Effects of Brexit on the acquisition of real estate by British citizens in Austria

Brexit Asset Deal Real Estate Real Estate Transactions

Austrian real estate transfer laws

Austrian real estate transfer laws – which are enacted and adopted by each of the nine provincial legislators due to its constitutional classification as a federal competence – provides for individual restrictions in the form of approval or notification requirements for the acquisition or transfer of rights to real estate by nationals or third country nationals. While British nationals have to date been treated equally to Austrian nationals given their status as citizens of the European Union, their equal treatment under the laws could end after Brexit.

The United Kingdom officially withdrew from the European Union on 31 January 2020. In the run-up to this, a withdrawal agreement was signed which includes a transition period ending on 31 December 2020. Under the agreement, the legal status of the citizens of both sides will not change until this period ends. Until this date, the acquisition of title to real estate by British citizens is therefore to be treated in the same way as it is for Austrian nationals. However, despite the existence of this withdrawal agreement, it is still possible that the UK will withdraw without an agreement (a so-called "hard" Brexit) as most of the provisions of the withdrawal agreement cease to have effect at the end of the transition period.

The absence of an international treaty between Austria and the United Kingdom generally means that once the transition period comes to an end, British citizens are qualified as third country nationals and will be subject to the stricter regulations of the laws on real estate transfers for any acquisition of property as of 1 January 2021. As a rule, permission will therefore be granted on the basis of the existence of public and economic interests. Under certain circumstances, however, British citizens and British companies might still be able to rely on the free movement of capital.

As a precautionary measure, the individual federal legislators have enacted accompanying Brexit legislation in the event of a hard Brexit. Although most accompanying Brexit legislation makes provision for treating British and Austrian nationals equally for a certain transition period, usually a few months or years, real estate transactions are usually explicitly excluded from such arrangements. This means that despite the existence of explicitly created laws to put the British on an equal footing with Austrian nationals, they are currently to be treated as third country nationals with regard to the acquisition or transfer of real estate from 1 January 2021.

However, it remains to be seen whether a hard Brexit will actually occur or whether the parties can still agree on a withdrawal agreement after all, which could possibly also contain regulations on real estate transactions within the Union. However, this does seem rather unlikely given the history of the negotiations to date. Of course, a bilateral agreement under international law between Austria and the United Kingdom would be one way around this issue, but as things stand there is no sign of this at present.