Thursday, 30 July 2020

Rent deregulation forcing Czechs to move

By Hana Vorlíčková |
Aktuálně.cz |
9 December 2008

Rent deregulation

Are you afraid of rent deregulation? Up to 10% of Czechs living in rent-regulated flats are considering moving out, president of the Czech Association of Real Estate Offices, Jaroslav Novotný, told the news site Aktuálně.cz. He said the number results from real demand on the real estate market.

The residents consider moving mainly because of continuously growing regulated rent and because of the economic crisis. They don't know whether they can continue paying rent for the entire year. In the past years, real estate agencies did not see such a sharp growth, however.

"Above all, it's people from the centre of Prague who seeking to switch to affordable housing, but some other Czech towns seem to be following this trend," he said.

The end of illegal rent practices

Deputy chair of the house owners civic association (OSMD), Libor Dellin, also thinks the housing market with regulated rents in Prague and Central Bohemia will be affected the most. But he says it doesn't necessarily mean people will move to new flats. "In the past few weeks, an increasing number of house owners have been selling their rental properties," he said.

Today, there are about 750,000 flats with regulated rent in the entire Czech Republic. "Nearly 1% of them, that is almost 7,500 flats, are rented illegally," according to Hynek Jordán, spokesman for the Regional Development Ministry. However, he said the number of illegal rentals has been falling sharply partly because of deregulation.

Regulated rents will increase again as of January by one third on average. But rents in some buildings may grow even more. Landlords in selected areas could raise rents by up to 50%. Rents in some locations will remain the same.

Deregulation to continue

The original plan of the Regional Development Ministry was to complete the process of deregulation by 2010. The average regulated rent in Prague was expected to grow from today's CZK 60 to CZK 100 per square metre a month.

But the head of the ministry, Jiří Čunek, said recently that the expected drop in property prices and market rent would affect the time period for deregulation process. Therefore, he has submitted a proposal, suggesting reaching the 2010 rent value within the next three years.

"The target monthly rental value originally planned for 2010 will thus be affective as of 1 January 2012," said the ministry.

In the Czech Republic, about 47% of flats are privately owned, 17% are owned by housing cooperatives and 29% are rental flats. The remaining 7% is social and corporate housing.

Translated with permission by the Prague Daily Monitor.