Investments in Czech real estate

Your lawyers for real estate law in the Czech Republic and Beyond

Doing business in the Czech Republic offers a stable environment with a strong economy, transparent tax system, and competitive wages. The country is strategically located in Central Europe, making it attractive for local and international businesses. It has a well-educated workforce and a favorable legal framework for investors, contributing to its status as an appealing business destination.

Investing in Czech real estate offers low acquisition costs and secure transactions, whether through direct ownership or a Czech company. Legal procedures ensure smooth ownership transfers, with due diligence and title insurance protecting investors. Property taxes and fees are also relatively low. The relationship between buildings and land is regulated by Czech law, providing clarity for investors.

The Czech real estate cadastre

The Czech real estate cadastre is a public register that records property rights, pledges, and other legal charges. Entries are made based on documents from public authorities. Once a case is initiated with the land registry office, the property is blocked from being transferred for 20 days to prevent unauthorized actions. The land registry office ensures the correctness of property rights and verifies ownership documents. Notifications of changes in real estate can be ordered for an annual fee.

Purchase of an apartment or business premises in the Czech Republic

The purchase of an apartment or business premises in the Czech Republic involves the transfer of ownership through a signed contract and subsequent registration with the Czech real estate cadastre. Ownership is transferred after the purchase contract is signed and the registration is completed, with an administrative fee required. The purchase price is often held in escrow for security. It’s important to conduct due diligence, including checking for liens or legal defects, and the seller may provide a guarantee. Since 2014, buildings and land are legally inseparable, meaning both must be acquired together.

Legal aspects of purchasing a share in a housing cooperative in the Czech Republic

In the Czech Republic, a housing cooperative allows members to lease cooperative flats rather than own them. A cooperative share represents a member’s right to lease a flat, but it does not confer ownership of the property. The cooperative’s Articles of Association govern membership, conditions for leasing, and the transferability of shares. A cooperative can only transfer ownership of flats or encumber them with approval from its members. Members contribute financially for the maintenance and repair of the housing property.

Real Estate Taxation in the Czech Republic

In the Czech Republic, real estate acquisition involves no real estate transfer tax on the purchase price. Only real estate tax each year is payable and VAT applies in case of certain transactions. For more details, visit our article Tax framework for real estate acquisition in the Czech Republic.

Stricter Regulations for Real Estate Brokers in the Czech Republic

The Czech Real Estate Brokerage Act introduced from 2020 stricter regulations for real estate brokers. It defines real estate brokerage, covering activities like selling, leasing, and facilitating property transactions. Brokers must now meet specific qualifications, including relevant education or professional experience. The law also requires brokers to have a clean criminal record and mandates that escrow services only be offered by certain entities. For more details, visit our article Czech Real Estate Brokerage Act.

Regulations for Short-Term Rentals like Airbnb in the Czech Republic

In the Czech Republic, accommodation services provided through platforms like Airbnb are subject to specific regulations. The distinction between short-term rentals and accommodation services is important, as short-term rentals are not considered the same as regular leases. Airbnb providers must comply with legal obligations such as obtaining a business license, paying local fees, and adhering to building regulations. Courts have confirmed that Airbnb services fall under the category of short-term accommodation, not rental.

The rules for operation of short-term rentals becomes more and more stricter. Airbnb operators in the Czech Republic are subject to specific obligations, such as registering with the Trade Licensing Office and paying various taxes, including accommodation capacity fees. They must also report the accommodation of foreign guests to the police. Additionally, Airbnb services are classified as accommodation services, which require compliance with tax and legal requirements. However, if an operator rents out property without the landlord’s consent, this may lead to violations of rental agreements.