“Money doesn’t grow on trees,” said Deputy Governor and Housing Officer Manfred Haimbuchner (FP) at a press conference on Monday in Linz. Nevertheless, in negotiations with the non-profit property developers, they managed to “carry out a far-reaching reform in housing subsidies”. Four regulations will be submitted for review in the next few days, and the new rules will come into force at the beginning of 2025. Among other things, the aim is to ensure that around 2,000 subsidized apartments are built each year and that rents are kept stable. Robert Oberleitner and Stefan Hutter, chairman and deputy chairman of the Association of Non-Profits in Upper Austria, were also present at the presentation.
Above all, agreement was reached on a successor plan for new building funding. As reported, there was a five-point plan for 2023 and 2024 to maintain construction performance despite increased construction and financing costs. Firstly, the state adjusted its loan conditions, and secondly, the property developers increased their use of equity in construction projects from eleven to 20 percent (with an interest rate of 1.9 percent). The share of conventional bank loans in social housing fell to a good 20 percent.
From 2025, property developers will be able to reduce their use of equity capital again to eleven percent. If you do this, you can charge 2.2 percent interest, with 15 percent equity it is 2.4 percent interest, with 20 percent equity 2.6 percent interest. The amount of equity capital used could vary from project to project, said Haimbuchner. The property developers also have different levels of equity capital.
100 euros more per square meter
At the same time, the state is increasing the extent of its direct loans for social housing projects by 100 to 1,100 euros per square meter. Including the base amount and open spaces, the state will finance seven percent more in the future. The interest rates for the state loan remain at 0.5 to one percent over 45 years. This makes it possible for the share of bank financing to remain at a good 20 percent, even if the property developer reduces his investment to eleven percent – if he does not do this, the bank share can even be lower.
The state is also increasing funding for the associated underground car parks. Instead of the current 1,000 euro loan per parking space for four-story buildings, there will now be 5,000 euros per parking space, and for three-story buildings, where there was previously nothing, 2,500 euros per parking space.
Image: Land/Kauder
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Image: Land/Kauder
Haimbuchner also presented a new funding system on Monday. From 2025, the direct loans will be available not only for classic new buildings, but also for densification on already sealed areas, which are often more complex – for the subsequent addition or installation of apartments, extensions and new buildings after demolition. Until now, it was common practice for the state to support bank loans with subsidies. According to Haimbuchner, the direct state loans have the advantage “that such projects become much more economically viable or even feasible at all.”
In an example from 2023, when a developer built 25 rental apartments in an old inn, according to him, tenants would save more than 3,000 euros per year with the new funding for a 70 square meter apartment. Oberleitner explained that this funding program had been a long-standing wish of the non-profit organization. In probably every community there is an unused area in the town that no one is currently taking care of.
According to the 2025 budget estimate, the state will spend around 24 million euros more on direct loans (new construction and densification) than in the previous year, a total of 140 million euros. How much it will be this year depends on how many apartments are funded. As of now, there have been almost 1,200 assurances so far, and more will follow. Last year there was a record of just over 2,300.
Oberleitner emphasized that there had been discussions with the state on an equal footing with the aim of affordable housing. For newly built apartments, the rent including operating costs without heating in the non-profit sector is currently ten to eleven euros per square meter, due to inflation, construction and financing costs. That’s less than on the private rental market, but a clear increase compared to five years ago (seven to eight euros). “It can’t get any more expensive,” Oberleitner appealed in the OÖNachrichten in September. With the state’s newly established funding, it is now possible that rental apartments do not become even more expensive. However, he sticks to the demand that the federal government should do more when it comes to housing subsidies.
Hutter highlighted another innovation from 2025. The subsidized living space for rent-to-own apartments will be increased by five square meters. “So there are positive developments for tenants and rental buyers.” The latter is important for the creation of property.
When it comes to renovations, the state will no longer differentiate between thermal energy and other renovations. The funding through grants for loans will be increased from 22 to 24 to 25 percent of the eligible costs. And in the future, with the “Young Living” funding program, funding will be provided per square meter, as with general new building funding, and not two thirds of the total construction costs.
Nd densification projects) annually, which significantly boosts the effort to address housing shortages. This increase will facilitate more housing developments while ensuring that existing rental prices remain stable, aligning with the broader goal of providing affordable housing for the community.
The emphasis on creating approximately 2,000 subsidized apartments each year under this reform is a strategic move to tackle escalating housing demand. The combination of adjusted loan conditions, increased equity contributions from developers, and the expansion of funding options for various types of projects signals a robust approach to address current housing challenges.
Moreover, the provision for additional funding for underground parking is expected to support developers’ efforts in aligning housing projects with modern living standards, focusing on sustainability and reducing the urban footprint. As Haimbuchner highlighted, the new funding system will also promote densification, which is essential for maximizing land usage, particularly in urban areas where space is at a premium.
the proposed changes in housing subsidies and funding mechanisms are anticipated to enhance the construction of social housing, mitigate rent increases, and ultimately improve living conditions for residents in Upper Austria.
