Sometimes we receive inquiries from clients who want to buy residential property in Vienna with the prospect of opening a beauty salon/shop or other type of business in it. Such actions may lead to a violation of local law, as in most countries, including Austria, there are separate premises for living and separate premises for commercial activities. That is why, in order to avoid such situations, we will share with you information on the main differences between commercial and residential real estate.
Purpose
Even from the name itself, we can understand that commercial and residential property serve different purposes.
Residential property is houses, apartments and other places intended for human habitation. An exception may be the case when a legal entity is registered in the apartment where a person lives. Accordingly, the legal address and office of the company will be considered the address of the person’s residence. However, this is possible either when the residential property is owned by the person or the owner has granted such a right to the tenant in the lease agreement. In such a case, it is advisable to have a separate room allocated for the “office”. If the need arises, it will be possible to explain to the controlling authorities that it is in this room that the company carries out its business activities.
Commercial property means retail premises, offices, factories, warehouses, hotels and other real estate intended for commercial activities. You can read more about the types of commercial property in one of our previous articles.
Legislative regulation
Local laws and regulations distinguish between commercial and residential property (residential areas). In most cases, commercial activities are not permitted on residential property and residential districts or are permitted only under certain conditions.
Thus, in accordance with §6 (a) of the Bauordnung für Wien, only residential buildings and buildings for religious, cultural, social or public administration purposes are permitted in residential districts.
The construction of restaurants, accommodation, meeting and entertainment facilities, office and retail buildings, as well as the placement of small warehouses, workshops and office and retail premises in residential buildings is permitted, provided that they do not cause smoke, soot, dust, harmful or poisonous fumes, precipitation from vapors or exhaust gases, noise, heat, vibration or other effects, dangers or inconveniences to neighbors that interfere with residential use.
Requirements for the maintenance of property
Requirements for the maintenance of residential property are generally aimed at ensuring the safety, comfort and inclusiveness of the occupants.
As for commercial real estate, the requirements for its maintenance can be much more extensive, as each enterprise or company is responsible for the life and safety of its employees and affects the lives of the residents of the community in which the business is located. Therefore, the requirements for the maintenance of commercial real estate most often relate to safety standards, fire resistance, moisture resistance and other regulations.
The purpose of the property purchase
Before purchasing a property, you should define your purpose precisely. If you need the property for comfortable living, then residential property will suit you. The location of the property and the type of housing is determined according to individual client requests.
If you want to get real estate for running your own business (office/warehouse/restaurant premises, etc.) or for renting out real estate and thus generating passive income, we advise you to consider commercial real estate.
Cost of brokerage services
Broker’s commission when renting commercial property:
- for landlords, the amount of commission may not exceed three monthly gross rental rates.
- for tenants, the commission depends on the duration of the lease agreement:
- lease agreement for an indefinite period or more than three years – three monthly gross rents;
- from two years to three years – two monthly gross rents;
- up to two years – one monthly gross rent.
In addition to the above commission amount, an additional 20% VAT must be paid.
The maximum brokerage commission for the purchase/sale of commercial real estate is 3% + 20% VAT (from each party), and there are also cases when one party pays the full 6%. Of course, the amount of commission may be lower if the parties agree on this.
The amount of brokerage commissions for the purchase/sale of residential property depends on the term and type of agreement. However, the maximum fee is limited by federal law. For example, the Immobilienmakler-Verordnung states that the broker’s commission for the purchase and sale of real estate depends on its value:
- up to EUR 36,336.42 – a maximum of 4% + 20% VAT;
- over EUR 36,336.42 – a maximum of 3% + 20% VAT.
However, when renting residential real estate, the principle of “customer” (Erstauftraggeberprinzip) came into force on 01.07.2023, according to which the person who first engaged the broker will be responsible for entering into an agreement with the broker and paying for his services. You can read more about this principle in one of our previous articles. Please note that this principle does not apply to the purchase/sale of residential real estate and commercial real estate transactions.
The “first customer of services” will have to pay:
- in case of entering into a lease agreement for up to 3 years – one month’s rent + 20% VAT;
- in the case of a lease agreement for more than 3 years – two monthly rents + 20% VAT.
To summarize, residential and commercial properties have different purposes and characteristics, and the choice between them depends on the specific needs and goals of an individual or company. Whether you have already chosen your property type or are just considering your options, VigoImmobilien will be happy to advise you and find the right property for you!
