Landlords in relief: Austrian Supreme Court confirms validity of value adjustment clauses in lease agreements

On July 30, 2025, the Austrian Supreme Court (OGH), in case number 10 Ob 15/25s, issued a surprising and far-reaching decision regarding the applicability of § 6 para 2 no 4 of the Austrian Consumer Protection Act (KSchG) to long-term lease agreements.

Previously lacking consistency

Previously, there was no consistent jurisprudence on this issue. Various Supreme Court senates held different views, causing significant legal uncertainty among both tenants and landlords. The Constitutional Court recently addressed this issue extensively, notably in its decisions G 170/2024-17 and G 37-38/2025-11.

Wording and purpose of the norm decisive

The Supreme Court took the opportunity to provide detailed clarification, initially emphasizing the precise wording of § 6 para 2 no 4 KSchG. This provision explicitly covers only those contracts that require full performance within two months of contract conclusion, clearly limiting its scope.

Additionally, the Court highlighted the protective purpose of the provision: to prevent unexpected price increases in short-term contractual relationships. However, long-term lease agreements typically spanning multiple years inherently involve no such surprise element. It is common knowledge and practice that long-term leases include value adjustment clauses to counteract inflationary losses, meaning tenants cannot reasonably expect a fixed, unchanging rent.

Drawing a clear line

The Court clarified further that § 6 para 2 no 4 KSchG exclusively applies to contracts fully performed within two months of their conclusion, aligning this interpretation with the legislative intent and materials.

This clarification establishes a clear boundary. The decisive factor for the applicability of the norm is not whether the agreement is a single-transaction or continuing obligation, but whether full performance is scheduled within two months after contract conclusion. This interpretation achieves an appropriate balance between consumer protection and contractual freedom.

Distancing from Constitutional Court

Notably, the Supreme Court explicitly distanced itself from recent Constitutional Court statements, emphasizing its independence in legal interpretation. The Supreme Court argued that applying § 6 para 2 no 4 KSchG to long-term agreements is neither supported by wording nor purpose and would create significant legal challenges, particularly given the European Court of Justice's jurisprudence on unfair contract terms.

Conclusion: Legal certainty achieved

Ultimately, the Supreme Court definitively stated that § 6 para 2 no 4 KSchG is inapplicable to long-term continuing obligations, especially leases, unless fully performed within two months.

This ruling finally provides legal certainty, ensuring that value adjustment clauses in long-term lease agreements remain valid, provided they are transparent and fairly structured. This offers landlords and tenants crucial guidance for future contract drafting and dispute resolution.