Impact of Coronavirus on Real Estate in Czech Republic

Recently, we held a live-stream on our Facebook page in which we talked about how the current situation has been affecting renting, selling, and purchasing apartments and houses in the Czech Republic.

For those of you who prefer reading instead of watching the stream, we present a summary of the stream:

APARTMENT RENTALS

Regarding the apartment rentals during this exceptional coronavirus period, three factors play a major role:

  1. Most people don’t want to visit an apartment due to their fear of the COVID19.
  2. Currently, there are no new expats or new tenants coming to the Czech Republic.
  3. There are lots of apartments, especially in Prague, that used to be rented via Airbnb whose owners now rather opt for renting them for a long term.

These factors resulted in a higher offer of apartments for rent at the moment, even though the demand of the market might be the same or lower. So if you’re looking for a new apartment to rent, now is the time since you’re going to have more options to choose from.

Another factor playing into the cards of people who now search for a new rent is that the Airbnb apartments are usually of higher quality, and they’re also all-inclusive, meaning you only need to bring your luggage with you. All the needed furniture and equipment is already provided. But still, you need to be careful with the Airbnb contracts because their landlords might change their minds once this storm subsides and might want to go back to their usual market in a few months. So, instead of actually saving money, you might end up paying a new commission all over again.

In addition, nowadays, you can find cheaper rentals because of the coronavirus. For example, the statistics have shown that you can get a contract with 10% off in Prague and approximately 5% off in Brno and once you sign your contract, landlords cannot change it to increase your rent for the whole duration of this contract. So our recommendation is: try to get a contract for at least a year or so to take advantage of the currently low rent prices.

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 There is, also, a new law: 209/2020 Sb. which states that:

  • the owner of the apartment cannot just kick out the tenant when they don’t pay the rent from March 12 to July 31 (they can, however, terminate their stay for other reasons or when the lease contract ends)
  • It is not enough for the tenant to simply proclaim “I cannot pay” – they must provide documents from the labor office to prove they truly are not able to pay
  • after July 31, the tenant has a duty to pay these “debts” until the end of a so-called protective period which is from April 27 to December 31, 2020
  • if the tenant states that they won’t be able to pay this debt anyway, the landlord can end the lease contract instantly
  • if an expat left for home before coronavirus and they are able to pay the rent they are obliged to do so since the borders are only closed temporarily and now EU nationals are allowed  come back to the Czech Republic 
  • if the landlord happens to ruin into a personal financial crisis because of that (no income from the apartment rental), for example, when they have a family to take care of, they can contact a court (if they don’t come to an agreement with the tenant) and demand the rent to be paid this way

APARTMENTS PURCHASES

In contrast to rentals, if you’re thinking of buying a new apartment, maybe you won’t have the same amount of options as you might have had in the past. Another statistic has shown that the amount of new apartments to purchase in the Czech Republic has decreased to 200 from the previous 500, which means that probably the property owners are waiting to see how the situation is to evolve in the upcoming months in order to decide whether they are selling or not.

If you want to get a loan it won’t be probably that easy nowadays, even though the Czech National Bank says otherwise. Commercial banks don’t really follow these instructions and they’d rather wait and refuse to give loans to new clients to avoid risk.

Furthermore, the long-term interest rate is pretty low at the moment and probably there will not be any significant change in the months to come.

There is good news, though: Czech government approved to abolish real estate transfer tax, meaning that people who bought property latest in December 2019 won’t have to pay this tax. The government proposal is now waiting for the Parliament’s approval.

Would you like to watch the live-stream but have no Facebook? Here is a Youtube video.

We will keep bringing you interesting live-streams about current topics. Follow our Facebook page to stay updated.

 

Photo source: Daikou Maria

Maria Daikou

Maria Daikou

Where's the beauty in already knowing what happens next? Embrace the mystery of your own journey and exceed your boundaries. The door is wide open.

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