Introduction - Purchase & Living cost - Buying guide
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Introduction

Almost anyone can purchase a property in the Czech Republic and the process is generally very straightforward. Please take time to read through this information and if you have any questions do not hesitate to give us a call.

Purchase & Living Cost

Payment Terms

For new property (Generally)

• 15% deposit
• 85% on completion

 

For resale property

• 10% Deposit
• Remainder on closing

 

Purchase Tax

The first tax you will encounter is the real estate transfer tax. Real estate transfer taxes are assessed on property when the ownership of the property is transferred between parties. These taxes are often used in fund programs designed to preserve rapidly depleting open spaces in commercial or residential areas, and to fund housing programs for low-income residents. The real estate transfer tax, which is payable by the seller, typically amounts to 3% on either the sales price or the officially assessed value whichever is the higher. The payment of the real estate transfer tax must be paid within 30 days of the registration of the sale. If the seller does not pay then the liability falls to the purchaser, therefore he should safeguard himself by insisting that this amount is held back, by the notary, until the seller has made the payment and produced the relevant receipt.

 

On new build property 5% VAT is paid by the developer and this VAT is usually included in the final listed price.

 

Other Purchase Cost

Solicitor charges vary, with costs typically 1,000 GBP
EU card (for foreign property purchase) approximately 600 GBP
Company formation (alternative to EU card) approximately 1,100 GBP

Other Expenses

All properties are also subject to an annual real estate tax depending on the position and size of the property. This tax is typically negligible (although the government is presently contemplating an increase) and is paid by the owner of the property. A typical 2 bedroom apartment in Prague's city centre, for example, would be taxed at about 1000 CZK (approx 25 GBP) per year.

Buying Guide

Who can buy?

For the Non-EU citizen or those without permanent residency in the Czech Republic, property may only be purchased through a local company. This entails establishing a limited liability company or s.r.o.- the most common means of purchasing property in the Czech Republic.

 

The company should be set-up for the sole purpose of buying a property and cannot carry out any other business. This is the most commonly used option, however, non-EU citizens without a visa valid for more than 90 days cannot act as executive director of a Czech s.r.o. In this case, a Czech national must be appointed as executive director.  

 

EU citizens may purchase property in the Czech Republic after obtaining an EU Card.

 

An EU card allows an EU citizen to purchase real estate in the Czech Republic. To obtain an EU card the citizen must give the foreign police a specific reason for his or her prolonged stay in the country. If you are unemployed, the sole trade license can be the cheapest option, but it does carry with it certain tax and insurance-related obligations. An EU citizen may also, like the foreigner, buy property through a Czech s.r.o. But unlike the non-native, an EU citizen may act as sole shareholder and executive director of the company.

 

Both processes are simple, although the EU Card requires a longer period of time to procure (approx 60-90 days).

 

Our Associate can provide both of these options via its partner agency

Tenure of Property

Almost all property in the Czech Republic is "Freehold".

Mortgage / Financial advise

Mortgages are available for a foreign citizen secured on a Czech property. Our associate can put you in touch with a company who can arrange this for you.

 

As a general guide a loan is granted for a period of 1-20 years with the maximum limit being 50-80% of the price of the property. Banks lend against their own valuations rather than property market prices, and as banks are conservative in their valuations a bank valuation may be lower than the actual price of the property. Banks will generally lend between 70% and 100% of their valuations. The resulting leverage can thus range between 50% and 80% of market price; the resulting leverage may be influenced by various factors, such as size and structure of the deal, profile of the client etc.

Legal Documents

We would always advise that you use a lawyer to complete your purchase and we can provide the names of several lawyers in the Czech Republic on request, although our Associate has access to lawyers.

 

Our Associates will prepare a Contract that will detail your property, type, etc together with the price agreed, payment method and any extras or alterations you may require.  This Contract Agreement is binding in Czech Law and will be in both English and Czech.

Land Deeds

There is a single title deed which is registered in the Czech land registry for each property.

Maintenance

For your peace of mind, if you are a non-resident, our Associate can offer a full maintenance service via an associated company. Details of services and costs are available on request.

Letting

If you are based outside of the Czech Republic and want to operate your property as a buy-to-let investment, our associates offer a service that meets this demand. They can, not only source tenants (this requires a fee of one months rent), but can also act as a point of contact for tenants should any problems arise. This service is broken down into two main areas - management and tenant sourcing.

 

Our associates will advertise your property in print media and through direct marketing (with the help of their data base). They also have regular contact with numerous international companies seeking accommodation for expatriate employees.

 

Other Information

Residency

A Residence Visa is only required for permanent residence or stays of longer than 90 days (for UK citizens) at a time. EU citizens whose stay in the Czech Republic will exceed 30 days are obliged to register within 30 days of their arrival in the Czech Republic with the Alien and Border Police.

If you are staying in a hotel or similar the provider of your accommodation will arrange this registration for you. If you intend to stay for more than 3 months you may apply for a Temporary Residence Permit by producing a copy of your passport, 2 photographs, a document certifying the purpose of your stay, a health insurance policy and a sworn statement saying that you have the financial means to support yourself during your stay (unless the purpose of your stay is looking for employment, self-employed or corporate business).

 

After a period of temporary residence EU citizens can obtain Permanent Residency Permits from the Alien and Border Police provided that they meet certain requirements i.e that they either have permanent employment in the Czech Republic and that their stay will be for a period of at least three years, are self-employed or are members of a corporate body/business located in the Czech Republic.  

Work Permits

As of 1 May 2004, EU nationals and their family members are allowed to work in the Czech Republic without any restrictions . They enjoy the same rights as nationals of the Czech Republic, ie. free access to the Czech labour market, social benefits and all employment services including job search. EU nationals do not need any work permits.

 

For details of work permits for citizens of other countries please check with the Czech Embassy or Consulate in your home country.

Social Security

For general details and information of the social security agreement between the UK and the Czech Republic explaining national insurance contributions and benefits visit www.dwp.gov.uk (Dept. for Work and Pensions).

UK Pension

United Kingdom retirement pension is payable in Czech Republic at the rate which is payable as if you were in the United Kingdom.

Medical Insurance

There are government run and private hospitals in the Czech Republic, although you may, under the reciprocal agreement between the UK and Czech Republic, be entitled to certain medical services. However, it is advisable to take out private medical insurance cover to ensure you can obtain the level of treatment you require. Costs of course will vary on the level of services required and covered.

Tax Regulations

Any earnings from property lettings in the Czech Republic is subject to tax. For international tax issues and double taxation relief and for information on your UK tax liabilities visit www.inlandrevenue.gov.uk

 

To view previously asked questions on purchasing property in the Czech Republic, or to ask your own question click here

 

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