When you buy a house in Austria you’ll have to sign dozens of documents in complex legal jargon (and in German). What may not be clear to you is that the house being offered is often located on leased property. This means that you’ll purchase the house, but not the plot of land it sits on. And it’s the plot of land that increases in value over time, not the house!
The legal and financial disadvantages are obvious: you have to pay rent to the owner of the property, which can increase every year due to inflation. Moreover, legally you are obliged to pay a real estate transfer tax. This amounts to 3.5 percent of 18 times the annual building lease interest. In addition, you will also be charged an entry fee in the land register of 1.1 percent of 18 times the annual building lease interest. Although the house can be sold, given away, or bequeathed to someone else, the contract is passed to the subsequent leaseholder. Early termination is possible only by the mutual agreement of both parties. However, if the interest is not paid for at least two consecutive years, the property owner has the option of terminating the contract with the leaseholder.
For this reason, before purchasing a house including a plot of land, always contact an experienced lawyer who can walk you through the fine print of your next home purchase.
