Living in Austria is getting more and more expensive. Experts and politicians disagree on how to deal with rising rents. Economists warn against automatic price indexation as a driver of inflation.
High inflation continues to drive up rents. The reason for this is the automatic price indexation in the housing market. More and more experts are therefore arguing not only for a rent brake, but also for an exit from the automatic price adjustment system.
Stretching benchmark adjustments over time?
“It takes a start to get out of automatic indexing,” said Wifo chief Gabriel Felbermayr on ORF. It is important that overall prices do not increase by more than two percent. In the meantime, it is already “dangerous” if high inflation is allowed to continue. Felbermayer welcomes considerations of stretching out the guidance value adjustments over time.
VAT reduction as an option
As a further option, Felbermayr introduces the reduction of VAT on rental: the VAT rate on private rental is zero percent in Germany and ten percent in Austria. “You could also start here.” That might be politically easier. IHS boss Holger Bonin also sees the automatic price adjustments for rentals as a problem. They would be based on the consumer price index, “and that is not plausible, that is not the right index”. It takes into account services, restaurant visits, hotelier services and the like that are not relevant to many people, says Bonin in the “Standard”. Rather, it is necessary to examine which price increases landlords are actually confronted with.
ÖVP is deaf to the rent brake
In any case, the ÖVP still rejects a rent brake. Club president August Wöginger points out that the government has already taken “a number of measures”, including increasing assistance with housing. P. Mladenova
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
