Austria's 5th Tenancy-Law Inflation-Mitigation Act (5. MILG), together with the Rent Indexation Act (MieWeG), took effect on 1 January 2026. Public discussion often calls it a "rent brake." The legal reality is more layered.
This overview covers which rents are capped, which are not, and what the Vienna market is actually showing in early 2026.
Three MRG regimes, three ceilings
The reform does not apply uniformly. Austria's Tenancy Act (MRG) recognises three application tiers, each with its own ceiling.
| MRG tier | Typical units | Ceiling 2026 | Ceiling 2027 |
|---|---|---|---|
| Full application | Old buildings (permit pre-1953), municipal housing, WGG cooperatives | +1% | +2% |
| Partial application | Post-1953 new builds, condominiums let under a tenancy | ~3.25% (formula) | ~3.25% (formula) |
| Full exemption | Single- and two-family houses, privately financed units over 130 m² | no MieWeG ceiling | no MieWeG ceiling |
The partial-application formula: inflation adjustments up to 3% are passed through in full; the share above 3% only at half. At 3.5% inflation this translates to a maximum of roughly 3.25%.
The full exemption sits outside MieWeG entirely. Whether and how an indexation clause applies is governed solely by the individual contract.
What is capped — and what isn't
The 1% (2026) and 2% (2027) ceilings apply only to valorisation — the inflation-linked indexation of existing contracts in the full-application tier.
They do not apply to the starting rent on a new lease. When a full-application flat is re-let after a tenant change, rent is determined under §16 MRG (reference-value rent plus location surcharge, or "angemessener Hauptmietzins").
Vienna's Richtwert rose from €6.67/m² to €6.74/m² on 1 April 2026 — exactly the permitted 1% (source: Statistik Austria). For a typical Altbau contract that works out to about 7 cents per m² per month.
What the market shows
The ceilings bite in the full-application tier, but Vienna's market consists of several segments with very different dynamics.
- Paid rents (existing tenants, including operating costs, all contract types): +4.6% year-on-year, averaging €10.40/m² in Q4 2025 (Statistik Austria, Wohnen Q4 2025).
- Asking rents (new listings): +10% year-on-year in 2025, averaging around €21/m² gross (ImmoScout24 Wohnindex). Some districts — Neubau, Brigittenau, Landstraße — posted increases above 23%.
- OeNB forecast 2026: regulated rents at the cap (+1%); unregulated segments at ~3.25% under the formula (OeNB Economic Outlook, December 2025).
METROX data currently shows the asking-rent spread across Vienna's 23 districts at roughly €14–28/m² gross (median values, Q2 2026). Inner districts mostly sit above €20/m², outer districts between €14 and €18/m². These figures reflect listings — executed transaction rents typically sit below this range.
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What this means for tenants
Existing full-application contracts can be raised by at most 1% in 2026. For a typical Vienna Richtwert rent that works out to about 7 cents per m² per month.
On a move, the market rent applies — and on new leases it sits materially above the paid-rent average. This is a structural effect of scarcity and low turnover in the regulated stock, not of the cap failing.
What this means for landlords
Indexation clauses on existing full-application contracts can only lift rents by 1% in 2026 and 2% in 2027. When a fixed-term tenancy ends and a new contract is signed, the rent can be re-set within the §16 MRG limits (reference-value rent plus location surcharge, or "angemessener Hauptmietzins").
The minimum fixed-term length for commercial landlords was extended from three to five years on 1 January 2026 (§29 MRG).
What this means for investors
The MRG tier is price-forming. A partial-application unit offers more indexation headroom than a full-application unit. Yield models should reflect the specific MRG tier rather than a blanket cap.
The gap between paid rents and new-lease rents in Vienna is historically large and only closes on tenant turnover. Turnover frequency and fixed-term rules therefore become material yield variables.
Outlook
The reform carries no sunset clause for the ceilings. From 1 April 2028 the full-application tier reverts to the standard indexation formula (3% plus half of any excess). The Austrian Constitutional Court (VfGH G 170/2024, June 2025) has upheld comparable indexation limits as proportionate.
Frequently asked questions
Does the rent cap apply to new builds? Post-1953 new builds fall under the partial-application tier and the 3% formula, not the 1% ceiling. Privately financed units over 130 m² sit in the full-exemption tier.
What is "valorisation"? The inflation-linked indexation of existing rent contracts. The 1% ceiling applies only to this indexation — not to the starting rent on a new lease.
Can my landlord raise the rent by more than 1% despite the cap? Not via indexation on a full-application contract. Rules differ for new leases and for partial-application units.
How long does the 1% cap apply? For 2026. In 2027 the ceiling rises to 2%. From 1 April 2028 the standard formula applies again.
Sources
- 5th Tenancy-Law Inflation-Mitigation Act, BGBl. I No. 114/2025
- Statistik Austria, Wohnen Q4 2025 (March 2026)
- Statistik Austria, Reference values (Richtwerte) from 1 April 2026
- ImmoScout24 Wohnindex Vienna 2025
- OeNB Economic Outlook, December 2025
- METROX Vienna Dashboard, asking rents Q2 2026
Disclaimer
This article is for informational purposes only and does not constitute legal or tax advice. METROX shows median values from aggregated public market signals; transaction rents may differ.
