Rent has risen by as much as 30 % in some areas
The return of tourists to the Czech Republic, strict mortgage approval conditions and the dire situation in Ukraine. These are the key factors behind rising rents, which increased significantly in the second quarter of this year. In major Czech cities such as Prague, Brno and Mladá Boleslav, they rose by as much as 30 %.
While this is unfortunate news for those looking for a place to live, landlords now face a crucial question. Should they review their current rent levels? According to David Novotný of Bohemian Estates, which specialises in investment property management, now is the ideal time to do so. And the reasons are far from purely self-interested.
Inflation, currently at 17,5 %, must also be taken into account. “Owners of rental flats often set rent to generate a certain amount above inflation. If inflation rises, and at this rate, it must inevitably be reflected. Otherwise, landlords will not break even and will make a loss. In some cases, the lease agreement even includes an inflation clause, under which rent is automatically increased by inflation, without debate,” says David Novotný.
Higher mortgage interest rates are likewise contributing to rising rental prices. Anyone whose fixed-rate period has ended will pay considerably more. “Financing a rental flat with a mortgage is more common than you might think. And if property owners' fixed-rate periods have ended in recent months, they will be paying noticeably higher monthly instalments. At least part of these costs needs to be passed on to tenants,” adds Novotný.
It would be a mistake to rest on one’s laurels now and leave the situation unaddressed, even if increasing the rent leads tenants to terminate their leases. “Higher rents may of course mean that existing tenants can no longer afford the new amount and will look for a rental in another area or wish to move into a smaller property. It may therefore be better to entrust rental management to professionals who deal with such matters on behalf of property owners,” says David Novotný of Bohemian Estates.
According to statistics, professional property management can generate more income for property owners—enough to pay for itself. “On average, we earn our clients more than CZK 13,000 extra per year compared with renting out their flat themselves. In most cases, this covers our fee. Not to mention the time we save them and the concerns the owner no longer has to deal with: finding tenants, communicating with them, dealing with authorities and repairs. We take care of all of it. So, if someone is arranging the rental of a flat, they can contact us. We will set the market rent and take care of the rest,” concludes David Novotný of Bohemian Estates.