How to find your dream home in Czechia amid a housing crisis

Despite the unfavorable conditions on the real estate market, the selection of properties is growing – putting potential buyers in a position to bargain. Staff

Written by Staff Published on 31.01.2023 17:00:00 (updated on 01.02.2023) Reading time: 7 minutes

Finally some good news for potential homeowners in Czechia: after years of rising prices, the cost of buying a house is starting to fall slightly. On top of that, the number of options for sale is steadily growing.

Robin Petrásek, a founder of Expats Finance confirms that there are indeed more properties to choose from.

“If you looked at Sreality in 2022, there were about 50k properties, now there are around 90k+ to choose from, so finally buyers are in a much better position to get discounts,” he says.

While this creates a new opportunity for those in the market for their dream house, foreigners in the Czech Republic do face some added hurdles when it comes to securing financing.

The biggest stumbling block is the language barrier, as the buyer must coordinate the transaction with a slew of people including the owner, lawyers, and mortgage brokers.

Czechs seem to always have a friend whose friend is a lawyer or property agent, but where does that leave expats? This is where experts like Petrásek come in.

“The best way for many foreigners is to simply outsource the task to a trusted party who has already gone through this process, has all the connections, and, most importantly, has a track record of successful deals for expats,” says Petrásek who has helped hundreds of expats find homes since 2014.

But even those buyers who choose to outsource the process shouldn’t take a passive role. A certain level of collaboration is necessary and you’ll still need to personally deal with a couple of the steps toward making it official.

“In most cases, there are only two hard parts you have to deal with personally,” says Petrásek. “Finding the right property, and deciding to sign the first binding contract,” he says, adding that it typically takes around two to three months from the time you find a property until you get the keys.

To give us an overview of the entire process and its varying levels of difficulty Petrásek has put together a useful guide for expats to buying a home in Czechia in 2023.  

Step #1 Begin formulating a clear idea of what you want to buy

Difficulty level: EASY

Given the current rise in property prices and the uncertain situation on the Czech market, it makes sense to ask yourself some questions to establish what type of property you want to buy and where. If you are a family of three with a budget of around CZK 6 million, perhaps instead of looking in the Prague expat enclave of Vinohrady, consider the outskirts of the city, or perhaps a commuter location such as Beroun or Lysá Nad Labem.

PRO TIP: It’s smart to check the rental potential of a property should you leave the country.

You’ll also want to consider how long you plan to live at the property and how long the property might suit you. Will there be more family members in the future? Will you spend significant periods of time abroad? Do you need to be close to schools or other critical infrastructure or public transport? These are all things to consider as you conduct your search.  

Step #2 Research financing options

Difficulty level: MEDIUM

The vast majority of people will need financing from a bank when purchasing a property. The question is not "Can I get a mortgage?" But rather, "How to find the best bank for my purchase?”

The answer varies from bank to bank. For employees, it depends on the income, age of the applicant and other liabilities. The maximum mortgage is also affected by the current interest rates. Self-employed individuals should inquire at the bank or with their mortgage advisor for more precise calculations as each bank sees the self-employed income differently.

PRO TIP: It is possible to get a mortgage from a different bank than where you do your personal banking. According to Petrásek about three-quarters of clients end up getting a mortgage from a bank other than their home bank.

You also need to compare offers, and that makes working with a mortgage advisor an advantage. They can offer comparisons and suggest the best options tailored for your needs. In the Czech Republic, mortgage advisors are free for clients and are paid by the banks after closing a successful deal. There are no costs for the buyer. They will be able to get you the best rates and a full comparison of the market, and can even pre-approve your mortgage.

Step #3 Go property hunting

Difficulty level: HARD

With no exaggeration, this is the hardest part of the process. Mortgages have gotten more expensive and harder to obtain, but one result of that is there is now a better selection of properties to choose from. So in some ways, the situation has improved. But prices per square meter have risen significantly in neighborhoods popular with expats. Back in 2015, for instance, it was easy to buy in Žižkov for 50,000 CZK per square meter, with no problem. These days, it’s most likely to be double that and even a bit higher.

The cheapest properties are usually on the ground floor or sometimes the basement—perhaps a renovated older cellar or converted commercial unit. Also, properties directly under the roof might have good views, but remember, a sloped ceiling limits the use of space, and the apartment can be hot during the summer. Also consider that many properties might not be advertised online, so you need to ask around. 

PRO TIP: Ask your landlord if they are considering selling the property you live in! You might be surprised and these deals are usually the best since you can get a better price and you do not need to move from your current home.

If you are actively seeking out a property to buy, dedicate some time every day or week to scan the market. One of the most important indicators is price per square meter, but watch the ads and double-check the area of the property. Some ads use misleading phrases. The bank always wants to double-check how many square meters are listed in the authorized documents.The bank or mortgage advisor will ensure you get the right information.

Step #4 Found your dream house? Now it’s time to close the deal

Difficulty level: MEDIUM-HARD

After you find the perfect property, the second-hardest part gets underway. The property must be aligned with the bank's requirements and valuations. It is very important to know how much the bank will value the property if you are dependent on the mortgage.The good news is that once you start speaking to the seller about the bank valuation, they’ll know you are serious. You can and should renegotiate the price with regards to the valuation, especially if it is lower than the asking price. Check with your mortgage advisor that nothing has changed (financial eligibility, mortgage rate, etc.), and make sure the advisor gives you the green light to move forward.

PRO TIP: Preparing and signing the contracts is by far the most complicated process, and Petrásek advises potential home owners to always involve a lawyer in the proceedings. If you are buying through a real estate agency, they will provide their own lawyer to draft the contracts, but you should hire your own legal counsel to ensure the contract is solid and fair for both parties.

Depending on your position and if you are happy with the bank's feedback so far, consider signing the reservation contract to make sure no one else will buy the property and always involve a lawyer. (To understand at which point to sign the reservation contract, this article is useful: When should I sign the reservation contract for my new property?)

Finalize the mortgage and align the bank drawdown conditions with the purchase contract. Once the seller or agent provides the drafts of the purchase and escrow contracts, they are to be forwarded to the bank to approve the mortgage.

Step #5 Change of ownership and handover

Difficulty level: EASY

Now it’s time to relax and let the officials finish the process. At this point, you should have signed all the contracts and now it is purely a matter of processing them. At this stage, it is rare that something goes wrong if the contracts were drafted correctly.

If you paid the purchase price both from your own funds and a mortgage, the seller's lawyer should deliver the signed and verified version of the purchase contract to the land registry, typically in less than five days from receiving all the money in the escrow account. Once all the money is paid, you will become the official owner in about 20-25 days from submitting the purchase contract to the land register. When the change in the land registry is officially approved, all parties are notified again by a letter from the land registry.

PRO TIP: Once you move from your old address completely, it’s necessary to notify all the appropriate authorities, update your mailing address and consider changing locks for added security!"

It’s entirely possible to navigate the entire process of buying a property in the Czech Republic on your own. Petrásek explains that “Czech banks are a bit bureaucratic but tend to be friendlier toward expats, unlike in some other countries.” It's the local bureaucracy that he says can be rather cumbersome, even for the most patient people.

“Finding a trusted person to help can make the process much less challenging, and under Czech law the use of the advisor’s services are free to the home buyer, so it can be a win-win,” he says.

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