In Austria, the so-called guideline rent model applies to apartments within the full scope of application of the MRG. The subjective value of an apartment is determined on the basis of the “individual residential value”. The calculation model has two stages and is based on the one hand on the basic costs of the apartment – which were determined separately for each federal state before the law was introduced – and on the other hand on surcharges and discounts as defined in Section 2 RichtWG. The additions and deductions increase and/or decrease the rent depending on the deviation from the so-called “standard apartment under tenancy law”.

The most well-known surcharge is the so-called “location surcharge”. For decades, the location surcharge pursuant to Section 16 (3) MRG was determined by comparing the basic costs for the specific rental apartment with the reference value of the respective federal state. If a surcharge was calculated, it was assumed that the location surcharge could be claimed. This practice has now been put to an end with the Supreme Court’s decision on 5 Ob 74/17v.

The Supreme Court states in its decision:

“In order to assess whether a specific location (residential environment) is to be qualified as ‘better than average’ due to its characteristics, an evaluative comparison with other locations (residential environments) is required. The landlord must provide evidence that there are concrete indications (residential environment factors) that allow the assumption of an above-average location.” Accordingly, the “general public perception” and the “experience of everyday life” are decisive for determining the average or above-average location and not not the basic costs for the specific apartment.

In its decision, the Supreme Court had to assess whether a location surcharge was justified in the 5th district of Vienna and stated that the apartment was comparable to those inner-city areas that typically have closed and multi-storey buildings. For such areas, local amenities and public transport connections were common and therefore the assertion of the location surcharge was not justified.

Vonkilch criticizes this decision, in particular because of the inconsistent application of the interpretation methods by the Supreme Court. Among other things, he argues that the reference to general public opinion and everyday experience does not rule out the possibility of basing the decision on the basic price ratios. The decision is also contradictory.

The tenants’ association welcomed this decision, as the location surcharge is a “price driver” for rents and the Supreme Court has now put a stop to it.