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 Real estate in Czech Republic

Plenty of people fall for Czech Republic as early as during their first visit. Ancient architecture, great beer, tasty pork knee, and Central Europe all around – what else do you need for happiness? Sure, to make the list complete, a person needs a roof above his or her head. Preferably, this roof has to be owned, not rented. This is what we are going to talk about today, buying real estate in Czech Republic.
Here comes a first fly in the ointment. A foreigner can't buy a house or a flat, according to the law. It is likely to be changed soon, but today the law says that a person without Czech permanent residence can't buy property. Still, this can be solved by buying this property for your Czech company. Registering a public company (s.r.o.) is fairly cheap and easy. Intermediaries will charge you from 2,000 to 3,000 Euro for that. You get the company and buy property as the company owner.
There are several types of real estate here. The best option is private property, or osobni vlastnictvi in Czech. Everything is pretty simple here, after all, private property is the same thing anywhere, in Africa as well as in Kladno. A flat or a house are owned by a company, a private individual, or a group of individuals. To get the property rights, in most cases it is enough to sign a regular purchase and sale contract, certified by a public notary.

Another popular variant of owning real estate is a cooperative society, or druzstvo. It is a legal entity uniting several shareholders. Instead of owning flats or parts of the building, they own shares in the society. There are plenty of such societies in the country, and each of these got its own statute – which may contain virtually anything. For instance, it may forbid a foreigner or a company to be a shareholder, or maybe that cat owners have to pay double rent. So, when you buy such property, make sure your laywer or real estate agent study the statute with you so that you don't hate yourself later on.

These are the two most common types of property ownership in Czech Republic. Selling general tenancy also exists, when a tenant lets you have the right of general tenancy. This type of deals is absolutely not recommended, because you don't own the property anyway, while the landlord can raise the rent at any time.

By the way, if we speak of payments, there is a point many people tend to disregard. Thing is, these may differ largely even with similar houses. Even if you own the flat, you have to make the utility payments for cleaning public areas like stairwells, lifts, yards etc, for garbage removal, phone service, electricity, gas, and so on. Moreover, there is a thing used in cooperative socities known as anuita. This is the sum of money still owed by the former owner to the society. If it's paid out in full, this is ideal. If it's not, your monthly payments will increase so that you cover this debt at some time in the future.

Buying a cooprerative flat has advantages, for instance, the paper issues are fairly easy to handle. You don't need to make any records in the cadastre and wait for the confirmation. However, it's not that easy to get mortgage for this kind of flat.

Mortgage has recently become quite easy to be obtained, even for a foreigner. It used to be something hardly imaginable like 5 years ago. Things change, and now there are tons of money available for investment in Europe, so banks are willing to offer the funds at an annual interest of 3-6%, secured by real estate, the most reliable guarantee. The contract is signed for 25-30 years, normally. Different banks have different requirements, but the basic one is that you have to show your solvency and your ability to cover the monthly mortgage repayments.

When you get mortgage, you have to pay attention to the term of fixation of the mortgage contract which may be a year, or 3 or 5 years. If you have 3 years as fixation period with 4.35% annual interest, total credit term 30 years, it means that the percentage will be fixed for 3 years, while afterwards the bank has the right to recalculate it according to the general rate for that time. As a rule, when this period is over, you normally can cover a part of the mortgage without any sanctions.

Many banks offer mortgages in Czech Republic today. Ceska Sporitelna and Hypotecni Banka look most attractive.