Purchase a Property in Czech Republic
Purchase a Property in Czech RepublicUpdated on Sunday 31st January 2021
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Since Czech Republic became a member state of the European Union (EU), the process of buying a property is much easier for foreign companies or foreign individuals who are interested in owning a building or an apartment here. Although the Czech legislation stipulated that EU citizens who do not have a residence permit in Czech Republic are not allowed to own a property here, the applicable law changed its provisions, allowing EU citizens to purchase a property without the issuance of a residence permit. If you are interested in buying a property in Prague, our Czech lawyers can offer you assistance through this procedure. Also, we can handle your business registration in this country.
Who can buy properties in Czech Republic?
According to the legislation applicable in Czech Republic, several categories of individuals suffer no restrictions in terms of acquiring a property:
- Czech citizens can buy all kinds of properties in this country, besides the state-owned ones;
- legal entities which have the headquarters established in Czech Republic;
- foreign individuals owning a residence permit on the territory of the Czech Republic;
- individuals who have applied for asylum in Czech Republic and who were granted this right.
The legislation stipulated that EU citizens are not allowed to buy a property for seven years after moving to Czech Republic, but the provision has been amended in 2009. As such, the European citizens (including persons from Iceland, Norway, and Liechtenstein) can request the right to reside in Czech Republic as long as they can prove they have sufficient financial funds to sustain themselves. In order to apply for the right to reside in Czech Republic, any EU citizen should provide to the authorities two photos, the passport or the identity card, plus the health insurance certificate.
What types of properties can I buy in Czech Republic?
Agricultural lands, apartments, office buildings, condominiums, studios, or warehouses are among the assets you can purchase in the Czech Republic. We remind that foreigners cannot acquire the properties which are owned by the state. The legal aspects of property purchase in this country can be entirely explained by our Czech attorneys. If you want to buy a property in Prague, talk to our advisors.
Real estate due diligence in Czech Republic
A real estate due diligence procedure is normally suggested at the time foreigners want to purchase a property in the Czech Republic. This is an important method through which a property is verified before the ownership is transferred. Complete information about the history of the property is normally provided by the seller, in order to see if there are any litigations involved, if the construction permits are available and if all the taxes have been paid. We remind that our Czech lawyers are entitled to perform real estate due diligence for all foreign individuals who are interested in buying an apartment in Prague.
Procedures for buying a property
It is recommended that, after you have found the property you’d like to live in, to perform due diligence procedures. The purchase should take place under the supervision of a Czech lawyer and a real estate agent. You will have to sign a reservation contract (which shows the interest in buying a certain property) and the contract of deposit, in which you will pay a certain percentage of the price of the property (customarily, the deposit varies between 10% and 30%, as agreed by both parties). The purchase process in Czech Republic usually takes a month or less. According to the Czech legislation, at the transfer of ownership, the seller must pay the real estate acquisition tax which is 4% of the selling price. Also, the agent fee (2,5% to 5%) needs to be considered and paid by the new owner of the property. Those who want to buy a house in Prague should ask for legal advice.
Real estate acquisition tax plus other fees
Until 2014, the real estate transfer tax has been imposed on all property transactions. Right after this year, such a tax has been replaced by the real estate acquisition tax which is set at a 4% rate and based on the property sale price. In most property transfers, the seller needs to pay the real estate acquisition tax, however, the parties involved in the transaction can decide on who can pay such a tax. Apart from this kind of tax, the seller and the buyer must pay the agent’s commission fee that ranges between 2.5% and 5%. In most cases, for example in Prague, such fee can be split between the seller and the buyer, however, this is not a general rule. If you need legal advice for buying an apartment in Prague feel free to talk to one of our Czech lawyers.
Land registration in the Czech Republic
A Land Registry Office declaration is needed at the time a person wants to purchase a residential property. This kind of document must contain complete details about the real owner of the property, the only person in charge of selling that property, and about the ownership, the plot number and the address. In special cases, a lawyer acting with a power of attorney can take care of all the formalities involved in selling a property in the Czech Republic. It is important to know that such a declaration will also tell you if there are encumbrances, lawsuits or loans on the property you wish to buy. The official website of the Land Registry Office offers free services for those wanting information, picture or maps of Czech properties. On the other hand, if you do not want to deal with such formalities before purchasing a property, you can talk to our Czech attorneys and find out how they can legally help.
What is a professional appraisal?
A professional appraisal of a property is a short report comprising information about the building materials, the cadastre extract, the initial purchase contract, previous expert valuations, measurements, building approvals and many more. Even though such a report comprises a wide range of details, it is best to talk to the owner and find out more about the property you are about to purchase. He or she can tell you about the building permits, isolation, heating, property changes, etc. If you would like to request a professional appraisal before buying a real estate property in the Czech Republic, do not hesitate to get in touch with one of our Czech lawyers. This way, you can be sure that there are no hidden problems or wrong information about a building, house, condominium or apartment.
Foreign residents and mortgages in the Czech Republic
A person with temporary or permanent residence in the Czech Republic can receive a loan to buy a property in this country. There are many banks in the Czech Republic that offer a clear picture of the mortgage conditions for foreigners. Among these, some banks might request proof of a steady source of income and living for at least two years in the country. Having said these conditions, many entrepreneurs set up companies in the Czech Republic in order to have better chances to obtain loans for buying a house. All the legal aspects of mortgages in the Czech Republic can be solicited to our Czech attorneys.
Facts about the real estate sector in the Czech Republic
The real estate sector in the Czech Republic continues to bloom each year, numerous construction companies already activating in the country and addressing all types of consumers. There is also a high interest in mortgage loans among national and foreign citizens in the Czech Republic who want to acquire a property in this country. The following facts and numbers can describe more the direction of the real estate sector mentioning that numerous developments have been registered in recent years, as the population continues to rise alongside the need for housing:
- There have been more than 2,800 apartments sold in the first 6 months of 2018 in the Czech Republic.
- The residential construction sector grew by 18.5% in 2018 compared to the previous year.
- Prague is the most expensive city where the square meter of apartments costs around $2,500.
- The mortgage loans rate grew by 2.58% in the third quarter of 2018 from 2.17% registered in the previous year.
FAQ about property in Czech Republic
1. Who can buy a property in Czech Republic?
There are no restrictions in the real estate sector when it comes to property purchase. Foreigners are welcome to buy any property they want in the Czech Republic as long as they aren’t state-owned. One must apply for a residence permit if he/she intends to move to Czeck Republic after property purchase.
2. Can I rent a property in Czech Republic after purchase?
Yes, you can rent a property in Czech Republic as long as you respect the legislation in this matter. Property owners must prepare a lease contract when deciding on customers.
3. What kind of properties can I buy in Czech Republic?
Apartments, villas, condominiums, office buildings, agricultural lands, warehouses, and studios are the types of properties that can be purchased by both locals or foreigners in Czech Republic. The entire process can be overseen from a legal point of view by our Czech lawyers.
4. Do I need legal advice for buying a property in Czech Republic?
Yes, it is quite recommended to have in mind the legal support of a Czech lawyer if you would like to buy a property in this country. A Czech attorney can verify the sale-purchase contract and the conditions comprised by such a document.
5. can I ask for real estate due diligence in Czech Republic?
Yes, real estate due diligence is a procedure through which a property is verified from a legal point of view. If there are any litigations related to the property you are about to buy, such information will be revealed by a real estate due diligence procedure. Our Czech attorneys can tell you more.
6. Do I need to sign a reservation contract for a property in Czech Republic?
Yes, according to the Property Law in Czech Republic, a buyer needs to sign a reservation contract and then pay around 10%-30% of the final price. Once the ownership transfer is concluded, the real estate acquisition tax of 4% of the selling price needs to be paid.
7. Can a Czech lawyer buy a property on behalf of a foreigner?
Yes, a Czech lawyer can purchase a property, helped by a power of attorney. You can discuss all the legal aspects with our specialists.
8. Is land registration required in Czech Republic?
Yes, the Land Registry Office in Czech Republic receives the documents of properties purchased by individuals in this country. A declaration with complete information about the bought real estate property in Czech Republic is solicited. Our Czech lawyers can help you with these formalities.
9. Is it hard to gain residence in Czech Republic?
No, the formalities for a residence permit in Czech Republic are straightforward and allow foreigners to legally live in this country. The process of buying a property in Czech Republic can be overseen by our specialists.
10. How much is the square meter for a property in Prague, the capital of Czech Republic?
Prague is considered one of the most expensive cities in Czech Republic. A square meter costs around EUR 2,500 for an apartment.
Opening a real estate business in Czech Republic
Foreign investors in Czech Republic have a wide range of business opportunities in the real estate sector. One can open a construction company with fewer bureaucracies, or a real estate agency to generate profits in a fast and reliable manner. These are great business ideas for international entrepreneurs in Czech Republic, with minimum effort from a company formation point of view. Plus, the support of a Czech lawyer will prove quite helpful, especially for those who are not acquainted with the legislation in the real estate sector. As for the company registration of a firm in this sector, the limited liability company can be the proper business form for entrepreneurs in Czech Republic. The formalities are quite simple and the business is based on the Articles of Association, the main documents of the firm, comprising complete information about the owners, activities, business address, internal rules and regulations, and many more. One should note that our Czech lawyers can represent your firm and can also help you register with the local authorities, respecting the regulations in this matter. Would you like to buy a house in Prague? Please talk to our specialists.
Choosing our Czech lawyers
We have a dedicated Czech team of lawyers with experience in the real estate sector. Both locals and foreigners can rely on the legal support offered by our advisors who act with professionalism, proficiency, and competence. All the legal services we offer are tailored to the needs of clients, as we collaborate from the start, for the best possible results.
All the legal aspects involving the purchase of a property in the Czech Republic can be explained by our team of Czech lawyers who can also answer all your questions. For additional information about how to buy an apartment in Prague, please contact our team of Czech lawyers.