Czech Government Mulls Rental Agreement Changes to Enhance Security for Tenants

Czech Republic – October 18, 2023 – The Ministry of Regional Development in the Czech Republic is considering amendments to rental agreement rules, aiming to address the challenges posed by a proliferation of short-term rental agreements. In discussions with the Ministry of Justice, these changes intend to offer increased security for both tenants and landlords.

According to Vice Prime Minister and Minister of Regional Development Ivan Bartoš, from the Pirate Party, the proposed changes seek to provide greater certainty for renters and property owners. While the Czech Republic has the highest proportion of people living in rental housing among the new European Union member states, it falls behind Western Europe.

Bartoš highlighted that in countries like Germany, renting is equally balanced with property ownership, devoid of any social stigma associated with renting. He emphasized the importance of people having the flexibility to rent a property for a few years in a location without being compelled to purchase.

A survey conducted by the ministry revealed that one of the reasons rental housing is seen as a necessity in the country is due to the lack of security. Approximately one-fifth of respondents reported having rental agreements lasting less than a year, while one-fourth had agreements for one to two years. This uncertainty particularly affects individuals under the age of 35.

To address this issue, the Ministry of Regional Development is proposing that rental agreements for a specific duration shorter than three years between the same parties can be made twice in a row. Subsequent third and all subsequent rental agreements must be for a specific duration of at least three years or an indefinite period. This proposal takes inspiration from Finland.

Opposition and Support Milan Krček, chairman of the Civic Association of Homeowners in the Czech Republic, opposes the government’s attempts to solve what he believes is a non-existent problem. He argued that in practice, the extension of a yearly lease is often set automatically. He views the proposal as an example of “social engineering” and believes the state should not interfere in contractual relationships.

Conversely, Lenka Veselá, vice president of the Tenants Association of the Czech Republic, welcomes the proposed changes and advocates for a one-year trial period followed by an indefinite lease.

Zdeněk Pištora, vice president of the Association of Towns and Municipalities of the Czech Republic and mayor of Postoloprty, stated that landlords exploit the chaining of short-term agreements to unreasonably increase rents, sometimes exceeding 20 percent. He highlighted how the Civil Code limits rent increases for indefinite-term contracts.

Adam Zítek, a lawyer and housing law expert, questioned the choice to draw inspiration from Finland instead of countries like Germany, the Netherlands, or Denmark, where chaining short-term rentals is prohibited unless there is a specific reason. He expressed skepticism about whether the proposed court order to expedite property evictions would significantly accelerate the existing process, which averages six months but can sometimes take up to two years. However, he conceded that he did not have a better proposal.

Minister Bartoš aims to have the primary changes passed by the Chamber of Deputies by the end of this government’s term, which concludes by the end of 2025. The necessary changes to the Civil Code and the Civil Procedure Code are expected to be presented by the ministries in the spring.

Article by Prague Forum

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