a powerfully attractive idea. And in Austria, at least, it isn’t just a matter of fun for the family – with an average of 4% growth in property values over the last decade, it makes sound financial sense. And Austrian resorts enjoy very good summer business, which isn’t the case in all French resorts.

But what’s involved? What are the pitfalls? Jessica Delaney of specialist agents Alpine Marketing guides us through the maze.

Who can buy?

If you are an EU citizen, you can buy a holiday property in any of Austria’s nine provinces, and the process is very straightforward. If you are not, you may have a problem: in the key provinces of Tirol, Salzburgerland and Vorarlberg, where most of the ski resorts are found, you’ll be able to buy only a special type of property called a ‘second home’ property – and they’re really hard to find.

Can I use a company to buy?

Yes – there are no restrictions if buying in the name of an EU company. This is a particularly good option if there are more than two of you involved – you can’t have more than two individual names on the purchase deeds in Austria. Another advantage is that ownership can be transferred tax-free (to children or grandchildren, for example) by a transfer of shares.

The set-up costs for an EU company start from around €2,000. You will also be required to pay a yearly maintenance fee of around €1,000 and to attend to formalities such as holding an annual general meeting.

What is the purchase process?

It’s very straightforward. The notary, who is a semi-public official, will act on behalf of both the purchaser and the vendor, and has a duty to protect the interests of both parties. The notary will draw up all the documents required to transfer the legal ownership. 

The deed of sale must be signed in the presence of the notary by both the vendor and you – but if you don’t want to attend, you can sign a power of attorney authorising one of the secretaries working in the notary’s office to sign the deed on your behalf.

What are the purchase costs?

There are various costs – tax, registration of ownership, notary’s fees etc – which work out at about 6.6% of the gross purchase price.

Can I buy with a mortgage?

Yes – it is possible to borrow up to 60% of the purchase price from an Austrian bank. Variable interest rates are currently around 2%, and it is also possible to take fixed-rate mortgages for up to 20 years.

Banks are happy to lend as long as you are buying a property in order to let it for holiday use through a tour operator. In this case your property would be classified like a small business, and the income you earn from your rentals may be used to cover the loan.

What will a mortgage cost?

Banks will charge a set-up fee, and this is usually around 2% of the value of the loan. They will also charge an appraisal fee of 0.5% and you will need to pay the notary a fee of 1.5% of the amount of the mortgage to register the mortgage lender in the land registry. So in all, about 4% of the loan amount.

How do I pay if I buy property that isn’t yet built?

New-build properties bought ‘off-plan’ are paid for in stages; all payments are made through the notary, who acts as trustee and releases cash to the developer as an independent surveyor signs off each stage. Alpine weather limits building to the summer months, which focuses the minds of developers and builders very effectively – so normally properties are built in a single summer season.

Are there construction guarantees?

Yes – all new-build Austrian property is covered by a 30-year building guarantee against all building defects, and developers will usually guarantee building fixtures for two years.

Can I specify how a new-build property is fitted out?

Yes – most chalets and apartments bought through Alpine Marketing are either built to order or already constructed and remain ‘unfitted’, so you can choose from an extensive range of bathroom fittings, flooring and wall tiles etc. Many properties also have the furniture included in the price, so your property is completely ready to occupy when it is handed over.

Do I have to let my property?

You are likely to be obliged to make your holiday home available for rental when you are not using it. Tourism is very important to Austria, accounting for over 15% of its GDP, and it is important for the infrastructure of the villages to have a good flow of tourists. Of course, you get the benefit of rental income, and you may get tax advantages.

How much rental income can I expect?

Austrian gross rental yields tend to vary between 4% and 6% – higher than in Switzerland and France. Of course, there are also running costs to deduct from this income.

What are the running costs likely to be?

As well as your utility bills, you have to meet the cost of snow clearance, rubbish removal, water rates, building insurance, local property taxes, cleaning and lighting for any communal areas, and maintenance of the gardens etc.

The expenses of a development of chalets or an apartment building are usually divided up proportionately between the owners, according to the size of their properties. As a rough guide, the basic running costs for a property (including the costs of energy consumed by visitors but not by you) usually work out around €3–€5 per m2 per month.

If you buy a property with extensive leisure facilities such as swimming pools and spas then these costs could increase to around €7–€11 per m2 per month.

Are there tax breaks for letting my property?

Purchasing a new-build property can have tax advantages – it is possible to reclaim part or all of the VAT on your purchase, giving a discount of up to 20%. To be eligible for this VAT discount you would be expected to let your property through professional agents when you are not using it – and you will need to show an overall profit over a period of 20 years.

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