Case Studies & Articles
31st January 2020Foreign National Equity Release on a Self-Build Property
Situated in the southern area of central Europe, Austria has a population of around 8.8 million people. The country is dominated by the Alps, creating a considerable focus on tourism, skiing and holiday homes.
In many ways, the Austrian property market is the perfect meeting point of old convening with new: picture-perfect, traditional real estate sits side by side with cutting-edge, modern architecture. The old and new styles are much like Austria itself: old-fashioned hospitality, opera, music, leisure, and wellness sit alongside world-leading infrastructure, a modern outlook and a growing economy.Let's Talk Now
Vienna is one of Europe’s smaller capital cities with a population of under two million. Where luxury real estate in other capital cities in Europe is often sold to non-residents exclusively for investment purposes, Vienna bucks the trend slightly. Many of the foreign investors buying property in Vienna wish to live in the house or apartment they are buying. The majority of luxury real estate in the city is owner-occupied, at least on a part-time basis.
In short, while there is scope to make returns on a property through rentals, the Viennese luxury rental market isn’t as lucrative as that in, say, Paris or London. That said, Viennese properties attract interest from investors from around the world, fuelled by rising property prices in the city. While this means anyone buying property in Austria as a foreigner will potentially make good returns, it’s not an uncomplicated situation from a housing perspective: many Austrians have effectively been priced out of the central Vienna market. As a result, much of the luxury property in Vienna is owned by foreigners in about a 60/40 split to foreign vs domestic buyers.
In terms of foreign investors of Vienna property, Europeans have long been enticed by the investment opportunities Vienna offers, as have investors from more far-flung locations, including Asia and the USA.
Vienna is also a top choice for East European property investors. Vienna’s luxurious surroundings, excellent infrastructure, culture, hospitality, liberty, luxury and relative proximity to Eastern Europe means Vienna is in many ways the ideal meeting point of east and west. This fuels the city’s enduring appeal for these Eastern European investors.
Vienna is a small city, but it offers more than many larger capitals, especially if you enjoy cultural and leisure pursuits. Enjoy a night at the opera, a tour of a leading museum, spend the evening at a ball…all are possible in Vienna. Of course, some of the world’s best shopping, world-leading spas and excellent dining are also on offer.
Vienna has 23 districts, but the ‘best’ is perhaps Innere Stadt. Buying property in Austria at the top of the property market is rarely cheap, but Innere Stadt is one of the most notable locations in the country, and it has prices to match. Prices start at around €15,000 per square metre for a newly constructed apartment. Super-prime property will rise to more than €35,000 per square metre for luxury penthouse-style apartments. In this sector, expect average property prices to start at around €1 million. Paying much more – several million euros – is common for the very best real estate in the city. Vienna offers some truly unique properties, and it’s not unusual to find palaces and historical buildings renovated into top-end real estate. It’s this ‘old world’ feel which adds to Vienna’s allure for many property investors.
Vienna is a historical city, and prime areas don’t allow for many new builds. There is limited new construction available, and those new builds that do exist are especially sought-after. Much of the city’s prime property is in older buildings renovated to an exceptionally high standard. Large atriums, high ceilings, period features and remodelled staterooms aren’t at all unusual. Viennese property is often – rightly – considered the height of luxury. Concierges, 24-hour security and wine cellars are all standard for the best properties.
Where Viennese real estate purchases are bought by individuals looking to live in the property they are buying, Alpine property in Austria is usually bought by individuals who want to buy a holiday or second home.
The country’s stunning vistas, serenity and both winter and summer sporting activities are huge draws. Austria offers excellent skiing, and although the country is known for its tranquillity, Austria’s most famous mountain resorts are well-known for some of the best apres-ski in the world
Naturally, there is an abundance of Alpine real estate in Austria: from modern chalets to traditional country houses and the occasional Schloss, the Austrian countryside truly has something for every property investor.
Properties in Austria’s most famous mountain resorts are nearly always high-value transactions: apartments in Ischgl start at around the EUR 2 million mark. Buying a house in Austria in the most glamorous Alpine resorts can set you back several million euros. Liquidity is also central to this type of purchase: real estate in Ischgl, for example, comes up very rarely, and the price is generally in the several million-euro range. You will need to be prepared to move exceptionally quickly to secure this type of property. Planning property finance ahead of time and working with in principle offers from banks is ideal, although Enness will be able to negotiating deals quickly, if required.
Many of Austria’s property investors are EU citizens. If you are an EU citizen, buying property in Austria as a foreigner is relatively straightforward. You can buy anywhere in the country, and there are no restrictions on homeownership, regardless of whether you wish to purchase to live in the property, rent it or use it as a second or holiday home.
As with much of Europe, buying property in Austria as a non-resident is more complex if you hail from a ‘third country’ which is to say, a country not part of the EU. You can seek to purchase a holiday property in Austria, although you will need to apply for permission to do so from the local administration. It is worth noting that specific rules can vary between the different Austrian states, so doing your homework (under the guidance of experts) if you are thinking of buying property in Austria is highly recommendable.
Buying property in Austria as a non-EU citizen is possible if the property sale benefits Austria from a social, cultural, or economic perspective. Local authorities will also ensure that the country’s national interests are protected, and that a third country citizen buying a home won’t negatively affect the country
While the criteria for buying property in Austria as a foreigner from third countries can seem relatively narrow, it opens the door for some interesting opportunities. Specialist legal firms dealing in the legalities of relocation will be able to assist you, but often there are details in your background, job or status which may help your case. A well-known sports figure from a third country, for example, may be able to make a case to buy a property based on their profile which would constitute a ‘cultural’ interest.
Austrian states are relatively free to decide who can buy or not, and applications are considered and granted on a case-by-case basis. Being able to showcase what you bring to Austria as a foreign homeowner is essential, and many administrations will want to see concrete ideas how your property ownership will benefit the area in which you buy. Many people do so successfully and can move ahead with buying property in Austria.
Buying property in Austria – particularly in the ultra-prime sector – is costly. With Viennese apartments costing anything north of EUR 1 million, liquidity is often at the centre of most real estate purchases in this part of the market.
Being liquid is paramount to ensuring that you can secure property and that property transactions get off the ground smoothly and complete successfully
Even though many property investors buying property are high-net-worth individuals, mortgages for Austrian real estate are commonplace. There are several drivers for this:
The Austrian mortgage market is relatively small compared to the European average, reflecting the small size of the country. Domestic lenders will generally offer finance to anyone buying property in Austria as a foreigner, although most of this will be mainstream property at middle-market prices. When it comes to Austrian mortgages, EU citizens will find it easier to secure financing from local lenders.
In the past, Swiss private banks were the first port of call for high-value (and in some cases, mainstream) Austrian mortgages. The Swiss franc is stable, and interest rates were often lower than those offered by Austrian domestic banks, and this was attractive for some time. However, these mortgage products are no longer offered to middle-market borrowers for a variety of reasons. With the ECB offering 0% interest rates, cheap finance is available more widely, and Switzerland’s banks are no longer the only institutions to offer such competitive financing for anyone buying a house in Austria.
If you want to borrow from a private bank when buying property in Austria, you will likely get the best rates and terms when you opt for an individually negotiated offer. In many cases, you may get the best finance if you place assets under management with a private bank. That said, this is not the only route to the most competitive mortgage rates. If you have diverse assets and you are highly liquid, your broker may be able to negotiate a mortgage with a private bank that doesn’t require you to place assets under management. Enness has access to more than 500 lenders and will secure the best rates and terms for you quickly and in a way that is most advantageous to you.
If you are buying high-value property in Austria, it’s advisable to think about property financing early. At this level, you are unlikely to secure the best deals on the high street, and the more expensive the property, the more you will benefit from a financing package that’s hand-built around your needs.
If you are buying property in Austria as a non-resident, things can be more complicated. Domestic lenders will have a strong preference to see income in euros and may reject you if you have income in one or more different currencies. By and large, Austrian lenders also tend to prefer lending to EU citizens: if you are a citizen of a third country, getting a mortgage from a domestic lender is rarely so straightforward.
While Austrian and EU citizens buying property in Austria will be able to secure mortgages with domestic lenders, doing so doesn’t necessarily mean you will benefit from the most competitive or attractive rates the market has to offer. Private banks, alternative and niche lenders can all provide other routes to lending for Austrian property.
Austrian high street lenders tend to offer package deals when it comes to mortgages. Ideal for the middle market, this type of financing is often less practical for luxury property purchases. Terms can be rigid, and rates are usually one-size-fits-all, with little room for negotiation. If you have diverse assets, significant wealth or complex income, generally speaking, more personalised financing will get you better rates and terms when buying property in Austria with a mortgage
If you are buying a property in Austria, Enness will suggest a variety of financing options for you. Refinancing property in your home country with a domestic or international lender and using the proceeds to buy Austrian property can be one such route.
If you are thinking of buying property in Austria, Enness will help you with your real estate finance.
Enness does not offer package deals or standardised financing for individuals buying a home in Austria. Instead, you can expect a mortgage vehicle that’s built to meet all your requirements – whatever they are. Enness will also be able to identify and bring forward the details, assets and particulars of your situation that will help lenders offer the most competitive mortgage, no matter the cost of your property.
Building customised mortgages starts with understanding what you need and in terms of finance, plus your ‘wish list’ for borrowing (preferred lenders, terms you are looking for, the flexibility you need, etc.) Enness will start by looking to understand:
It’s worth noting that there is competition amongst international lenders for Austrian property finance. As a result, many different elements can be negotiated, depending on where you are prepared to be flexible or grant concessions to lenders in return for a better deal or more advantageous rates. With a firm understanding of what you want, Enness will look at what to present and emphasise to lenders to present your case as powerfully as possible. The result will be the most competitive property finance for your Austrian real estate.
Enness has significant experience assisting both residents and non-residents (including third-country citizens) in securing competitive mortgages in Austria.
Contact Enness to have a no-obligation chat about your plans for buying property in Austria and explore how Enness can help you structure and streamline Austrian property finance.Get In Touch Now