Equity investment in new social housing – Austrian providers generating their own investment capital

Vienna, Austria Better Finance, Non-profit provision of social and affordable housing


Well-managed social housing providers can accumulate their own equity to invest in further social housing provision.  In Austria most new social housing has been provided by the members of the Austrian Federation of Limited-Profit Housing Associations (german: Gemeinnützige Bauvereinigungen – GBV) in recent decades. These are legally obliged to operate on a cost-capped cost recovery basis and charge rents to reflect this.

Actors involved

  • Limited-profit housing associations of Austria



More information

To generate equity to invest in new housing, the Austrian Limited-Profit Housing Associations (LPHA) can generate modest surpluses after loans funding dwellings have been repaid.  Tenants continue to pay rents for these dwellings, set at a flat rate rather than cost-linked, and these are accumulated to contribute equity funding for new social housing.  Legislation limits profit-distribution among owners, and compliance auditing by GBV plus accountability reporting enforces timely surplus reinvestment in housing construction. Furthermore, shares in a limited-profit housing association may only be sold at a nominal value.

Limited-profit housing associations are also regulated to ensure dwelling maintenance.  To achieve this, rents paid by tenants also include payment into a “renovation fund”. Each LPHA building has this fund, which must be used for improvements in the building from which it was been collected. The renovation fund must be kept separate from the other accumulated surpluses, meaning that LPHAs operate two dedicated funds: one for renovation and the other for new construction. The renovation fund enables work on properties to be completed without increasing rents, offering tenants stable and predictable costs.