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Buying & owning Austrian property FAQ

ZONING AND OWNERSHIP

What is a “tourist residence” and what restrictions can an owner expect?

When purchasing a property constructed on land zoned for touristic use you are obliged to rent the property within the framework of a tourism enterprise.  The enterprise is managed by an appointed Rental Management Company.

Why do the local authorities zone properties in this way?

The local government invests in infrastructure in the resort such as ski lifts and development of the ski area, which is financed by usage.  Therefore, it is important that owners do not leave their properties empty when not using it.

Does this mean I can’t use my own property?

No. For purposes of attaining optimum capacity and usage you are permitted to use your apartment within the framework of a tourism enterprise.

How do I rent my property to tourists?

We appoint professionals to provide rental and facility management services relating to the running and tourist operation of the property.  They maintain a booking and reservation system and accept bookings throughout the year.

Am I investing in a hotel?

No.  You will be officially recorded in the Land & Property Register as the owner of the freehold of your apartment.  You are not purchasing shares in a hotel. Furthermore, you will own a share of the land and the common areas in the property. This includes the wellness facility, technical rooms, ski and boot room, etc.

PURCHASE PROCESS – RESERVATIONS, PAYMENTS, COSTS AND HANDOVER.

I am keen on a particular apartment but worried another buyer could reserve it before I’ve had chance to go through all my queries.  What should I do?

To allow a prospective buyer time to go through all of the important questions that come up, we can reserve a unit for a period of one week with no obligation.

I’ve decided to move forward – how do I proceed?

The first stage is to sign a Purchase Offer (Kaufanbot) which is sent to you by email for signature.  A 1% deposit of the net purchase price is due upon signing as an ‘Earnest Money Payment’ and this may be refunded if the construction has not started according to the due date in the Agreement, or other special requirements are not met.

From whom am I purchasing the apartment?  Kristall Spaces?

No. Your Sale & Purchase agreement is with the development company which owns the land.  The Developer appoints VenturePlus AG and Kristall Spaces AG as experienced development consultants to assist with the delivery of the project.

Can I buy the property through a company in Austria?

Yes, many purchasers use a so-called Special Purpose Vehicle (SPV). The only requirement is that the SPV acquiring the property has to have a registered office inside the EU. Contrary to popular belief, it is not necessary for the shareholder or ultimate beneficiary to be a European citizen.

What if I want to sell?

There are no restrictions on resale; you may sell your property at any time.

What happens if the Developer selling the apartments has financial problems part way through the development?

Buying property off-plan in Austria is extremely secure.  New-build chalets and apartments are paid for in stages and all payments are made to a lawyer and held in a Trustee Escrow account.  Stage payments are not released to the developer before an independent, court-appointed surveyor has inspected each construction stage and signed off the building progress for the Trustee.  Construction begins only after the financing bank has released funds for the development and the development is fully funded to completion.  Furthermore, the development is ‘ring-fenced’ and completely independent of any other commercial activities.

What is the schedule for the stage payments?

  • 15% at start of building works (including the ‘Earnest Payment’ of 1%) due within 14 days of both parties having signed the Sale and Purchase agreement
  • 35% on completion of the building shell and roof
  • 20% on completion of plumbing and electrical installations
  • 12% on completion of the facade & windows
  • 12% on completion of the property
  • 4% on hand over of keys
  • 2% after the developer provides a bank guarantee to the Trustee to cover any unforeseen defects.

Who drafts the contracts and handles the legal aspects of the purchase – what are the legal fees?

In Austria, a Trustee lawyer or Notary acts on behalf of both the purchaser and the vendor. Occasionally, the purchaser appoints his or her own solicitor for a second opinion – this is not necessary but may provide peace of mind. In this case, the purchaser’s solicitor will liaise directly with the Trustee. The legal fees are 3% of the gross purchase price.

Why are the legal fees so high?

The Trustee lawyer has more responsibility and employs more resources over a longer period for an ‘off-plan’ purchase compared to a typical re-sale transaction.  The role of the Trustee is to draft the Sale and Purchase Agreement, Rental Agreement, Contract of Administration, etc. in German and English and prepare all documents required to transfer legal ownership to the Purchaser.  The Trustee is obligated to offer impartial legal advice, collect stage payments and release funds to the Seller in accordance with the contract.  The Trustee acts for the Purchaser and the Seller during construction, engages an independent, court appointed, sworn witness to confirm building progress and concludes all aspects of the conveyance.

When and where do I sign the Sale and Purchase Agreement?

The Sale and Purchase Agreement (SPA) and all documents required to transfer legal ownership are drafted in German and English and signed by the Purchaser and Seller in the presence of a Notary Public.  The Purchaser will receive a copy of the SPA by post and is required to sign before a Notary Public (not a solicitor) in their country of residence. Once the Purchaser’s signature is witnessed the Notary Public sends the document to the Foreign Office to be apostilled. Most choose to sign at the Austrian embassy in their home country as they can also provide the apostille, thus speeding up the process.

What are the average purchase costs?

Purchase costs for buying a property in Austria are 7.6% of the gross purchase price.  The purchaser pays the Trustee fees after the SPA has been signed. Fees are calculated as follows:

  • Purchase Tax (Stamp Duty) is 3.5% of purchase price
  • Registration in the Land Registry is 1.1%
  • Trustee legal fees – 3% + VAT (VAT is refunded)
  • Court costs, administration fees – approximately 150 euros.

Do I pay agency fees?

No, Kristall Spaces does not charge any fees to the buyer.  Buyer’s fees can be as much 3%, so there is an instant saving when you buy through us.

Do you arrange finance?

Yes, once a Purchase Offer has been signed “subject to finance”.  Austrian banks will fund up to 55% of the purchase price with a loan period between 15 and 25 years.  Some banks may charge set-up fees and/or an appraisal fee of 0.5% in addition to a notary a fee of 1.5% for the amount of the mortgage to be registered in land registry.  If required, it is possible to add the mortgage related costs to your mortgage.  Variable interest rates are currently 2.5%.

Austrian mortgage agreements generally need to be signed at the bank in Austria.  Some buyers therefore time this to coincide with signing of the Sale and Purchase agreement.

Why do you not provide a fixed date for completion and handover?

We are obliged to make every effort to complete construction and hand over your apartment on time.  However, we are building in a high-alpine environment at the mercy of the weather with a short construction window of May to November.  Also, we are governed by the local laws, which often restrict construction during the tourism seasons.  We offer an estimated date for completion in the contract but no guarantees can be made.

Parking

Each apartment must be purchased with a minimum of one space.

Will Wi-Fi & Sat connections be provided to all parts of the development?

Internet by Ethernet cable and Wi-Fi is available in your apartment. Cable TV is available in each room.

Will there be any separate storage space for owner’s belongings such as ski equipment and clothing?

Yes, a minimum 2m² of storage per apartment is provided and included in the purchase price. Owners must provide their own personal padlock.

Please confirm the arrangements surrounding the use of the washing machine & tumble dryer.

The washing appliances are metered and for the use of the owners and their guests.  Alternatively, each apartment has the option to install the connections for a washer/dryer in one of the bathrooms if instructed during construction.

HANDOVER, SNAGGING AND BUILDING GUARANTEES

How do you hand over the apartment?

You will be contacted two weeks in advance with a date for the official handover of the apartments. If you cannot be there in person, the Trustee Lawyer and independent, court appointed surveyor will represent you.

What about snagging?

The developer provides a 3-year bank guarantee to cover unforeseen snagging defects.  A report will be produced documenting any snagging issues at the time of handover.  Any issues raised will be fixed within six weeks if the apartment is vacant.

Is the apartment delivered to the owner turnkey?

At the time of handover, the apartment will be fully fitted out with all contents and appliances included in the inventory and the design scheme chosen by the owner.

A full furniture pack including cutlery and crockery is included in the purchase price.  Everything required for rental is supplied with the apartment and is detailed in the Building and Furnishings specifications sheet you will receive prior to purchasing.

A choice of three high-quality design schemes for the apartments have been created and owners are invited to choose their preferred interiors.

Are there any building guarantees?

Yes, we negotiate bank guarantees with tradesmen for the following:

  • 10 years for the roof covering
  • 5 years for the mechanical systems (heating, electrics, lifts)
  • 5 years for the remaining works including the shell of the building
  • 2 years for electrical goods

Furthermore, Austrian Building Law allows for a 30-year Statute of Limitations for all hidden defects.

POST HANDOVER – RENTAL INCOME, CONDOMINIUM FEES (WEG) AND PERSONAL USAGE

What are WEG fees?

WEG fees are your condominium fees and owners are invoiced these monthly in advance by the Facility Management company.

What is the Facility Management Company’s role and who appoints them?

We appoint the Facility Management Company to represent the Condominium Owners Association before handover of the apartments.  The Facility Management Company will read the meters for water, electricity and heating on the handover date and appoint the caretaker, utility and maintenance providers, and ensure the building has full insurance coverage.

How much are the WEG charges and what do they include?

The total operating costs of the building are divided proportionately between the Condominium Owners Association (WEG) according to the size of each owner’s property.  These are payable monthly in advance.  Your share of communal service charges is determined by a court-appointed assessor based on the title document for each individual apartment, which is detailed in the Sale & Purchase Agreement.   The heating, water and electricity costs of running your individual apartment are metered in the owner’s name, so you can see exactly what you are using and paying monthly.

We generally estimate the fees to be EUR4 per m² of your apartment per month.   The estimate includes the following services:

  • Heating
  • Waste water
  • Electricity and lighting in the general areas
  • Refuse disposal
  • Building insurance
  • Caretaker services
  • Snow removal
  • Cleaning of common areas
  • Chimney sweep
  • Heating maintenance contract
  • Lift maintenance contract
  • Maintenance of common areas
  • Internet
  • Cable TV
  • Auditing costs
  • Sinking fund for future maintenance

At the end of the year, individual calculations will be made for each apartment according to actual usage.  If you have overpaid, you will be refunded and if you have underpaid you will be invoiced for the balance.

What is the Administrator’s role and who appoints them?

The Owner appoints the Administrator to carry out the following roles:

  • Reception and/or concierge services
  • Accommodation Administration and Management
  • Supervision of the wellness facility

The total Administration costs of the building are divided proportionately according to the size of each owner’s property.

What is the role of the Rental Operator?

The role of the rental operator is to market the apartments, maintain a booking system, handle guest deposits, organise check in/check out, keys, cleaning and fresh linen, oversee quality control within the apartments and the payment of tourist tax to the authorities.  They also publish the rental income and distribute it to the owners.  The accounts are audited annually for complete transparency.

What kind of rental income can I expect?

The rental yields vary depending on the apartment size, number of bedrooms and floor.  Please refer to the rental income projection document for guidelines.

How are the rental rates decided?

The rental operator compares rates of similar establishments within the resort, as well as information from the local tourist board regarding occupancy rates.  Rental rates are published annually in advance.

Who will do my accounting?

We have negotiated a very reasonable tax package with an Austrian accountancy firm specialising in tourism residences.  You can engage the tax advisors at the time of purchase.  They will register you for VAT in Austria, advise you on tax issues during the purchase process and handle your VAT and Tax returns in the future.

How does the local tax system work?

The local authority charges tax on the land of the building, a proportion of which will be paid directly by you, as a part owner of the freehold.  The Land tax is a nominal sum and the council will issue you an invoice annually.

Do I have to inform the rental operator when I want to use my apartment?

Yes, please inform the rental operator in writing, a minimum of 5 months before the start of the winter season.  In order to make a success of the rental scheme, the operator needs sufficient notice to market the apartments.

What about spontaneous visits?

The rental operator will always try to accommodate the owner assuming the apartment is not already booked.  This may result in you having to stay in an alternative apartment.

Do I have to pay to stay in my apartment? 

Owners may be obliged to pay a small administration charge during weeks of personal usage.

What if I want to spend several weeks in my apartment outside the main winter season?  Is this allowed? 

Yes, please inform the rental operator in writing 2 months before arrival. Occupancy rates are lower outside of the winter season and short-term visits are generally not a problem.