within the Austrian Tenancy Act (MRG)

One misery of dismissal protection is that the landlord has to bring in an action of eviction within 14 days after the termination of a limited tenancy agreement to avoid the risk that an unlimited tenancy agreement comes into being. Thereby the tenant also loses the possibility to enter into an extending agreement at short notice, for instance if the completion of the new apartment is delays.

From our point of view the fundamental question why actually tenancy agreements are not allowed to be terminated from the landlord’s side (not only for restricted legal reasons, but possibly for contractually agreed reasons) should be definitely justified to be stated.

Termination of a tenancy agreement and action for eviction can be endlessly protracted
If rent is not paid, the landlord has the option of cancelling the rental agreement or taking action for eviction. The proceedings are immediately discontinued by the court, however, if the tenant files an application to the arbitration board requesting, e.g. assessment of the basic rent or the operating costs. The tenant usually ceases to pay rent during the ongoing proceedings - which can be protracted at will. Even if the landlord wins the case, he usually cannot recover the outstanding rent. 

No yield security
Due to the substantial interpretive scope of surcharges and deductions within the Richtwertgesetz [Reference Value Act], the landlord has no guarantee of achieving the prospected yield through rental income. Past experience from arbitration proceedings demonstrates that above-average furnishing is usually not taken into account, which means that landlords are often "left in the lurch" with their investments. This situation will certainly have negative effects on landlords' propensity to invest over the long term.

Legal confusion upon tax deductibility
The deductibility of the amount of rent reserve tax payable from rent proceeds presents another peculiarity: initially it was simply omitted from the tenancy legislation, then it was introduced as a 40% deduction lump sum in the WRN 1997, but abrogated on 31 Dec 2004 as unconstitutional, then reintroduced in the WRN 2006 as a 25% (for those subject to corporation tax) and a 35% deduction (for those subject to income tax).

Extended duration of the initial appraisal procedure
Perceived from the perspective of real estate administrators, the extended duration of the initial appraisal procedure seems untenable. The tenant has at his disposal a wide range of instruments to prolong the proceedings. Unfortunately, the judiciary does nothing to alleviate the situation. The landlord is usually left with the sole option of writing off the irrecoverable arrears.

Real-life examples
Claim to usage rights of laundry room / Prevention of refurbishment and attic storey development:
The tenant acquired the tenancy of an 80m2 prime-location flat at an immensely cheap rate under a rental agreement dated 1956. The tenant prevents the renovation of the building - which was to be carried out for financial reasons during the course of an attic storey development. Reasons: through perennial "exclusive" utilization of the "laundry room", the tenant had thus gained sole right of use of the so-called "laundry room" (which is actually used as a storage room) as well as the drying room (= attic). The laundry room (approx. 20m2) is located in the otherwise undeveloped attic. Access to the other areas is only possible by way of the laundry room - for which only the tenant possesses a key. The laundry room and drying room are rarely utilized by the other tenants of this building - and when they do so, they have to collect the key from the stated tenant. The court confirmed the tenant's sole right of use. The tenant was offered new storage opportunities as compensation free of charge. The tenant declined this offer. The tenant stored objects of minor material value in the stated room. The development of the attic was first delayed, than postponed indefinitely.
Persons with right of access, urgent need for housing:
The grandfather of the person in question lived in a flat at the above address. The gentleman was in need of care and lived with an „illegal“ carer in the stated flat for the last few years. After the grandfather's death, the grandson lodged a claim to the flat on the grounds of right of access. The grandson had studied abroad for years and then worked in Graz. He was nevertheless able to credibly demonstrate to the court that he had cared for his grandfather, and that his main place of residence was Vienna, i.e. his grandfather's flat - thus entitling him to the right of access. Restriction of rent amount pursuant to MRG section 46 sub-section 2.
Approx. 347 m2 flat incl. conservatory, as well as a 53 m2 balcony, very well furnished. Tenant began leasing in 2001:
Since the beginning of the tenancy, the tenant has only paid two months' rent. After this, the amount of rent rate paid was first reduced due to the flat allegedly being uninhabitable - and shortly thereafter discontinued. Due to non-payment of rent, a claim for payment was issued and an eviction procedure initiated in 2002 - i.e. 5 years ago!!!! There were numerous interruptions of the proceeding due to passive actions induced by the tenant. As the tenant has been representing herself wherever possible for some time now (the tenant initially engaged several solicitors), which means those presiding over the hearings must fulfil their special guidance and instruction duties towards unrepresented parties. This has caused repeated delays.

The following procedures are being/have been carried out:
- Assessment of the appropriateness of the level of rent
- Operating costs
- Uninhabitable state (due to tenant's own remodeling activities)
- Criminal proceedings against the tenant due to fraud
- Private insolvency was dismissed on the grounds of insufficient assets
As the tenant did not pay her electricity bill either, the electricity was switched off. Damages hitherto amount to approx. EUR 400,000. There is still as yet no end of the proceedings in sight.

After 6,5 years there was a default judgement. The tenant was criminal convicted, all outstanding proceedings abandoned and the devastated flat was taken back.
Tenant of commercial property since 1996, purpose of use: dental surgery:
Since January 2006, the tenant has been retaining approx. 80% of the total rent due on the grounds of alleged impairment due to odour nuisance resulting from smokers in the stairway. The landlord instigated action for payment of rent and eviction.
Rent arrears amount to approx. EUR 40,000.
After 2,5 years there was a court settlement in which the landlord granted minimal rent reduction but had to bear his attorney's fees.
Development of attic storey by tenant, landlord's duty of maintenance
The tenant rented a low-priced undeveloped attic for the purpose of development at Börsenplatz, 1010 Vienna. The development procedure was instigated by the tenant at his cost (-low-budget remodeling procedure). Due to the duty of maintenance over the common parts of the property stipulated in the Tenancy Act, the landlord is obliged to cover the increased expenses resulting from the "low-budget remodeling by the tenant" for roof, insulation, and balconies, as well as for consequent damages incurred by the other tenants. Maintenance and refurbishment costs amounting to the price of a new flat have hitherto accrued to the landlord to date - while the rent paid for an "undeveloped attic" remains extremely low.
A rental agreement was concluded with the tenant. The tenant was registered in Austria and carried out business activities abroad. After the rental agreement was signed, a handover date was agreed; however, the tenant did not keep this appointment. Issued notices of charges, as well as demand notes and termination statements were all to no avail. Damages due to non-payment of rent, vacancy costs etc. amount to approx. EUR 126,000.
Landlords are continuously confronted with such cases where it is not possible to serve notices. The necessity of an appointed trustee not only generates immense costs, but loss of time as well - as the landlord is thus unable to tend to other business matters. This also presents the problem of a lack of enforceability within the registration system. Registration offences, false registrations or non-registration are all only deemed administrative offences.
Commercial leasing, new premises, decedent‘s estate:
The tenant, a private person, has died. The probate procedure is disputed, as no rent was paid. Business operations are continued by the leaseholder. It is not possible to issue a notice of termination during the pending probate procedure.
If a tenant requires assistance in paying his rent, then this automatically leads to an arbitration proceeding - insofar as the respective rent amount is assessable - for the assessment of the reference rent amount and the appropriateness of the basic rent due.
Rental of approx. 150 sqm in 1959 by grandparents. The grandparents paid a KAT B rent for many years. After the grandparents deceased, their grandchildren acquired their tenancy rights in 1993 (prior to the third WÄG [Residence Alteration Act]). In February 2006, these persons filed a request to the arbitration board to fix the original rent category (from 1959!).
After a few years an out-of- court settlement proceeded to avoid long lasting legal costs.