Prague
Buy house or flat in Prague
Housing Market
The Czech residential real estate market has is fairly stable. After the country's entrance into the EU, further momentum has been gained and Prague in particular is following a westernized model.
Foreign investors have somewhat flooded the city's market. There has also been a small mortgage market boom and there is competition between Czech banks offering financing. Buyers should shop around to find the best company to represent them.
Housing Available
Newer construction meets international standards, but some of Prague's buildings are less than optimal. Until recently, pre-WWII housing was the best available. Post-war housing tended to be pre-fabricated and unattractive, often described as "communist boxes" or Panelaks. There was also an issue that housing was to be made fairly inexpensively, and theft of materials further robbed buildings of quality. The use of concrete was also a poor choice in that sound insulation is almost non-existent in some buildings, making the top floor the only option that doesn't include listening to every aspect of your neighbours life. Some of these buildings are deteriorating quite quickly because of the issues described, as well as a lack of maintenance or funds for maintenance throughout the years.
State Housing
State housing tends to be extremely inexpensive. There are about 350 flats available for every 1,000 inhabitants. Many of these flats are unoccupied. This may be because the individual holding the rent agreement finds it in his interest to continue paying a low regulated rent for future use, rather then return it to the state and lose it. It is somewhat common for these units to be sub-rented illegally at a price several times higher than the State controlled price.
Private Housing
The wait for private housing is considerably shorter than private housing. The price, however, is also much higher.
Who is eligible?
If you are looking for your own little slice of the Czech Republic, a little research and capital can get you there. Real estate in the Czech Republic may be owned by anyone, although it can be complicated. Non-residents, (individuals without a permanent residence or owning legal entities headquartered in the Czech Republic) may purchase real estate and this process has become much easier with the acceptance of the Czech Republic in the European Union.
- Citizens of the Czech Republic
- Legal entities having their headquarters in the Czech Republic
- Foreigners with a permanent residence permit in the Czech Republic
- People who have been granted asylum in the Czech Republic
- EU citizens only need their passport when buying property in the Czech Republic
People who do not fall within the above categories may need to adhere to certain restrictions in acquisition of real estate. This includes people interested in acquiring agricultural and forest lands and nationals of other states. An estate agent can be instrumental in finding out your chances of owning and what restrictions may apply to your situation.
A common way to buy property if you do not have free access is by opening a business in the Czech Republic, such as a B&B. The company structure can also provide useful tax and liability shelter against lawsuits. Seek professional help from an advisor within the Czech Republic if you choose this option.
How to Search for Real Estate
Searching for available properties on your own is an excellent way to get a realistic view of the market and what exactly you are looking for. Ask friends, family, and acquaintances living in the area you want to live what they like and dislike. See if they know of any openings or if they have an agent they would recommend. Before you commit to a home, thoroughly research your options.
Online Listing
Online listing are one of the best ways to find out what is available and adjust your expectations. There are a plethora of sites to cruise. Some of the most popular include:
EasyExpat Classifieds in Czech Republic
http://realestate.expats.cz/
http://realestate.expats.cz/
http://www.viviun.com/Real_Estate/Czech_Republic/
http://czech-republic.themovechannel.com/
http://realestate.classifieds1000.com/Czech_Republic
http://cz-ads.cz/index.php/
http://www.ezilon.com/czech-real-estate.html
Public Postings
Many places have billboards offering advertisements for a variety of goods and services. Watch these boards for useful postings. Laundrettes, cafes, grocery stores, community centers, and bars all might have private ads. The Bohemian Bagel and the Globe are good places to look.
Newspaper
The newspaper is another useful source for finding info on property available and information on the housing market. Both in print, and on-line, check out major newspapers. One of the best places is Prague Post Real Estate section or the Prague Monitor's real estate listings.
Estate Agent
A real estate agent is vital to finding the right property for you. A good agent knows the legal pitfalls, ins-and-outs of housing in the area, and how best to navigate a contract and mortgage. This can save you hundreds of thousands of dollars in the long run.
becoming an estate agent in the Czech Republic is fairly easy, so make sure you are comfortable with their experience and expertise before signing with them. Asking friends, family, and business contacts for recommendations can help you locate a great agent. An agency will typically charge between 2% and 5% of the total property price.
A complete list of agents can be found on http://www.reality.cz/.
Contracts
Before you sign any documents, including your contract with your realtor, have it looked over by a lawyer or advisor. If the contract is in Czech, which it will usually be, it might be worth the investment in a professional translator. It is extremely important that every element of a contract be understood before signing.
Once you have found the property you would like to buy, you will usually need to sign a reservation contract and pay a small deposit to take the property off the market for a period of two to four weeks. This also gives you time to thoroughly examine the property and contracts.
- Land registry- Is the person selling the legal owner of the property? If he is - are there any disputes about the property?
- Licenses- If you are building, you need a construction license. For a house, a habitation certificate is necessary.
- Restrictions- some homes are historically protected or have other special qualifications
- Boundaries- If in a free standing structure, confirm the property lines
The purchase process, beginning with the reservation contract and ending with the signing of the contract of sale, usually takes about twelve to eighteen weeks.
At this point, it is time to sign the preliminary purchase contract. This also requires a larger deposit of 10% - 30% of the total price. This is useful for confirming certain conditions are met before transferring ownership. It is also necessary if you still need to secure details of your mortgage. It is important to clarify cancellation conditions in case of an issue on either side of the table. Cancellation conditions should specify if the deposit is returned.
If all conditions have been met and you are ready to officially buy the property it is time to sign the final contract of sale. The remaining price of the property will also need to be paid, as well as the agent fees.
Register
Once you have purchased a place, you need to register your new property. This is extremely important as the house does not officially belong to you until the purchase contract is submitted to the appropriate Cadastral Office. In the application, you have to ask the Cadastral Officers to change the records in the Cadastral Register based on the signed Purchase Contract. Verification is also required with 2 signatures by notary (costing about 30Kc per signature). Once the property is registered- Congratulations on your completed purchase!
Fees
The assortment of fees can really add to the cost of a home, but are necessary to make a sound financial decision.
- Legal Fees (buyer) - 1%
- Registration Fees (buyer) - 0.01% - 0.02%
- Agent's Fee (buyer) - 2.5% - 5%
- Transfer Tax (seller) - 3%
- Total Costs paid by buyer: 3.7% - 6.21%
- Costs paid by seller: 3%
Mortgage
In general, Czechs avoid debt. Taking out a mortgages in the Czech Republic used to be a cumbersome undertaking. Recently, the process has become easier for Czechs and foreigners alike. EU nationals and non-EU nationals with Czech residency can apply for a mortgage in the Czech Republic directly. If you do not fit that requirement, you may need to apply for a mortgage loan through an S.R.O., a Czech limited liability company.
- Copy of the purchase contract or of the preliminary contract
- Proof of income (include the incomes of any co-applicants or guarantors) - If you are an employee you'll need to prove your average income over the last three months and provide an employment contract. Self-employed people will have to use their tax return documentation from the last two years as proof of income.
- Real estate appraisal (depending on your bank)
An application should be processed within two weeks. Most banks will only finance between 75-85% of the total real estate price. The remaining amount can be paid as a deposit on the property. Mortgages range from 5 to 25 years, usually with fixed interest rates for the first five years.
Relocation Professionals
If you prefer for a company to navigate your move and home purchasing, their are several companies that will plan the relocation. This is usually at a substantial fee, but if your time is valuable, this may be the quickest and easiest solution.
Auction
Buying at auction is very exciting and can offer you a significant savings. Note that most properties are sold cheaply, but are basically just the exterior of a property. The interior will usually need to be renovated.
To find auctions within the Czech Republic, some online listings can be found at:
http://www.findaproperty.com/
http://www.property-abroad.com/
http://www.bftm.cz/
Update 27/01/2011
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