Facing a Rental Increase? Find Out What You Can Do about It

As an institution that provides apartment rentals, we receive a lot of questions about increasing rental payments by the apartment owners. It is an issue that is useful to understand. When the price of your accommodation is being raised, you ask why is that happening and if the amount is reasonable, right? So, what is the reason behind?

What amount is “normal” and when is it too high?

Can you prevent it?

What are the tenants’ rights?

These and more questions will be answered, just keep on reading.

Contract

The first thing you need to do when renting an apartment in the Czech Republic is to agree on the contract (so-called lease agreement) and that means on the price, place, time period etc. According to the Civil Code, if you are not going to discuss the high/amount of your rent, the landlord can assess the price according to the local prices at that time. That means you have the power to go through the contract with your landlord and change it.

 

Rent increasement

If you want to prevent unexpected increasement of your rent, according to the paragraph 2248 of the Civil Code, you can design the yearly increase in your rent with your landlord beforehand. However, if you didn’t discuss the exact amount that is your rent going to be increased for, or if you didn’t agree on excluding any type of increase, your landlord can higher the rent up to the local prices of apartments in the area. The increase should not go over 20% of the rent or over the usual price of rent in the area.

 

If you as a tenant agree with the increasement of the rent, then you must defray this amount at the beginning of the third month after receiving the offer from the landlord. If a tenant is not going to reply to this offer in written form in two months after receiving, then the landlord has the right to ask the court to suggest the increment amount in the period of 3 following months. The court can decline, if the landlord sends the offer to the tenant with a delay. The court is going to suggest a price that is regular in the area and time period.

 

The same process applies if the tenant suggests a decreasement of the rent.

 

Other reasons for rental increase

There could be other reasons why your rent is getting higher. For example, if the landlord renovates the building, buys new furniture, repairs floors, buys new boiler, applies new economical innovations etc. Simply said, if the condition of the accommodation enhances/gets better in some way, the landlord invested extra money to make your home more pleasant and that means, the price of the apartment raises and so is your rent. However, the rent can grow up to 10% of the used assets maximum, in that way you can have an idea what price to expect. If you are not going to discuss the price together with the landlord in advance, then the price grows up to 3,5% yearly from the used assets automatically. What needs to be said is that your rent can be raised in any time period, depends on the reason of the increase.

 

Inflation

The last reason why the prices of rentals grow yearly is INFLATION.

What is inflation? Basically, it could be explained as a growth of the average price level of specific goods and services in Consumer basket. After prices rise, they begin to influence the general costs of living in the country. Inflation can be measured by using Consumer price index (CPI), Producer price index (PPI) and the deflator of the Gross National Product.

 

CPI – measures assets used by one household and in that way it shows price level and the average price of the Customer basket – which basically stands for a group of things, that you spend money on, such as costs for rent, food, culture etc.

For more details considering Customer basket click the link below:

Customer basket archive

 

PPI – is based on prices of commodities (= goods on the market, that has no differences in the quality, it cannot be for example a car, that has SEVERAL different manufacturers, prices and places of production ). It is specific for each industry and fields. The basket includes different goods and services, for example, convenience foods or raw materials.

 

Deflator GNP – simply said, this one is similar to CPI, the difference is that GNP measures changes in prices, not the stable Consumer basket

The actual average year-to-year inflation rate is for December 2018 2.1% which gives a 0.4% decrease from 2017. Overall inflation has been increasing since 2014 but also slightly decreasing from July 2018.

Get more info: Monthly development of the annual consumer price index

If you would like to check any kind of information about inflation or gain some other knowledge in the Czech statistics click on this link: Czech Statistical Office (CZSO).

Tenants rights

In the contract which tenant and lessor signed all right and responsibilities involving both sides have to be stated. Let’s focus on the side of the tenant.

 

Rights

A tenant that pays the rent regularly and behaves according to the rules have certain rights as following:

  1. § 2208 – If the lessor is told in time to fix for example a broken boiler, but he is not taking the action to do so, a tenant has the right to get a reasonable reduction on their rent or they can fix it by themselves and ask for repayment of the assets from the lessor. Lessor will repay assets that are not higher than monthly rent and if the tenant lives there shorter than one month than no higher amount then rent for the period. Tenant has to apply this right within 6 months thereafter it is not going to be accepted by the court. Read more about what to do when you need to make minor repairs here.
  2. § 2215 – if the lessor agrees in written form, the tenant can accommodate the third party.
  3. § 2219 – The lessor has the right to ask the tenant to visit the accommodation in adequately time period to maintain or repair something, but if he causes any difficulties, the tenant has the right to get rent discount.
  4. § 2220 –  The tenant has a right to ask the lessor, if they want to make changes in the accommodation. The lessor has to deliver a written form of approval. Tenant is using their own sources for the change. If the change increased the price of the place, both parties are going to compensate when the contract is ending.
  5. § 2255 – If it’s not going to restrict anything and anyone, tenant work or do business at that place.
  6. § 2258 – Tenant has the right to have a pet if the breeding is not going to give problems to any other party.

 

If you need any type of advice that is dealing with this issue do not hesitate to visit our website Foreigners or to contact us through FB Foreigners.

 

You can also read more on our blog:

Bureaucracy behind flat renting in the Czech Republic

Do not hesitate to contact us or to visit any of our offices 🙂

Sources:

https://www.podnikatel.cz/zakony/novy-obcansky-zakonik/f4585909/

http://www.miras.cz/seminarky/makroekonomie-09-inflace.php

https://www.czso.cz/csu/czso/inflation_consumer_prices_ekon

https://www.investopedia.com/terms/i/inflation.asp

Hana Lahodová

Hana Lahodová

Hi Everyone! My name is Hana and I am a Czech citizen, who is currently studying in Denmark. I was lucky enough to get a position of a PR Intern here at Foreigners and that means I have the great opportunity to share some of my work with you guys.

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