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In any case, commercial operators of student residences are now subject to the regulations of the Student Residence Act

09/16/2019 - Reading time: 5 minutes

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Over the past years, the sector of student residence operators has increased significantly. In Vienna, companies such as ‘The Fizz‘, ‘The Student Hotel‘ or ‘Greystar‘ have already or will shortly open ‘Student Apartments‘. The boom is owed, among other things, to a legal ‘loophole‘:

The renting of premises in student residences is not subject to the Austrian Rent Act (Mietrechtsgesetz, MRG) (section 1 (2)(1) MRG). So far, providers of student residences have been able to avoid becoming subject to the Student Residence Act (Studentenheimgesetz, StudHG) by using a specific wording in their articles of association and thus the occupancy agreements they concluded with the students were neither subject to the MRG nor to the StudHG. Only the largely non-mandatory provisions of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, ABGB) and those of the Consumer Protection Act (Konsumentenschutzgesetz, KschG) were applicable to these lease agreements.

With the amendment to the Student Residence Act, which came into effect as of 1 September 2019, both commercial and non-profit operators of student residences letting premises to students are now subject to the StudHG, regardless of the designation of the premises specified in the articles of association. The premises, however, do not necessarily have to be located in a building that is entirely operated as a student residence; they may also be part of an apartment. Neither the StudHG nor the exception under section 1 (2)(1) MRG applies to the letting of private accommodations which enable autonomous management and housekeeping and lack shared facilities; instead, this continues to be governed by the general lease and rental regulations of case law (OGH 21/06/2005, 5 OB 86/05s).

Unlike non-profit student residence operators, commercial operators are still free to set out the rent amount. However, the occupancy agreement concerning the rented space needs to specify what services are included in the occupancy fee. If the operator of the student residence offers additional services against payment, such services, along with the relevant costs, must be communicated expressly and in a suitable manner.

Non-profit operators of student residences may, as has been the case so far, set out the occupancy fee only after hearing the representative body of the student residence and taking into account the principle of cost coverage. What is new, is that now operators may build up reserves for renovation purposes and investments. In addition, in cases where the capacity of the student residence is not fully utilised, non-profit operators may, from now on, also conclude short-term ‘guest‘ agreements with non-students at a rent that exceeds the amount necessary for cost coverage.

The occupancy agreement concluded between the operator of the student residence and the student must be made in writing and specify, in any case, information on the premises to be rented, the term of the agreement, the possibility of renewing the agreement, the notice periods, the rent amount, the payment methods, the deposit, the interest on the deposit, as well as contain an arbitration clause. Furthermore, the bylaws of the student residence must form a part of the agreement. Such bylaws are, from now on, the exclusive legal basis for the functioning of the student residence and must be adopted by the operator for each student residence as they constitute the code of conduct of each student residence.

A new provision stipulates that, in future, the student residence operator may request a deposit from the tenant for claims against the tenant arising to the operator under the occupancy agreement; such deposit, however, must not exceed an amount equivalent to twice the amount of the occupancy fee. Both the investment and repayment of the deposit are, in general, subject to the provisions of the MRG.

The duties of the tenant regarding maintenance and restoration as well as the liability for any damage caused within the rented premises are governed by the provisions of the ABGB. For this reason, the legislator now declares provisions to be null and void that depart from the following statutory regulations to the detriment of the tenant of a student residence:

  • Section 1109 ABGB: In general, the premises rented shall be returned as nearly as possible in the same condition they were in at the commencement of the agreement; fair wear and tear effects do not need to be removed.
  • Section 1111 ABGB: The tenant of student residence shall be liable for any and all damage caused by him/her, his/her roommates and subtenants, except in case of an accident. However, the operator of the student residence must assert claims for damages no later than one year after the tenant freed the rented premises.
  • Section 1096 ABGB: The operator of the student residence must ensure that the premises are in livable condition at the commencement of the agreement and that they remain in this condition. In case of a defectiveness, the tenant of the premises shall be exempted from paying the rent for the duration of and depending on the degree of the defectiveness.

More flexibility was introduced to the rules on the term of the occupancy agreement: The occupancy agreement must, in general, be concluded for a period of 12 months, with its commencement and termination being determined by the academic year as defined in the bylaws of the student residence. University entrants have the right to expressly request the term of the agreement to be 24 months. Apart from that, it is also possible to conclude an occupancy agreement during the current academic year until its end; it may be concluded for a period of 12 months with a customised term of the agreement or for a shorter period. Upon expiration of the agreed duration, the agreement shall be renewed upon the student‘s written request by an additional 12 months; however, an entitlement to such renewal does not apply in cases where the duration of the studies has exceeded one and a half times their duration provided for by law. In student residences funded by the federal government, students are entitled to the renewal of the agreement only in case the student is underprivileged and provides evidence of favourable academic performance.

The operator of the student residence may terminate the occupancy agreement prior to the term of the agreement with a notice period of one month in case the student drops out of or completes university, decides not to rent the premises or finds a new tenant for the premises, in the event of default on rent payment by at least two months, if the student commits a criminal act against other tenants or the operator of the student residence, as well as in case the student breaches obligations under the StudHG or the occupancy agreement. In case of the student committing a criminal act against other tenants or the operator of the student residence or the student causing imminent danger for the student residence, its tenants or its operator, the agreement may also be terminated with immediate effect.

The occupancy agreement may also be terminated by the tenant, with a notice period of one month. A contractual agreement extending the notice period is permitted; in this case, however, the tenant of the hall of residence shall have the right to terminate the agreement observing a notice period of one month if there is evidence of good cause. Apart from that, termination of the agreement at the end of a semester is, in any case, effective if the agreement is terminated until 30 November with regard to the winter term and until 30 April with regard to the summer term. Termination by the operator of the student residence as well as by the student may be effected in or out of court.

In a final step, new rules on arbitration proceedings were established: With regard to disputes arising in connection with the occupancy agreement and in the event of disagreement on the bylaws of the student residence, the parties to the dispute may refer to an impartial arbitrator. Participation in the proceedings by the parties is voluntary. The out-of-court arbitration proceedings no longer represent an obstacle to filing complaints; this way, the difficulty for students to take legal action, e.g. in the case of a termination or eviction, has been eliminated. Regardless of this fact, the request for arbitration proceedings and the continuation of these proceedings before the arbitrator impede the commencement and the continuation of the statute of limitation as well as other periods regarding the assertion of rights and claims in the proceedings.

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