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Aug 22, 2006

Czech law is pro-landlord


Czech Republic row housesRents: Can landlord and tenant freely agree rents in the Czech Republic?

Foreigners, renters of housing built after 1993, and new renters of houses with vacant possession, live in the free market. Rents in this sector are free - entirely determined by agreement between landlord and tenant.

However 90% of the population still lives in controlled rental housing, where rents are much lower. They are either ‘controlled rents,’ pegged per square metre according to the size of the town and the category of flat (there are 4 categories), or ‘materially regulated rents,’ calculated according to costs.

What rights do landlords and tenants have in the Czech Republic, especially as to duration of contract, and eviction?

The difference between the two sectors above can be stated in another way – the free market has fixed term contracts; in the controlled market, unlimited contracts prevail.

In the free market, the parties may negotiate any period of contract. If no period is stipulated, the contract becomes a contract for an indefinite period. The contract must be in writing.

The tenant may repudiate the contract at any time by giving three months’ written notice, without stating a reason. The landlord can only repudiate the contract for serious cause, such as the need to use the flat for his own family. It is common to conclude free-market leases for rather short periods.

Czech Republic properties and real estateAt the expiration of the contract, the tenant must vacate. He is not entitled to substitute housing. No notice is required. However, if the tenant stays on and if the landlord files no petition for his evacuation within 30 days, the lease agreement is renewed under the same terms that it was originally concluded, although a lease concluded for a period longer than one year is always renewed for a year. A lease concluded for a shorter period is renewed for this period.

A flat lease terminates on death of the tenant.

The landlord may repudiate the lease if the tenant does not pay rent for three months.

In indefinite contracts, the landlord can give a notice to the tenant only for approved reasons and in some cases has to provide the tenant with an adequate dwelling as compensation, even in certain cases of eviction for not paying the rent. The process in these cases takes on the average 3.5 years.

Deposits

There is no maximum deposit period, and quite long deposits are common.

How effective is the Czech legal system?

EVICTION FOR NON-PAYMENT OF RENT

Duration until completion of service of process 60
Duration of trial 90
Duration of enforcement 180
Total Days to Evict Tenant 330
Courts: The Lex Mundi Project

Legislation

The Civil Code covers renting. Controlled rents are covered by the Price Regulation of the Ministry of Finance

Brief history: Recent changes in Czech landlord and tenant law

Under communism, the state took over most housing. In 1959 enterprise and co-operative housing was introduced.

After the 1991 economic reform, housing was not high on the agenda. There was no large-scale ‘right to buy’ in the Czech Republic; instead, many dwellings were restituted to former owners. In Inner Prague, 75% of all dwellings were restituted. High figures generally applied to city centres. Meanwhile the municipalities, which took over much state housing, have been slowly privatizing. There remains a sharp divide between the ‘free’ sector of dwellings built after 1993 (and dwellings with vacant possession or rented to foreigners), and the controlled sector. The government is slowly narrowing the gap by a) raising controlled rents; b) introducing compensatory income subsidies.

    





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