3 things to know before buying property in the Czech Republic
Once you’ve decided to put down roots in the Czech Republic, buying a home can be a logical step. The good news is that both EU- and non-EU citizens are eligible for mortgages. For EU citizens, most banks simply require temporary residence and a Czech rodné číslo — no additional rules usually apply and income from EU countries is accepted. For non-EU citizens, permanent residence and working history in the Czech Republic are required.
Skyrocketing real-estate prices however present challenges to the first-time buyer let that be local or foreigner. At Home Prague professionals offer some key points to consider, before you take action and opt for a purchase contract!
1. Property prices in Prague and the Czech Republic are historically high.
The Czech economy is stable and growing. At the same time, residential real estate prices continue to rise. Housing shortages, especially a lack of flats in Prague create a high demand which pushes prices upward and according to our real estate professionals, the situation is not expected to change significantly in the near future. In addition, loan conditions have been tightened by the Czech National Bank to make cheap loans less affordable. This works as a protection against a price bubble on the housing market.
2. Flexibility is a must.
Due to record-high property prices, especially in the Czech capital, more and more foreigners are purchasing homes in suburban communities outside of Prague, which offer easy access to the center by car or public transport, says Ben Anderson, our Real Estate Specialist and Sales Rep. who himself also lives in the agglomeration.
Cities as Neratovice, Kolín and Kladno offer close proximity (less than 40 minutes to Wenceslas Square) and relatively lower property prices. Slaný, Řičany and Beroun are also popular commuter communities among expats.
3. Don’t qualify? You’ve still got options.
Even if a client doesn’t have sufficient trackable income, certain banks will grant mortgages based on the transaction volume. For those who are serious about buying, we recommend building up your savings as soon as possible, (potentially using rental accommodation in the meantime) then checking the housing market in a year or two.
Other options include asking a family member to pledge collateral on your behalf or setting up a stavební spořeni
(building savings) account with state contributions. While it doesn’t provide the best interest on the market establishing such an account could entitle you to a better offer with less strict conditions than regular banks after two years saving. Mr Ben Anderson can help English-speaking clients navigate these options.
A mortgage broker who is an intermediary who works with multiple lenders can also help. Mortgage brokers are offering complete real-estate financing and legal guidance to both foreign individuals or property investors. Working with them is a popular option among borrowers because many banks offer discounted rates to mortgage brokers who bring them business. Mortgage agents can also help you secure mortgage approval when you wouldn’t get it from a bank. And for those who don’t speak Czech, having one on your side worths a lot.
Throughout our long experience in serving expats and international clients wishing to acquire a Czech property, we have recognized the need to offer a one stop service covering all requirements involved in international property transactions.