Buying Property in the Czech Republic

Follow these steps to ensure the process is as smooth as possible

Ryan Scott

Written by Ryan Scott Published on 05.06.2012 16:52:45 (updated on 05.06.2012) Reading time: 12 minutes

At some point, you may decide it is time to purchase some property here. Before you do, it might be useful to go through the following steps to ensure the process is as smooth as possible.

Considering a mortgage?

You should start by checking where you can get the very best rates in the Czech Republic for mortgages.

Finding a Place

There are a number of websites you can visit to find a plot of land, a house, or a flat: the main servers are and both of which have an English language version; however, some of the descriptions can be difficult, so it pays off to learn some of the basic Czech terminology.

You can also find thousands of properties for rent and sale in the Real Estate Server

Otherwise you can search on Google using English search terms or ones in Czech such as ‘reality Česká Republika’, ‘reality Praha/Prague’, ‘nemovitosti’ or ‘pozemky’. ‘Byty’ (apartments) also seems to work, but ‘domy’ (houses/buildings) seems to be too general. The advantage of using Czech search terms is that you net companies for the Czech market. Due to the nature of the market, you will often find the same property listed by different agencies, and quite often with different prices and descriptions, which can be very confusing.

Ben Anderson, from The Czech Property Company, cautions people concerning the prices listed. With 17 years of experience in Czech real estate, Ben (who is originally from the UK) is able to bring an expat’s perspective while at the same time having the accumulated years of knowledge of both the market and the language. He said most advertised prices will be above the actual market value, with the lower advertised prices just above market value. He recommended deducting 15% from the advertised price to arrive at an acceptable market value. This is mainly caused by the vendor not seeking proper advice or substantiated appraisals before starting to market the property. If you are not familiar with the market, secure the services of an advisor who is aware of your concerns and can guide you through the mass of information on the web; it will save you time and money in the long run.

As for which location will give you the best return for your investment, Ben offered this advice. “If you buy a classic Prague property in an area dominated by other classic Prague buildings, you are buying in to the fabric of Prague. This is always an attractive option, and while I would not like to talk about any growth in value, it is safe to say the value will at least hold its own in comparison to other locations.”

Outside of the historical city centers, there are other factors which have an effect on values, financial returns, and ease of exit; these factors include international schools (eg. houses in Nebušice rent easily due to proximity to ISP), clean air and parks (eg. Průhonice), or even plain old snob value for a good address such as Hanspaulka in Prague 6.

Land Registry

Assuming you’re going to buy an established abode, the first thing you’ll want to do is obtain a Statement from the Land Registry (Výpis z Katastru nemovitostí). This step is to ensure that the person selling you the property is the legally recognized owner. Only the legal owner has the right to sell, although in certain circumstances and agent, lawyer or other third party acting on a valid power of attorney can conclude the sale on behalf of the owner. You don’t want to find yourself handing over money and not able to move into the house. Additionally, the statement shows whether there are any loans on the house which can be passed on to the new owner. Usually, these loans are cleared by the former owner once they obtain the money.

Fortunately, obtaining a full statement (list vlastnictví) is just a matter of visiting your nearest Czech POINT. You can find a Czech POINT window at most post offices. The statement costs 100 CZK and the applicant has to provide proof of ID, the land register area, ownership document (LV) number, land plot number, and the building registration number or housing unit number. (Information courtesy Česká pošta) Note: Any notary will also do this, and you do not need to show ID as this is public information. The cost is per page, and some statements have several pages.

If you want a land map where the property is located from the land registry, you can obtain one from the Land Registry in the municipality where the property is located. Or you can use this website. It’s just a matter of entering the street and city in the top left box.

Alternatively, for short statements of ownership (loans and other defects will not be visible) and for land map images, the land registry web site offers a free service; just enter the municipality and the house or plot number, and the ownership details will be shown free of charge.

Buying Property in the Czech Republic

Property Report
The Land Registry answers the question of ownership, but what about the condition of what you’re buying? Home owners are not required to provide something like a home information pack (HIP), which formerly existed in the UK. However, you can and should obtain an expert report (znalecký posudek) concerning the property. In a nutshell, the report contains the condition of the house, building materials, and the estimated value, though this is not the same as the market value.

An example of an application for an expert report can be found here. Other companies which provide this service can be found here.

A final document you will want, if it is a new building, is its building approval (kolaudace), information which can be found here. The decision about the building approval is also required if there have been any structural changes.

On top of the report, you should certainly discuss with the owner the condition of the property, especially if you’re buying an older place. Ask about the heating, temperature and sound insulation, and plumbing, and get details in writing. Ben also says that you should ask for any previous building documentation, plans and approvals for construction, and any changes to the property.

Lastly, choose your inspection times carefully, especially for the cheaper new build apartments. “Most inspections are done during the day when the neighbors are out. But then you come home in the evening and you can quite often hear them having a cup of tea,” Ben said.

Getting a mortgage from a Czech bank comes with good and bad news. The good news is that the major banks (ČSOB, Česká spořitelna, Komerční banka and UniCredit offer mortgages at 100% of the property’s estimated value. Estimated is the key word. The property value will be based on the bank’s valuation, so you might not get the full amount which the seller is asking. On the plus side, you can use mortgage funds for finishes, renovations and items such as kitchens.

As to whether a foreigner is eligible for a mortgage, it depends on the bank. Česká Spořitelna said it is necessary for the applicant to have either temporary or permanent residency. ČSOB said that applications for foreigners are assessed on an individual basis. Raiffeisenbank, however, will loan up to 90% of the value, and will consider applicants who have been in the country for at least two years. A condition for any mortgage is that you need to prove a regular source of income. KB said that for people from non-EU countries, they require permanent residency.

You can use this website or this one to compare mortgages. If you want to go through a mortgage broker, here is a list (in Czech) of brokers who belong to the Association of Mortgage Brokers (Asociace Hypotečních Makléřů) or AHM. A real estate agent should also be able to advise you.

When it comes time to pay for the property, the handover of money should happen through a third party: the real estate office, a notary, or a lawyer, when dealing with larger amounts and more complex transactions a bank escrow account is usually recommended. The simple reason is that the entry of the new owner into the Land Register can take up to 30 days.

Ben says that “all payments should be made in accordance with written agreements and should form part of the purchase price; notaries and most lawyers will have insurance for such deposits, thus you are guaranteed by Czech law. However, very few agencies have such insurance. Monies for the vendor are usually released automatically within a few days of him presenting a fresh copy of the ownership document showing that the transfer of ownership has been registered and that any other agreed preconditions have been fulfilled, but allowing for standard provisions for the payment of the property transfer tax.”

Prices for a notary are set by a governmental decree. The rates are in the table below.

From the first 100,000 CZK value bracket                                1,2 %,
From excessive amounts up to 500,000 CZK value bracket        0,6 %,
From excessive amounts up to 1,000,000 CZK value bracket     0,4 %,
From excessive amounts up to 10,000,000 CZK value bracket    0,2 %,
From excessive amounts up to 30,000,000 CZK value bracket    0,1 %,
Minimum amount: 1000 Kč.     
Amounts above 30,000,000 CZK are not counted into the base value bracket.
(From the Decree of the Ministry of Justice on the fees and reimbursement of notaries and inheritance administrators.)

Lawyers provide these services too; however, lawyers’ rates will vary. For example, this lawyer charges a flat fee per amount. Others may charge a proportion. Still others may charge a combination. The following are only meant as examples of prices and are not necessarily recommendations. To find other lawyers, search Google using the term ‘advokátní úschova’.

Unlike the UK, payment doesn’t entail a ‘housing chain’ (wherein a seller must wait for a potential buyer to sell his own property before a sale can officially take place). Ben remarked that “a chain sometimes occurs, but as the fluidity that is often present in the UK market is missing here, it is not such a problem. It has never prevented us closing a sale.”

“If a chain occurs, there are ways of securing a property for a period of time; the most common way is to use a contract of future sale. The contract of future sale is a legally binding contract that outlines the conditions that need to be fulfilled before the final contract of sale is concluded. The actual agreed contract of sale should form part of the contract of future sale so that all parties are aware of the conditions, thus the transaction is no longer subject to contract. Do not confuse this with a reservation contract which does not necessarily contain all of the conditions of sale.

“If the contract of future sale is concluded, the purchaser normally pays a deposit which forms part of the purchase price; this is held in one of the above mentioned mechanisms. The deposit can be anything from 10% to 50% of the purchase price, each case is different. The purchaser and vendor agree the terms of the contract of future sale and what conditions need to be fulfilled before the sale contract can be signed. This mechanism is used most often to secure a property when the purchaser is seeking a mortgage, both parties will be legally obliged to conclude the final agreement once the mortgage is agreed, or in the case of a chain, when the purchaser has raised finance by selling another property. There can be other conditions applying, but there will always be a time limit on these conditions being fulfilled. If for some reason the purchaser (or vendor) is unable to fulfill his part of the agreement and can not conclude the final contract of sale, there is usually a penalty applicable that can be as high as the total deposit payment. Thus before entering such an agreement you should be certain that you will be able to fulfill all of the conditions.

“The lack of chains can be for a number of reasons. People are not buying and selling so often. First time home owners are more likely to buy either new houses or move into vacant family properties such as the former homes of grandparents. With less people upping sticks, the market for homes – as opposed to investments – will be slower and represent more discrete sales as opposed to links in a chain. The issue with the land registry equally contributes to making a fluid chain less likely.”

Getting Legal Advice
Apart from overseeing the transaction, a lawyer can be important, even necessary in other parts of the process. A lawyer can help draw up and/or check the reservation agreement (rezervační smlouva) or the purchasing agreement (kupní smlouva), examples of which can be found here. Lawyers’ fees seem to hover between 1000 CZK and 5000 CZK. Determining how much the services will cost is something you should ask the legal firm at the beginning. These services can be organized through the real estate agent as well, Ben of the Czech Property Company said that “it is always best to agree a flat fee with a lawyer for a standard sales transaction. The contracts are straightforward and your agent should be able to advise on the commercial terms that need to be incorporated. It is important to remember that the contract of sale should clearly ensure that; ownership is transferred to the vendor receives all of the due money.”

Other payments
Ben also advises “that you check on all expected payment before entering into any transaction. Fees for the real estate agency are usually covered by the vendor, howver, on some properties the agency will also want a fee of up to 3% of the sales price, this should be clearly stated on the proeprty details or dueing first contact with the agency. If you instruct an agent to work on your behalf, a fee will aslo be agreed, normally on a case by case basis but generally between 1% and 2% of any sale concluded, why pay you ask? The vendor normally pays a fee, so who is the agent representing? If you agree a fee, the agent should be working exclsively for you, negotiating good terms and reduced prices. For more complex searches hourly fees can also be agtreed.

“During the transaction, you might also be asked to contribute towards notary or bank fees, if so a 50/50 split is often the compromise achieved, the property registration charges are low and usually covered by the agency, but check beforehand.

“You will also most likely have to pay for any bank valuations and any surveys that are carried out. Detailed suveys are expensive, if you are considering purchasing an older property, it is best to have a short structural inspection by either a structural engineer, experienced architect or builder who can tell you very quickly if you are going to have major problems (problems=cost), afer that you can proceed to a full survey if you wish to continue.”

Tax at 3% is paid by the vendor, though if a vendor doesn’t pay, the buyer is liable. To avoid this, 3% of the final price is typically held back on deposit until the vendor provides proof of payment. The vendor is obliged to secure a tax valuation of the property and the tax is set at 3% of whatever is the higher, the sales price or the official valuation.

Generally, Ben said, “It’s the process is quite straight forward here. The main issue is the language gap and unfamiliarity with a different system, all of the information that you need is easily accessible, however, if you feel that your advisor (real estate, financial or legal) is not aware of the issues that concern you, find a new one.”

What has been your experience with buying property in the Czech Republic?

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