Austria’s government has agreed on a major change to rental law that will affect both regulated and - for the first time - unregulated rents from 2026.
After freezing rents in many parts of the housing market this year, the coalition has now introduced a broader “rent brake” that will limit future increases and extend rental contracts.
Here’s what tenants and landlords need to know.
What’s happening with rents now?
In spring 2025, the government froze regulated rents, which cover most older buildings, council flats and fully financed cooperative apartments. Without this intervention, these rents would have automatically gone up by 3.16 percent in April, in line with inflation.
The freeze saved a total of around €138 million for tenants across Austria this year, according to official estimates.
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From 2026, these regulated rents will gradually rise again, but with caps: a maximum of 1 percent in 2026 and 2 percent in 2027. From 2028, the same rules that apply to unregulated rents will come into force, meaning a brake once inflation exceeds three percent.
The big change: rent brakes for unregulated housing
For the first time since 1945, Austria is intervening in unregulated rents – those for new buildings, official apartments and privately rented houses.
The rule adopted by the Council of Ministers on September 17th means that from 2026, landlords will only be able to pass on part of inflation above three percent.
The rule is simple: if inflation is 4 percent, rents may only increase by 3.5 percent; if inflation hits 5 percent, the maximum rise allowed is 4 percent. The government says this measure is designed to stop the kind of sharp rent hikes that occurred during the last inflation crisis.
Another change is that rent adjustments can only happen once a year and not before April 1st. This prevents the practice of raising rents multiple times within the same year.
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SPÖ leader and Vice-Chancellor Andreas Babler described the rent brake as historic, promising that “never again will hyperinflation trigger a price explosion in the rental sector.” Government estimates suggest around 430,000 households – roughly one million people – will benefit from the new rules.
Critics, however, argue that the changes amount to interference in property rights. Business groups such as the Freiheitliche Wirtschaft dismissed the measures as “Marxist experiments,” while landlords’ associations have described them as an “attack on property.”
Changes to fixed-term rental contracts
Alongside the rent brake, the government is extending the minimum duration of fixed-term rental contracts.
Currently, landlords can set a limit of three years, after which tenants can be asked to leave. From November 1st 2025, the minimum will be five years for all new or renewed contracts. The government says this change is aimed at giving tenants more security in their homes. It does not mean tenants must stay for the entire contract duration, just that they are afforded the stability of the contractual terms for at least five years.
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The government argues these changes will protect households from sudden cost spikes while maintaining fairness in the housing market.
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