Everything an expat needs to know when deciding to rent a flat in Prague

In recent years, the rental housing market in Prague has seen substantial expansion, mainly driven by the challenges associated with property ownership. As we step into 2024, analysts anticipate a sustained increase in the demand for rental properties, despite the possibility of declining mortgage rates. This persistent trend is sustained by the ongoing disparity between the demand for housing and its availability. Hereafter, we will delve into a summary of some prevailing trends in the market.

• Consistent growth across different types of accommodations: in 2024, price dynamics among different apartment layouts are not expected to change. Unless unforeseen global market disruptions occur, rental prices are projected to maintain a steady growth trajectory and the completion of planned housing projects is unlikely to significantly alter this pattern, as demographic data and social mix analyses do not foresee higher growth dynamics among various apartment types.
• The shift towards rental housing: while the desire for property ownership remains, its feasibility, especially in Prague, is increasingly challenging. The attainability of personal housing in the city continues to be problematic, leading to an ever-increasing demand for rentals. The scarce construction of new apartments exerts pressure, causing both property prices and rental costs to rise. This year, the situation could see a slight improvement, yet, over the long term, a stable and gradual increase in rental prices is anticipated.
• Neighborhood variations in rental prices: rental costs in Prague vary by spot. Central neighborhoods like Vinohrady, Nové Město, Bubeneč, Karlín, and Smíchov continue to be sought after. However, areas beyond the city center are becoming increasingly popular, particularly those featuring new development projects that provide energy-efficient living, reduced operational costs, parking facilities, outdoor spaces (balconies, terraces, gardens), and surrounding greenery.

Renting an apartment in Prague comes with a swift accumulation of initial costs. Beyond the first month’s rent, tenants need to factor in a reservation fee, security deposit, and moving expenses.

Initially, tenants pay a reservation fee which is generally equivalent to one month’s rent plus VAT to the real estate agent for securing the apartment. This fee transforms into the agent’s commission upon lease signing.

Upon lease signing, tenants must provide a security deposit, known as kauce, varying from zero to three months’ rent. Most landlords request a one- or two-month refundable deposit to safeguard against potential property damage or nonpayment.

To conclude, in addition to the deposit, the first month’s rent is due by the 5^th of that month as per the law.  

Combining the deposit, first month’s rent, and reservation fee, tenants should be prepared to pay 4-5 months’ rent upfront. Additional expenses may include moving costs and cleaning fees. In summary, the average initial apartment rental costs in Prague hover around 5 months’ rent. Proactive planning for these considerable startup expenses is crucial for a seamless renting experience in Prague.

You do not necessarily need any special documents to lease a flat in Prague. Generally, avalid ID card or passport is enough.

In some Western countries tenants are usually asked for proof of income, together with a bank statement, employment contract, and even references from previous landlords. This is not a usual practice in the Czech Republic, but it’s at the discretion of landlords to ask for these documents.

Landlords or rental agencies in the Czech Republic usually only check the insolvency register, the central register of enforcement, and the database of persons wanted by the police when considering prospective tenants.

Once all these checks are completed, and the landlord agrees to lease the flat, as a binding step it’s then necessary to sign a reservation contract to block the flat before the lease contract is signed. In this stage, the tenant is asked to pay a reservation fee which will usually be safely kept by the rental agency as a reservation deposit until the final contract is signed.

After the lease contract is signed by both parties, and the tenant has paid the first monthly rent and the security deposit to the landlord, the flat is then handed over. The handover protocol, which is a documentation of the apartment’s conditions including evidence of any previous damages and initial data from utilities readers, needs to be signed by both parties. Then, after the handover, electricity and gas consumption can be transferred to the tenant if both parties agree and through the filing of another two forms.

As a final step, the landlord is obliged to inform the Foreigner’s Police within three days from the finalization of the rental contract that their apartment is leased to a foreigner.

Lease agreements in the Czech Republic must incorporate some standard clauses articulating the terms and conditions governing the rental arrangement. These provisions are crafted to safeguard the rights and responsibilities of both landlords and tenants. Fundamental clauses include:

• Lease duration, which defines the lease term and (possibly) procedures for lease renewal or termination.
• Rent payment, where specifications about the monthly rent amount, due date, and further provisions related to late rent payments or penalties are outlined.
• Security deposit and conditions for its return, together with allowable deductions for damages or unpaid rent.
• Clause about maintenance responsibilities specifying which party bears the responsibility for property maintenance and repairs during the lease period.

Besides these mandatory provisions, other additional and non-mandatory clauses may cover various aspects of the rental agreement, such as clarifications about utilities, early termination provisions, stipulations regarding whether pets are allowed, and provisions about renovations or alterations to the flat.

When entering into a lease agreement in the Czech Republic, particularly for expatriates, it is advisable to seek legal counsel from a local expert. This ensures a thorough understanding of the terms and conditions outlined in the lease agreement, as well as comprehension of rights and responsibilities as a tenant. Expatriates and newcomers should also acquaint themselves with their rights under Czech rental laws, which offer tenant protections and regulations concerning rent increases, lease renewals, and eviction procedures.

The rental culture in the Czech Republic has undergone substantial changes in recent decades, and along with it, the tenant-landlord relationship has evolved significantly. Consequently, the contemporary dynamics between tenants and landlords are relatively recent. While the protections established by the Czech Civil Code in 2014 align with regulations seen elsewhere in Europe, their practical implementation has encountered challenges, particularly as the private rental sector has matured.

After the fall of the communist regime during which private property was basically forbidden and people used to live in state-owned accommodations, property ownership shifted back to occupants leading to a resurgence of private rentals, though home ownership has remained strongly preferred. Fortunately, there are now robust legal protections in place for tenants, allowing them to comprehend their rights and address disputes when necessary. Overall though, the Czech legal framework prioritizes tenants’ interests.

Let’s take a look at the main features of the tenant-landlord relationship:

• Despite Czech landlords typically do not require supporting documentation from prospective tenants such as proof of income and bank statements, they are legally permitted to request them.
• Landlords retain the right to reject applicants without being obliged to furnish a specific reason.
• Termination rules differ depending on the type of lease in terms of duration, type of tenant (individual or company), and its intended use. In general, landlords can terminate the use of the apartment for themselves or a family member, while either party can terminate for “gross violation” of the contract by the other. Yet, a proper notice period as defined in the contract or by the law must always be given.
• The landlord cannot raise the rent at their will during the period of a fixed-term lease contract unless there’s an inflation rate clause specified in the contract. Without such a clause, the Civil Code caps rent increases at 20 percent over any three years.

In addition to the base rent, tenants can be responsible for pre-payments towards building utilities including, for example, waste disposal and cleaning of common areas. These cannot include, however, expenses related to repair funds and building insurance which should instead be paid by the landlord.

Finding the ideal rental property can be a challenging endeavor, particularly in a city as lively and diverse as Prague. With the increasing demand for rental properties, navigating the real estate market can become quite overwhelming and seeking the assistance of a rental agent can make a significant difference.

1. One of the key advantages of engaging a rental agent in Prague lies in their extensive understanding of the local real estate market. By capitalizing on their expertise, rental agents can effectively navigate you through the extensive range of options, guaranteeing that your search is both targeted and customized to your preferences.
2. A rental agency can simplify the research by providing carefully selected property listings that match your specific requests. This not only saves you valuable time but also ensures that you visit only those properties aligning with your criteria, minimizing unnecessary tours and potential frustrations.
3. Rental agents possess the necessary negotiation skills thanks to their experience in the industry. They act as effective intermediaries to reach more favorable terms and conditions that ultimately benefit you as a tenant.
4. Rental agents often have access to elite property listings that may not be readily available through public channels. By engaging a rental agency, you get access to their exclusive inventory possibly including hidden gems and special opportunities that might be overlooked relying solely on online platforms.
5. A rental agent will offer valuable support by clarifying local rental laws, ensuring that your lease agreement is fair and conforming to regulations, and handling any legal concerns that may arise throughout the process.