In this paper we deal with the question of whether there exists an incentive for landlords to invest into energy efficiency of buildings in the Austrian real estate market. We discuss the general framework of the issue, which is characterized by the fact that landlords control the energy efficiency of buildings while renters pay the heating costs, and the legal framework in Austria. Then, based on data from the EU-SILC survey, we test in a hedonic price framework whether renters are paying a higher rent for (otherwise equal) properties with lower heating costs. It is argued that only in this case landlords would have an incentive to invest in the energy efficiency of their buildings. The analysis provides no support for this hypothesis. For two different years and a range of model specifications we always get positive coefficients for heating costs, some of them highly significant. This indicates an adverse incentive which has substantial implications for policy.