Landlords, lawyers say big room for legal improvements as rent deregulation landmark looms

23-11-2010

The Czech Republic’s slow and painful steps from regulation to market regarding for rented flats will take a big step forward at the start of next year when rent controls end for around 450,000 apartments. Last week the government proposed accompanying laws rebalancing the relationship between landlords and tenants. But the former say these don’t go far enough, and experts are warning that the courts could be swamped by tens of thousands of cases over rent levels.

The New Year will bring uncertainly for many Czechs paying rent for where they live, with one of the biggest deregulation steps so far taking place on January 1. From then on the market should determine rents in two big cities, Ostrava and Ústí nad Labem, and in mid-sized towns across the country. Prague and other regional capitals follow a year later.

That step has been welcomed by landlords, but they still feel that the latest government proposals short change them on giving back all the rights they lost under Communism and have had to claw back over the last two decades. Mr. Milan Krček is deputy chairman of the Czech Association of Landlords.

“Our organisation’s point of view is that this is a step in the right direction, that has to be said. But at the same time that it is not sufficient. For instance, the tenant can cancel the tenancy with just three months notice but for the landlord there are only very specific reasons which he can use for an eviction notice.”

Milan KrčekMilan Krček In some circumstances, they complain that landlords are still under an obligation to find alternative housing for a moved on tenant.

In addition, the landlords’ lobby says a two year transition period for rental transfers to next of kin ―while a massive improvement compared to the current no limits handover of rental rights ―is still over generous to tenants.

And they would like to be given the right to deliver long term notice to tenants if the flat is in need of major reconstruction, something which is impossible now.

Aside from the landlords, one of the foremost Czech lawyers in the field who has represented both landlords and tenants, Hana Marvanová, sees many practical problems with the proposed set up that will kick in next year.

Not the least of those is the fact that courts will be first in line to solve disputes when landlords and tenants cannot agree on new rents based on local market rates, and their deliberations could take several years.

“For the tenant it is not at all advantageous to go to court because when the case ends they could be at risk of paying all the legal costs as well as the overdue rent. I think that there should be a parliamentary amendment allowing priority for agreements between the two sides and that court battles should be really exceptional.”

Hana MarvanováHana Marvanová On the other hand, Marvanová says the Czech state has failed to fully hand back rights to landlords and still seems to believe they can provide a social safety net for poor tenants that should be the job of the state.

The multi-billion crown bill for that failure is likely to be delivered next year by the European Court of Human Rights when it rules on a complaint brought by 6,000 Czech landlords with another 24,000 waiting in the wings for the outcome.

23-11-2010