Negotiating the rent in the contract: yes or no?

Contrary to some presumptions, lease is not a legally binding part of the lease agreement. Nevertheless, we consider it a crucial part of the contract and advise that you negotiate it in the contract. This will conserve you a great deal of issues and confusion in the future. If the amount of rent is not agreed in the agreement, the property manager can declare the lease at the rate that is traditional in the area for renting a similar flat or house. However, this should be proven.

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

How to identify the optimum lease?

Finding the perfect rent is difficult. If you do not utilize the services of a realty agent, different property sites can be a good guide. It is crucial to compare apartments with the same design, size and condition - for example, whether they have actually been refurbished, how they are heated and the condition of the windows. Naturally, the place, the floor of the building in which the house is situated, whether there is an elevator, a cellar or balconies in the building also influence the price. It is also important whether the house is rented provided or not.

Finding numerous apartment or condos with comparable criteria will help figure out the price variety. It is a genuine aim of property managers to make as much cash as possible from the lease. However, it is true that if you set the cost above the typical variety in the location, it will take a lot longer to find a renter. Unless the home has something quite remarkable that other apartments in the location don't have, it is possible that the occupant will be tempted by cheaper competition and will soon leave, or not relocate at all.

Each month when the apartment is empty, not just does it not bring any money, but on the contrary, it is gotten in touch with expenses for utilities and energy that the owner needs to pay. Therefore, it pays to discover the ideal cost level for the rent.

What is included in the lease?

The lease itself is characterised as a payment to the owner for using his/her flat (or e.g. non-residential area). However, the landlord and the occupant can agree that the lease will likewise consist of payments for services connected to making use of the home, or charge these services as a flat rate outside the rent. This includes, for example, utilities, energy or water charges. All of these payments can likewise be listed in a" record sheet", which can be an accessory to the tenancy contract.

When it comes to long-term leases, it is usually worth moving the energies to the renter. This gives the renter the flexibility to choose the company and a better introduction of their expenses. A little 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 many legal interpretations, this is a payment that does not directly benefit the occupant and ought to not be charged. But if it is billed covertly, i.e. as part of the overall lease, sadly the occupant has little recourse.

In addition to the rent, a sum of cash (frequently described as a down payment, which we have actually talked about in detail in our article What to watch out for when renting a home) can also be agreed in the agreement, which the renter pays to the property owner before the tenancy starts and which can be utilized in the future, for instance, to pay lease arrears or to make up for damage brought on by the occupant.

Aid with the lease arrangement

By drawing up an excellent lease contract, you will conserve yourself the majority of the issues, whether as a proprietor or a tenant. We will draw up or check the lease arrangement, or recommend on drawing up a change to the arrangement or ending the lease. We will handle whatever rapidly and flawlessly.

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Can regular lease payments be ensured?

The services of business that lease an apartment or condo from the owner and after that offer it to renters for a commission have ended up being a hit in recent years. This ensures the owner routine lease payments throughout of the contract and eliminates him of the inconvenience of discovering occupants and administration. For the property manager, this can be an extremely rewarding solution that saves time and energy. However, it is very important to carefully compare deals from various companies and check out evaluations before signing an agreement. This is due to the fact that some companies, in the experience of consumers, do not constantly act fairly and might have a different method to renters than what has been concurred with the proprietor. It is therefore crucial to study the terms and conditions thoroughly and be clear about what both celebrations are committing to.

Rent increases

Rent increases can be approached in several ways. A popular one is to consistently get in into a fixed-term agreement (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 occupant whether they accept the brand-new cost and want to stay in the home. In such a case, the property manager is not restricted by law in the possible cost increase. However, we suggest participating in fixed-term contracts if the objective of the lease is really short-term. If the property manager means to rent the home for a long term, however takes the tactic of getting in into shorter-term fixed-term agreements, such methods may backfire specifically since the occupants leave after a short amount of time and the landlord is busy repeatedly trying to find brand-new occupants.

The property owner can unilaterally increase the rent up to the normal lease in the area, if this is agreed in the agreement.

Rent indexation to inflation

Another alternative for increasing the lease is to negotiate an inflation provision. This enables an automatic increase in rent depending on inflation, generally on 1 January or on the anniversary of the lease arrangement. However, it is not possible to increase rent more regularly than when a year using an inflation stipulation. The provision itself should refer to a particular inflation index (such as the Consumer Price Index). Obviously, the lease does not have actually to be increased by the full worth of inflation, but a boost can be negotiated, for instance, only if inflation increases by more than 2%, with the rent only being increased by the increase in inflation above this threshold. At the exact same time, it is usually concurred that a negative increase in inflation will not impact the rent.

Agree on a greater cost

The two celebrations can likewise settle on the rent boost together and write an addendum to the lease arrangement, for example.

The proprietor can also choose to increase the lease himself. As a rule, she or he will then communicate his/her objective in the type of a proposition for a boost, which she or he sends out to the tenant. According to the guidelines put down in the Civil Code, a boost can be proposed no earlier than one year after the last boost. At the exact same time, there is a guideline that the rent might be increased by a maximum of 20 % over 3 years. If your lease is CZK 15,000, it can be increased by an optimum of CZK 3,000 within 3 years. At the very same time, there is a condition that the resulting lease does not go beyond the abovementioned normal lease in the area. The in your area popular rent can be determined, for instance, by seeking advice from genuine estate agencies operating in the locality or an expert's report. For your own orientation, the web calculator will likewise assist you

However, the occupant does not need to accept the proposed increase. They can think about the proposition for 2 months and if they do not concur, the landlord can use to the court within 3 months to have the increase approved. The court might figure out in the procedures that the rent will be lower (or higher) than the landlord's proposal. In case of difference, the renter may exercise the right to terminate the agreement by providing the appropriate length of notice.

Hint: We have actually also talked about lease boosts in more detail in our post When rents can increase.

Can the state control leas?

After the revolution, the state likewise enforced particular restrictions on lease boosts in the form of lease regulation. Regulation was introduced in the Czech Republic till 2011. Some politicians are still thinking about the possibility of policy as an extraordinary and temporary action to avoid a sharp boost in lease prices, but no such step has yet taken concrete kind. Recently, lease policy has actually likewise failed in Berlin.

What is the danger of non-payment of rent?

Non-payment of rent can cause termination of tenancy. The landlord deserves to terminate the lease either with a conventional notice period, however if the lease and utility costs have not been paid for a minimum of three months, the lease can be terminated without notification and the renter can be required to restore the apartment or condo without undue hold-up. In addition, non-payers of lease might likewise have to stress over interest on late payments and court costs if there are court proceedings.

However, it is ideal not to let the scenario go that far and to call the renter at the first hold-up in paying the lease with a notice of non-payment and a demand for payment of the rent due, warning of the possible repercussions later (i.e. payment of interest or later termination of the lease). Some scenarios can be rather insignificant, such as a lost or omitted standing order, and just providing a caution will help fix them rapidly.

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

Summary

The lease contract governs the relationship in between the proprietor and the occupant, with the key aspects being the quantity of rent, the possibilities of increasing it and the rules for payment of services. The property owner can unilaterally increase the rent only in cases attended to by law, while the tenant has the right to decline the changes and, if essential, obtain an evaluation by the court. Non-payment of rent can result in termination of the lease without notice. When entering into a contract, it is necessary to plainly set out the regards to payment and to check out all contractual arrangements carefully to avoid misconceptions and conflicts in between the celebrations.