Written by Richard Gürlich
of GÜRLICH, ODROBINA & spol.
WHAT YOU NEED TO KNOW WHEN YOU LET A FLAT
In our previous articles we wrote about the acquisition of property in the Czech Republic. Hopefully, many of you succeeded and are now owners of a building or a flat. If you want to earn money by letting a flat you have bought, then this article is for you.
We are going to concentrate on changes regarding letting a flat which were made under Law No. 107/2006 Coll.: the Law on unilateral increase of rent and the changes in Law No. 40/1964 Coll., civil code. Hereafter we will just call these “The Law”). The changes can be divided into two categories which are:
1. The possibility to unilaterally increase the rent for flats where the rent used to be fixed and unchangeable due to binding regulation
2. The changes regarding lease of flats where the rent isn´t regulated, and so the rent depends upon an agreement between the lessor and the lessee
This article addresses point 1. In our next article we will address point 2.
The new Law states that the unilateral increase of rent can be imposed by the lessor between March 31, 2006 and December 31, 2010 which corresponds with the effectivity of the Law. If the lessor decides to increase the rent several conditions must be met. The conditions are the following:
1. An announcement of the increase of the rent must be sent by the lessor to the lessee. The document must be in writing and must include the reasoning for the increased in rent, e.g. the explanation why the increased amount of rent is asked in accordance with the Law
2. It is not possible to increase the rent immediately, but with effect from January 1, 2007.
3. It is only possible to increase the rent once a year.
4. The increase of rent can not exceed the maximum amount given by applicable regulations
The obligation to pay the higher amount of rent applies:
1. From the day given in the announcement of the increase of rent (Given that the conditions mentioned above are met).
2. On the first day of the calendar month three months after the announcement of the increase in rent is delivered to the lessee at the soonest.
To explain what is mentioned under points 1 and 2 regarding reasonable demands for higher rent, we should give an example:
If the lessor wants to increase the rent with effect from March 1, 2007 the announcement must be delivered to the lessee on November 30, 2006 at the latest. In the case it is delivered later, let´s say on January 10, 2007, the rent can´t be increased sooner than May 1, 2007 even if the date of March 1, 2007 is mentioned in the announcement.
If the lessee has some doubt about the legitimacy of the increase in rent, they are entitled to file a petition with a court and seek a court ruling on whether the increase of rent is in accordance with Czech Law, or not within the legally required period of time as mentioned above.
Finally, we should mention that there is an appendix to the Law, whereby it is possible to calculate the exact amount of money by which the rent can be increased in a particular location and in a particular flat.
We trust that this article will provide you with basic guidance on how to proceed in case increasing rent concerns you, whether you are the Lessee or Lessor. We are ready to answer any particular questions you may have, and will be pleased to offer you our services if you wish.