Negotiating the lease in the contract: yes or no?

Contrary to some assumptions, lease is not a legally binding part of the lease arrangement. Nevertheless, we consider it a key part of the contract and advise that you negotiate it in the contract. This will save you a great deal of issues and confusion in the future. If the quantity of rent is not concurred in the agreement, the proprietor can declare the rent at the rate that is popular in the area for leasing a similar flat or home. However, this should be shown.

Tip: Read what to keep in mind when concluding a lease agreement for a home.

How to identify the optimal rent?

Finding the ideal rent is difficult. If you do not use the services of a realty agent, various realty websites can be a great guide. It is essential to compare apartment or condos with the very same layout, size and condition - for instance, whether they have been remodelled, how they are heated and the condition of the windows. Obviously, the area, the floor of the building in which the home lies, whether there is an elevator, a cellar or balconies in the building likewise influence the price. It is likewise crucial whether the apartment is leased supplied or not.

Finding a number of apartment or condos with similar parameters will help identify the rate variety. It is a genuine objective of property managers to make as much cash as possible from the rent. However, it holds true that if you set the cost above the regular range in the area, it will take much longer to find a renter. Unless the home has something rather remarkable that other homes in the area do not have, it is possible that the occupant will be lured by cheaper competition and will soon vacate, or not move in at all.

On a monthly basis when the apartment is empty, not just does it not bring any money, but on the contrary, it is connected with costs for energies and energy that the owner needs to pay. Therefore, it pays to discover the ideal rate level for the lease.

What is included in the rent?

The lease itself is characterised as a payment to the owner for using his/her flat (or e.g. non-residential space). However, the property manager and the renter can concur that the lease will also include payments for services related to making use of the home, or charge these services as a flat rate outside the lease. This consists of, for instance, utilities, energy or water charges. All of these payments can likewise be noted in a" record sheet", which can be an attachment to the occupancy agreement.

When it comes to long-lasting leases, it is usually worth transferring the energies to the occupant. This provides the tenant the flexibility to choose the provider and a much better overview of their costs. A bit of administration at the beginning can conserve both parties the inconvenience of settling overpayments or underpayments.

An often-discussed payment is the payment to the so-called repair fund. According to lots of legal analyses, this is a payment that does not directly benefit the tenant and ought to not be charged. But if it is billed discreetly, i.e. as part of the total rent, unfortunately the renter has little option.

In addition to the rent, a sum of cash (frequently described as a security deposit, which we have gone over in information in our article What to watch out for when leasing an apartment) can also be concurred in the agreement, which the tenant pays to the property manager before the occupancy starts and which can be used in the future, for instance, to pay rent financial obligations or to make up for damage brought on by the tenant.

Aid with the lease agreement

By drawing up an excellent lease agreement, you will save yourself most of the problems, whether as a property manager or a renter. We will prepare or inspect the lease arrangement, or recommend on drawing up a modification to the arrangement or terminating the lease. We will handle everything quickly and flawlessly.

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Can routine rent payments be ensured?

The services of companies that rent a home from the owner and after that use it to renters for a commission have ended up being a hit in recent years. This ensures the owner regular lease payments throughout of the agreement and alleviates him of the hassle of discovering renters and administration. For the property owner, this can be a very rewarding option that conserves energy and time. However, it is very important to thoroughly compare offers from different providers and check out reviews before signing an agreement. This is because some business, in the experience of consumers, do not constantly act fairly and may have a various technique to renters than what has actually been agreed with the landlord. It is therefore key to study the terms and conditions thoroughly and be clear about what both parties are devoting to.

Rent increases

Rent increases can be approached in a number of methods. A popular one is to consistently participate in a fixed-term contract (e.g. for one year), where the landlord presents a new agreement with an increased lease each time the term expires. It is then up to the renter whether they accept the new cost and wish to remain in the apartment or condo. In such a case, the landlord is not restricted by law in the possible price increase. However, we recommend entering into fixed-term contracts if the objective of the lease is really short-term. If the landlord means to lease out the apartment or condo for a long term, however takes the strategy of participating in shorter-term fixed-term contracts, such strategies may backfire specifically because the tenants leave after a brief amount of time and the property manager is busy repeatedly looking for new tenants.

The property owner can unilaterally increase the lease as much as the typical rent in the area, if this is agreed in the agreement.

Rent indexation to inflation

Another choice for increasing the rent is to negotiate an inflation stipulation. This permits an automated increase in rent depending on inflation, typically on 1 January or on the anniversary of the lease contract. However, it is not possible to increase rent more frequently than as soon as a year utilizing an inflation clause. The stipulation itself need to describe a particular inflation index (such as the Consumer Price Index). Obviously, the lease does not need to be increased by the amount of inflation, but an increase can be worked out, for instance, just if inflation increases by more than 2%, with the lease only being increased by the increase in inflation above this threshold. At the very same time, it is usually agreed that a negative boost in inflation will not impact the lease.

Agree on a greater cost

The 2 parties can likewise concur on the lease boost together and compose an addendum to the lease arrangement, for example.

The landlord can likewise decide to increase the lease himself. As a guideline, he or she will then interact his/her intention in the kind of a proposal for a boost, which he or she sends to the tenant. According to the guidelines set in the Civil Code, an increase can be proposed no earlier than one year after the last increase. At the exact same time, there is a rule that the lease may be increased by an optimum of 20 % over three years. If your lease is CZK 15,000, it can be increased by an optimum of CZK 3,000 within three years. At the very same time, there is a condition that the resulting lease does not go beyond the abovementioned typical lease in the location. The locally traditional rent can be ascertained, for instance, by consulting genuine estate agencies running in the region or a specialist's report. For your own orientation, the web calculator will likewise help you

However, the tenant does not need to accept the proposed increase. They can consider the proposition for 2 months and if they do not concur, the property manager can apply to the court within three months to have the increase authorized. The court might determine in the proceedings that the rent will be lower (or greater) than the landlord's proposal. In case of difference, the tenant might exercise the right to terminate the contract by giving the appropriate length of notice.

Hint: We have actually also gone over rent increases in more detail in our post When rents can increase.

Can the state manage leas?

After the revolution, the state also imposed specific limitations on rent boosts in the type of rent policy. Regulation was introduced in the Czech Republic up until 2011. Some political leaders are still considering the possibility of policy as a remarkable and short-term step to prevent a sharp increase in rent costs, however no such step has yet taken concrete kind. Recently, lease guideline has also stopped working in Berlin.

What is the threat of non-payment of rent?

Non-payment of lease can cause termination of tenancy. The landlord deserves to end the lease either with a traditional notification duration, however if the lease and utility expenses have not been spent for at least 3 months, the lease can be terminated without notice and the renter can be required to restore the apartment without unnecessary delay. In addition, non-payers of rent might also need to fret about interest on late payments and court costs if there are court procedures.

However, it is ideal not to let the scenario go that far and to get in touch with the tenant at the first hold-up in paying the rent with a notice of non-payment and a demand for payment of the rent due, caution of the possible repercussions later (i.e. payment of interest or later termination of the lease). Some scenarios can be quite insignificant, such as a misplaced or omitted standing order, and just offering a warning will assist resolve them rapidly.

You can also discover how to pay tax on rental residential or commercial property.

Summary

The lease contract governs the relationship between the landlord and the renter, with the key aspects being the amount of rent, the possibilities of increasing it and the guidelines for payment of services. The proprietor can unilaterally increase the rent only in cases offered by law, while the tenant has the right to decline the modifications and, if required, apply for a review by the court. Non-payment of rent can result in termination of the lease without notification. When participating in a contract, it is essential to clearly set out the regards to payment and to check out all legal provisions carefully to prevent misunderstandings and disagreements in between the parties.