“Broker commissions in tenancy law: The Constitutional Court confirms the ‘ordering principle’”

The Austrian Constitutional Court confirmed the constitutionality of Section 17a of the Real Estate Brokerage Act in a ruling on February 27, 2025. The debate centered on the so-called “ordering principle”: the regulation stipulates that, when brokering residential rental contracts, the party that first commissions the broker must pay the broker’s commission.

A landlord had argued that this regulation violated his property rights and freedom of contract and led to an unjustified burden – in particular because it applied regardless of the tenant’s income situation and therefore also favored luxury tenants.
The Constitutional Court takes a different view. In its detailed deliberations, it clarified that the legislator has further legal policy leeway when drafting rental and housing law provisions. The aim of the law was to relieve the burden on tenants with low and medium incomes in particular, as the estate agent’s commission has often represented a considerable financial hurdle at the start of a tenancy to date.

The court emphasized that before the regulation came into force, many tenants effectively had no way of avoiding the conclusion of an estate agent contract. They had to pay commission even though the initiative for brokerage typically came from the landlord. In the Court’s view, the amendment to the law therefore represents an objective, proportionate and legally legitimate measure.

Property interventions are also permissible as long as they are in the public interest and proportionate. The judges refer to similar regulations in Germany, which were also confirmed by the Federal Constitutional Court there.

Conclusion: The Constitutional Court strengthens the social balance on the tight housing market and does not see any unconstitutional discrimination against landlords in the current legal situation. The ordering principle therefore remains in place.