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Property in Austria: Can I still buy a holiday home in Salzburg?

The state of Salzburg is tightening property buying rules for second homes. What does this mean for people wanting to buy a holiday home in the Austrian province?

Property in Austria: Can I still buy a holiday home in Salzburg?
Salzburg is a popular location in Austria for second homes. But stricter laws will make it impossible in some areas. (Photo by Detlef Bukowski / Pexels)

Salzburg is a hotspot in Austria for holiday homes, with both Austrians and foreigners eager to invest in “concrete gold” in the province.

However, after a recent change to planning laws, buying a second home in the province of Salzburg just became more difficult, if not impossible. 

Here’s what you need to know.

FOR MEMBERS: Is now a good time to buy property in Austria?

What are the rules in Salzburg?

After years of high interest in property in Salzburgerland (especially in the winter tourism areas) followed by rising prices, the state government has decided to tighten the law. 

This means when someone buys a house, apartment or building land in certain districts in Salzburg they have to prove that it will be their main residence (Hauptwohnsitz). 

For a developed property, the deadline to register a main residence with the local authority is one year after the purchase date. In the case of a renovation, the registration has to take place within five years of buying the property, or seven years for an undeveloped plot of land.

Additionally, if buying agricultural land, the buyer must be a farmer and a management concept has to be submitted, with 75 percent of the area managed by the farm itself.

If these requirements are not met by the deadlines, there is a risk of foreclosure and the property or land being sold at auction. The money from the sale will go to the owner, but auctions will start at 90 percent of the estimated value.

READ ALSO: Property buying rules for foreigners in Tyrol and Vorarlberg

Basically, this means that if someone buys property in Salzburg but doesn’t intend to live there on a permanent basis, they could lose it in the future.

The new laws will come into effect in 2023.

The purchase of second homes (Nebenwohnsitz or Zweitwohnsitz) or holiday homes in Salzburg will only be permitted in designated zones.

Why was the law changed?

In March, the state audit office published a damning report on the property market in Pinzgau, Salzburg.

The report followed an investigation by the Social Democratic Party of Austria (SPÖ), which found most apartment buildings, chalets and second homes in the Pinzgau district were sold to foreigners.

In many cases, agricultural or forest land was bought to build the homes, which is in breach of laws that say the planning board must check if a buyer is a farmer.

READ NEXT: Where to find property in Austria for under €100k

The auditors found that “the rule of law was largely disregarded” and that sales of land and property were not properly documented, reports Der Standard.

In July, the Constitutional Court (VfGH) then overturned part of the Salzburg Spatial Planning Act. The law had enabled the approval of around 3,000 second homes throughout Salzburg, which was found to be in breach of the principle of equality in the province.

The Austrian city of Salzburg. Photo by Dimitry Anikin on Unsplash

Second-home rules will depend on the region in Austria. (Photo by Dimitry Anikin on Unsplash)

Also, there will now be just one statewide Land Transfer Commission (Grundverkehrskommission) responsible for planning in Salzburg. Previously, there had been separate commissions for each district.

Are there any exceptions?

Michael Denkstein from Denkstein Immobilien Salzburg confirmed to The Local that if you want to buy property in an area that is designated for second homes, then it is still possible.

Additionally, if a property was already used as a second home before 1993, there are exceptions to the law. 

There is also the possibility to make an application to the municipal council to make an exception, although there has to be “reasons worthy of consideration”. According to the Salzburger Nachrichten, an exception could be a plan to retire and move to Salzburg in the next two years.

However, if none of the above apply, then a property can’t be bought and used as a second home in a restricted zone in Salzburg.

Where are the second home zones in Salzburg?

The sale of second homes is restricted in areas where more than 16 percent of the housing stock is already taken up by second homes. The areas are known as “reserved communities” and mostly affects tourist areas, like Pinzgau.

This means in areas where less than 16 percent of the registered homes are for second home use, a holiday home can (in theory) be purchased. It also means that the “map” of zones is in constant change.

In the city of Salzburg, a second home area is only permitted if there is enough affordable housing available for local residents. So it’s always worth consulting with a real estate agent about the relevant local laws before planning to buy property in the province.

Earlier this year, the state of Salzburg also introduced a vacancy tax which owners have to pay if their property is empty for more than six months of the year.

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PROPERTY

EXPLAINED: Is the construction ‘boom’ over in Austria?

Austria has seen a property and construction boom in the last few years. Will inflation dampen new investment in the sector? And what will it mean for the property market?

EXPLAINED: Is the construction 'boom' over in Austria?

Austria has seen an increase in residential construction in recent years. In 2021, the activity in residential construction was the highest since the 1980s, according to data from Statistik Austria.

Around 71,2000 flats were built across the country in 2021, which exceeded the already high level of the two previous years by 5 percent and is the highest result since the beginning of the 1980s, the data institute said. 

The provinces with more activity were Vienna (23 percent of all completed apartments were built there), followed by Upper Austria (19 percent), Lower Austria (17 percent) and Styria (14 percent). However, the province of Tyrol, in Western Austria, had the highest construction activity per inhabitant, according to the data.

FOR MEMBERS: Is now a good time to buy property in Austria?

Based on annual average population figures, about 7.9 apartments per 1,000 habitants were built in 2021 overall. 

The highest rates were registered in Tyrol (9.0), followed by Upper Austria and Styria (both 8.8). The numbers in Vienna include only new homes in new buildings – not any renovations to add apartments to already existing blocs.

Rising costs and fewer new buildings

However, inflation has also been felt in the construction sector, according to a separate report by Statistik Austria.

“In October 2022, construction costs for residential buildings were +7.6  percent, significantly above the October figure of the previous year, but down slightly by 0.3 percent compared to the previous month of September,” said Statistics Austria Director General Tobias Thomas.

The Austrian Institute of Economic Research (WIFO) currently expects the completion of new homes to stagnate this year and decline by 2 or 3 percent in 2023, according to Der Standard.

The reasons are inflation, higher construction costs, delivery problems and the new stricter lending guidelines that prevent some people from being able to borrow and finance a home, Wifo economist Michael Klien told the daily. 

READ MORE: EXPLAINED: How Austria’s new property buying rules could impact you

Austrian housing researcher Wolfgang Amann told Der Standard that, from 2024, the stricter rules would have more impact leading to a “massive drop” of 24 to 30 percent in the completion of single-family homes. 

From August 2022, anyone applying for a mortgage in Austria is subject to new rules related to equity and terms and conditions for loans, as The Local reported.

The most significant change to house-buying rules in Austria is that there is now a mandatory deposit of 20 percent of the value of a property, including additional costs. Previously, banks were simply issued with recommendations about a minimum deposit.

Additionally, the monthly loan instalment may not exceed 40 percent of the monthly disposable net household income, and the financing term may not exceed 35 years.

So, what will happen to the property market?

Peter Marschall from Marschall Real Estate in Vienna told The Local: “In one scenario, the political situation is not so bad and property prices and demand go down a bit but not dramatically.

“In the worst case scenario, the war in Ukraine is still ongoing or getting worse, the economy is bad and bankruptcies are increasing.

“The question is, how bad will it get? I hope not as bad as some people predict, but it’s difficult to see into the future right now.”

READ ALSO: EXPLAINED: What will happen to Austria’s property market in 2023?

Justin from Amazing Austria told The Local that he expects prices to fall across the entire property market in Austria next year. However, it might increase transactions in some segments.

Justin said: “Predictions for 2023 are that the market will definitely slow at the lower end.”

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