I wanted to share a few thoughts on the differences between the Viennese and the Romanian real estate markets, since I am a “mieter” (renter) in Vienna, but an owner of two properties in Bucharest. I’ve been offering properties for rent in Bucharest for the past 3 years now, and my experiences so far have been frustrating. So here is how things happen in the two cities.
Renting a flat in Bucharest
- A few things about the structure of the real estate situation in Romania:
- 80% or more of the people own the property they live in, only 20% or less are forced to rent.
- 90% of offers are likely posted by a real estate agent or agency, who will actually make the transaction more difficult, because he/she cannot offer almost any accurate information about the property, does not have the keys to the property, and basically acts as a highly payed human phone forwarding system between the renter and the owner. (obviously, some information will be lost in the forwarding)
- real estate agents expect a commission equal to half the monthly rent from the owner. Some also expect an additional 1/2 rent from the renter.
- Do not expect a contract. Legal contracts between the owner and the renter are somewhat of an eccentricity in Bucharest. Even if you do receive one, it usually has less than 2 pages and records a different sum of money than what you agreed on, because owners want to evade taxes. A common practice is to rent the apartment for 300-500 euros, but declare only 50-100 euro on paper, in order to pay smaller taxes.
- Even if you do have a contract signed, don’t expect the renter (and often the owner) to honor it. It’s very common to end the contract abruptly, with hardly any notice, and with no way to legally enforce penalties or consequences. Basically, you can get a phone call from your renter saying: “Tomorrow we’re leaving! We found somewhere else cheaper! And we’re not paying the last rent, because you can deduct it from the warranty.” (Kaution) This usually leaves the owner with debts to the electricity or other public utility providers, because the “Kaution” in Romania is one-month’s worth of rent or less, which barely covers damages to the apartment (quite frequent, if you’re leasing to students), bills and unpaid rent.
- People usually change apartments every 6-8 months. There are three reasons for that:
- the vast majority of renters are students, who share the apartment among themselves. When they quarrel over some issue or begin a new academic year, they tend to look for a new place (with, usually, new roommates).
- rents have been constantly decreasing since 2008, and continue to do so. Very few owners are likely to renegotiate or proactively reduce monthly rent, so renters tend to look for some other place cheaper to rent after a few months. (differences can be as high as 30% over an 8-month period)
- there are no ways to enforce contracts (in the unlikely event that there is a contract in place). If you go to court, it can take 3-5 years and expenses will exceed anything you were hoping to get back from the breached contract.
- Now, for some personal experiences as an owner, which explain why I consider this “business” frustrating:
- People will try to negotiate the rent from the very first second, before and after they sign the contract. They will complain it’s too much, but as soon as the first few months are passed, they’ll request that they start paying less, because they cannot afford it. Reminding them that they have a contract they need to honor won’t help.
- Despite complaining that they cannot afford to pay rent, it’s not uncommon that they will request an additional air conditioner or a plasma TV. Even as they negotiate rent, they will send the negotiation emails from an expensive smart phone such as iPhone or Blackberry. And I’m not talking about business people here, I’m talking about freshman students. If you don’t buy them a flat-screen plasma TV, they will eventually buy it themselves, and continue complaining about the high rent.
- People think that warranty is actually “rent paid in advance”. They think it’s weird to demand money for protection of property or any damages done to the property. I’ve had one customer complaining about this, saying he has never heard of such a thing, and leaving the room completely pissed off. As a result, people will not pay their last rent before leaving the apartment, because they think they already paid one rent in advance. Demanding money for additional bills they should have paid or for damages done is like pulling teeth with your bare hands.
Renting a flat in Vienna
- In Vienna, things are quite the opposite of Romania:
- 80% of people rent, 20% own their flat/house.
- a real estate agent wants at least 2-month’s rent commission from the renter. (usually, 2 months + VAT)
- Kaution (or warranty deposit) is at least 3-months rent.
- Contracts are the rule, rather than the exception. A contract has anything between 10-50 pages, with rules about anything and everything, from how you should throw away garbage, to whether you’re allowed to hang pictures on your walls or what happens if you leave earlier than the minimum contract period (which is usually 2 years).
- So, when someone rents an average apartment for, say, 750 euro/month rent, they need to pay upfront around 4,500 euro. Compare this to 1 month rent + 1 month warranty + 1/2 rent commission in Bucharest, which totals about 875 euro for a 350-euro-rent apartment.
- Rents usually include most of the “living expenses” (Betriebskosten), which makes payments much easier and reduces the likelihood of being scammed by the renters.
- Most apartments are unfurnished or only partially furnished. This is, again, different from Romanian apartments.
- When we moved, we visited 12 apartments, we liked 10 of them, we short-listed to 4, and finally decided on 1. The owner agreed instantly to make some necessary repairs to the apartment (a couple of walls were dirty and the sink was broken).
- Payments for rent and bills are handled automatically, meaning the other party gets access to your bank account and withdraws the needed amount of money. (direct debit)
So that’s it! If you have other experiences you’d like to share, please do so in the comments.
When the Gloriette goes dark 