Developer loans in Austria via crowdinvesting platforms

In Austria the retail route to developers is usually a qualified subordinated loan that ranks last before equity. What that means and what to check.

A private person in Austria, or a foreigner, who wants to put money into a property developer there will in practice meet a crowdinvesting platform, and the usual instrument on those platforms is a qualified subordinated loan. That is almost the opposite of a loan secured by a mortgage. This guide explains what the instrument is, what you actually hold, where the risk sits, what we could not verify and what to check. It is general information, not legal, tax or financial advice, and money put into such a loan can be lost in full.

This is not the German product

Elsewhere in this series we describe a different structure: a direct loan to a German developer, secured by a land charge (Grundschuld) in the lender's favour. See how a private loan to a German developer works and the due diligence checklist. The Austrian platform loan described here usually has no first-ranking security and ranks behind every other creditor. It is a different product with a different risk, and it should not be read as 'the same thing, but in Austria'.

The legal frame in short

Austria regulated crowdinvesting and crowdlending in 2015 with the Alternative Financing Act (AltFG), which sets out information duties and exemptions from the full prospectus regime for small offers. The Financial Market Authority (FMA) supervises the capital-market rules.
The thresholds that decide whether a prospectus or a lighter information sheet is needed apply per issuer and per twelve-month period. The sources we found give different figures: EUR 2 million, EUR 5 million and a lower threshold for an information sheet, and some of them mix the rules before and after the 2018 amendment. We do not state a number. Read the current text of the AltFG on the legal information system of the Republic (RIS) and the FMA's pages.
Regulation (EU) 2020/1503 on European crowdfunding service providers has applied in all EU countries since 10 November 2021. We could not confirm how the AltFG and the EU regulation divide the field for Austrian platforms. Ask the platform which regime its offer falls under and check it against the FMA's pages and the EU-level register.
Austrian banking law requires a licence for lending as a commercial, repeated activity. Where an occasional private loan stands is a question for an Austrian lawyer; we have not verified it.

What you actually hold: a qualified subordinated loan

The standard contract on Austrian crowdinvesting platforms is the qualified subordinated loan (qualifiziertes Nachrangdarlehen). You lend to the project company and your claim ranks last before the developer's equity: other creditors are paid first. Under a qualified subordination clause the payments to you can also be held back while the company is in financial difficulty, as the clause states. In an insolvency the practical outcome is usually a total loss, which is how Austrian law firms describe it.

Two further points. First, there is normally no duty to put in further money, so your loss is capped at the amount you invested. Second, the Association for Consumer Information (VKI) classifies such loans as highly speculative and expects a total loss if a project fails.

Security is the question to ask of each project. Most subordinated loans are described as unsecured. Some real estate portals reportedly let lenders be entered in the land register, which would give a pledge that is served first, but the sources we read conflict and several of them come from Germany, where the terms differ. If a project does state a land-register pledge, read how it fits with the subordination clause, and who holds the pledge, because a pledge in the name of a bank or of a trustee does not automatically help you. Do not assume a security exists; read the project documents.

What the platform does, and what it does not

The platform selects the developers, publishes the information, collects your money and passes repayments back. It earns fees for this. It does not guarantee repayment. The failures that have already happened show it: one Austrian platform reportedly suspended its real-estate offer after defaults, according to a 2024 report whose current status we could not check. We do not name platforms and we do not rank them.

The risks, plainly

Total loss. A subordinated claim is paid last, so a failure of the project usually means nothing is left for you.
No security of first rank. Unless the documents show otherwise, nothing stands between you and the developer's other creditors.
Delay and extension. Projects run late and terms are extended; the date you expect your money back is an estimate.
Illiquidity. The money is locked for the term and there is normally no way to sell the claim before maturity.
Platform risk. If the platform stops, repayments still have to be collected by someone.
Concentration. One project, one developer, one platform: do not put a large share of your savings in it.
No deposit guarantee. A loan to a developer is not a bank deposit.
Marketing. Advertised rates are the platform's marketing. We quote none, and a high advertised rate is itself a sign of high risk.

Tax, and what we could not verify

The rate of 27.5 percent applies to most capital income in Austria, and whether it is withheld on a crowdinvesting loan depends on how the loan is classified, as a private loan or as a debt security. We could not verify how interest is taxed for a lender who lives outside Austria, whether tax is withheld at source, or what a tax treaty changes. Ask a tax adviser before you invest and ask the platform what it withholds and reports for clients who live abroad. Your own country of residence will usually tax the income as well.

Checklist before you invest

Find out under which regime the offer is made, and check the platform against the FMA's pages and the EU-level register.
Read the whole subordination clause: what ranks ahead of you, when payments can be stopped, what happens on insolvency.
Find the security, if any, who holds it and how it relates to the subordination.
Find out who the developer is: accounts, earlier projects, the share of the project paid with its own money.
Check the permits, the building progress and the share of units already sold.
Check the term, the extension rules and what the platform does on a delay.
Find out what happens if the platform stops operating.
Add up all the fees.
Keep every project to a small share of money you can afford to lose.

Questions people ask

Is a subordinated loan the same as a mortgage loan? No. A mortgage loan is secured by a charge on the property. A subordinated loan ranks behind other creditors and is usually unsecured.

Can I lose more than I invest? Normally not, because there is no duty to put in further money. You can lose all of what you invested.

Can someone who lives abroad invest? Platforms set their own rules by country of residence. Ask before you register.

How we help

We do not offer or arrange loans to Austrian developers. What we can do is talk through the German project financings we work with, show the documents and terms of those offers, and, for Austria, help with the purchase side: see rental yield and investment in Austria and prices and buying costs. We do not quote returns. This text is general information and not legal, tax or financial advice; the terms of any offer are set by the issuer.

Lending to developers in Austria through crowdinvesting platforms: subordinated loans, not a mortgage