Changes in brokerage fees to be expected

Aim

The Austrian Brokers Act (Maklergesetz) is about to undergo an important change. The aim is that the broker’s commission is to be paid by the person who arranged for the real estate agent’s service. For residential lease agreements this entails that only if the apartment seeker themselves place the initial order with the broker they are obligated to pay the broker’s commission.

What’s new?

The Brokers Act is to be amended. A draft bill is currently before parliament. With it, the government wants to introduce the so-called “first client principle”. This means that anyone who commissions the real estate broker in the context of a residential lease agreement has to pay for the service. In practice, this entails that in the majority of cases it is no longer the tenant but the landlord who has to pay the commission. This law only applies to rental contracts for residential premises (this includes both apartments and houses).

Which constellations will remain unchanged?

The sale of apartments and houses is not covered by the current draft law, and commercial real estate and commercial leasing are also excluded from the “first client principle”. Even in cases in which an employer concludes an apartment lease agreement as a tenant in order to make it available to the employees as a dwelling, nothing changes. The amendment to the Brokers Act also does not change the previous cap on the amount of commission; this will continue to be regulated in the Real Estate Brokers Ordinance.

What happens if the first client principle is not observed?

The real estate agent has to record every brokerage agreement on the brokerage of an apartment rental agreement, including the date, in writing or on a permanent data medium. In any case, an agreement becomes invalid if it requires the tenant to provide any other service to the landlord or real estate agent. A service to the former tenant or other third parties is also invalid. A fine of up to 1,500 or 3,600 euros may be imposed if the law is not observed.

Impacts on businesses

Due to the change in legal situation, it can be assumed that landlords will in some cases refrain from commissioning a real estate agent when brokering residential leases. Both private and commercial landlords will tend to incur higher expenses in the case of self-brokerage, but also in the case of brokerage by a real estate agent.

What’s next?

The draft law’s reviewing process began on March 23rd, 2022. After a usually six-week-long period, the law will be passed in this or an amended form in the National Council. Six months after the day of the announcement in the Federal Law Gazette, the law enters into force and is then applicable to contracts and acts that are concluded or set after the entry into force. This should be the case by January 1st, 2023, at the latest.

If you have any further questions on this topic, please do not hesitate to contact our experts Daniela Huemer and Elisabeth Glawitsch from the Real Estate Law Team by telephone or at akut@hnp.at.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.

 

25. March 2022

 

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