Buying real estate in Prague
The Czech economy is stable and growing, and the unemployment rate is very low. It is one of the reasons why real estate prices continue to rise. Currently, the property prices are high both for renting and buying. Despite this fact, there is a lack of flats in Prague, and you need to be patient when searching for your dream home. According to real estate developers, the situation will change, and prices will decrease. But it will take a few years.
Property prices in Prague are getting closer to those in other European capitals, even though the average salaries are lower. The number of people who can afford the investment is lower than in 2015-2017 when mortgage was more affordable, and interest rates were low. Despite high prices, there is a lack of flats in the city. Finding a suitable flat or house is not easy but not impossible, either!
How much does a property in Prague cost?
Prices depend on several factors. The locality is a very important one; the size of the property influences the final price as well. Let's have a look at prices of flats in Prague according to the locality. All amounts are average flat prices per square meter; figures were published in mid-2019.
The most expensive flats are in district Prague 1, where the price per square meter is 175,000 CZK. It is followed by districts Prague 2, Prague 6 and Prague 8 for 119,000 CZK. Prices below 100,000 CZK are in Prague 3 and Prague 9. Flats in peripheric areas like Prague 11, Prague 15, Prague 16, or Prague 22 can be purchased at a price between 82,000 and 90,000 CZK. In general, the cheapest small flats start at a total price of around 3,000,000 CZK. What about the price of a family house in Prague? Older habitable houses in the suburb of Prague start at about 8,000,000 CZK, new-build houses at about 11,000,000 CZK.
Procedures and fees for buying property in Prague
Have you found your dream property in Prague? Congratulations! Let's start with paperwork and discuss with the owner about the formalities. When and how you will pay? How much will be down payment? Who will prepare the contracts and pay for it? Who will pay for an attorney? The reservation contract, the contract of deposit, and the purchase contract need to be signed. Be careful before signing the contracts. It is highly recommended to let them verify by a disinterested lawyer. Then, it is the time to settle the down payment, which can be around 10-30 % of the property price. Once the purchase contract is signed by both parties, the buyer pays the remaining amount, which is kept in escrow. The owner asks for the property's transfer in the Czech cadastre register. The transfer takes 30 days, and it can be checked online on their official website. Additional fees will include:
- price for certified signature: 30 CZK without VAT per signature
- stamp in the cadastral office: 1,000 CZK
- real estate acquisition tax: 4 % of the total property price
Basically, all foreign nationalities can buy property in the Czech Republic. There are no restrictions, if you are a Czech citizen, a foreigner with permanent residence, a person granted asylum, or you have legal entity headquartered in the country. Citizens of the European Union will need permission to reside in the Czech Republic. It is easy to get it; only a few documents are required, for example, a certificate of health insurance, or a proof of enough funds. Citizens of the United States have similar conditions to those from the European Union, and in addition, they need a visa for more than 90 days. Non-EU and non-US citizens need to have a visa, have lived in the Czech Republic at least for seven years or have married a Czech citizen. Alternatively, they can buy a property through a limited liability company (s.r.o.).
Real estate agency – yes or not?
Buying a property directly from the owner would be cheaper. But as a foreigner, you may have difficulties due to the language barrier. Real estate agencies provide full service starting with the choice of the property, paperwork, and legal arrangements. The provision is usually around 3-8 % of the property price. When searching for a real estate agency, ask for the references or do your own online research. Before signing a contract, read it properly and make sure that you fully understand it. All reliable real estate agencies should be able to prepare a contract in English.
How to get a mortgage from a bank in the Czech Republic
As a foreigner, you can take a mortgage. It has become easier in recent years. EU citizens and Czech residents can take a mortgage directly from the bank. Others can apply through a limited liability company (s.r.o.). Use a mortgage calculator to get an idea about instalments and length of the mortgage. In 2019, conditions got more strict than in the past:
- a bank can finance around 80 % of the total real estate price
- monthly instalment should not exceed 45 % of your net salary
- total debt should not exceed ninefold of the amount of your yearly net salary
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