By setting out new rules for the neighbourhood surcharge, the Supreme Court (Oberster Gerichtshof, OGH) changes, especially for Vienna, one of the key princi-ples for the calculation of rent payable for flats meeting certain statutory require-ments: With respect to the surcharge that may be added to such ‘guidance rent’ if the location (neighbourhood) of said standard flat is ‘above average’, it found that ‘above average’ must not be deemed to mean that the related share of land costs exceed that of the standard flat. Tables serving as guidelines for the calculation of the neighbourhood surcharge are no longer needed.

With respect to apartments in old buildings, payable rent usually consists of the guidance rent with surcharges and deductions applied to it. So far, the so-called neighbourhood sur-charge has been one of the elements having the strongest impact on rent calculation. It is admissible to charge this kind of surcharge if the property on which the flat is situated is located in a neighbourhood that is better than an average neighbourhood. But what is an ‘average neighbourhood’? According to the relevant provisions, the standards for measur-ing the averageness of a location shall be ‘general public perception’ and ‘everyday life ex-perience’.

Before the backdrop of this jumble of legal terms, in Vienna landlords would frequently charge a neighbourhood surcharge if the ‘Lagezuschlagskarte’, a specific map based on property prices which is maintained by the City of Vienna’s Municipal Department 25, showed the flat to be located in an eligible neighbourhood. According to this map, the terri-tory of Vienna has average and above-average neighbourhoods, which are subdivided into six price classes. Neighbourhood surcharges were charged for flats located in above-average neighbourhoods.

Now, the Austrian Supreme Court put a stop to this practice: It asks what areas must be used as standard of comparison for the location of a flat in order to establish whether it is above average and thus permits charging a neighbourhood surcharge. According to the Austrian Supreme Court, the property prices serving as the calculation basis for the neigh-bourhood surcharge do not reflect whether a neighbourhood must be regarded as above-average or not.

The relevant Supreme Court judgment is based on the following case: The landlords of a flat of 83 m² located in the 5th district of Vienna had demanded a neighbourhood sur-charge from their tenant claiming that public transport and all businesses needed for eve-ryday life were within five minutes’ walking distance. They argued the neighbourhood had to be classified as an above-average one because, for average flats in Vienna, the connec-tions to the public transport system are not as ideal and the businesses needed for every-day life are more than five minutes away. The flat is situated in an area eligible for a neighbourhood surcharge according to the City of Vienna’s Lagezuschlagskarte.

Consequently, the court of first instance found a neighbourhood surcharge to be justified, comparing the flat’s location to ‘all other locations in Vienna’. The court of appeal on the other hand did not use the entire territory of Vienna as the standard of comparison when judging the location of the particular flat, but at most the district where the flat is located.

The Austrian Supreme Court confirmed the decision of the court of appeal in the final anal-ysis but gave a more detailed statement of reasons for its judgement: With the average-ness of a neighbourhood depending on general public perception and everyday life experi-ence, an evaluative comparison with other neighbourhoods is required. The area to be used for such a comparison must not be determined based on any political demarcations but shall rather correspond to what is regarded a reasonably uniform residential zone by the housing market participants. The reference area to be used for assessing the averageness of the location of a building shall correspond to those areas of the territory of Vienna that, by public perception, have similar development features and (thus) constitute a reasonably uniform residential zone. In the case of a building located in the 5th district of Vienna, this means the urbanised inner-city areas which typically feature attached multi-storey build-ings. By comparison, in the case at hand, the fact that the neighbourhood is provided with public transport infrastructure and local suppliers does not justify qualifying it as an above-average neighbourhood.

Meaning, in short: Goodbye, Lagezuschlagskarte. One more indefinite aspect has been added to guidance rent calculation. Both conciliation boards and courts of law should prep for quite an amount of work.