Negotiating the lease in the contract: yes or no?

Contrary to some presumptions, lease is not a legally binding part of the lease arrangement. Nevertheless, we consider it an essential part of the contract and suggest that you negotiate it in the agreement. This will conserve you a great deal of complications and confusion in the future. If the amount of lease is not concurred in the contract, the property owner can declare the lease at the rate that is popular in the local area for renting a similar flat or home. However, this should be shown.

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

How to identify the optimal rent?

Finding the ideal rent is not easy. If you do not use the services of a property representative, numerous property websites can be a great guide. It is necessary to compare houses with the exact same layout, size and condition - for example, whether they have been renovated, how they are heated and the condition of the windows. Of course, the area, the flooring of the structure in which the house lies, whether there is an elevator, a cellar or balconies in the structure likewise affect the cost. It is also important whether the apartment or condo is rented provided or not.

Finding numerous apartment or condos with similar criteria will help figure out the cost variety. It is a legitimate aim of proprietors to make as much cash as possible from the lease. However, it is true that if you set the rate above the typical variety in the area, it will take a lot longer to discover a tenant. Unless the apartment has something quite extraordinary that other apartments in the location don't have, it is possible that the tenant will be tempted by less expensive competitors and will quickly move out, or not move in at all.

Every month when the home is empty, not only does it not bring any cash, but on the contrary, it is connected with expenditures for utilities and energy that the owner needs to pay. Therefore, it pays to find the best rate level for the rent.

What is consisted of in the rent?

The lease itself is characterised as a payment to the owner for the use of his/her flat (or e.g. non-residential space). However, the property owner and the occupant can agree that the lease will also include payments for services related to the usage of the home, or charge these services as a flat rate outside the lease. This consists of, for instance, energies, energy or water charges. All of these payments can likewise be noted in a" record sheet", which can be an accessory to the tenancy arrangement.

In the case of long-term leases, it is generally worth moving the utilities to the renter. This provides the tenant the freedom to pick the provider and a better overview of their expenses. A little administration at the beginning can save both celebrations the trouble of settling overpayments or underpayments.

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

In addition to the rent, an amount of money (typically referred to as a security deposit, which we have discussed in detail in our post What to keep an eye out for when leasing a home) can likewise be concurred in the agreement, which the occupant pays to the landlord before the occupancy starts and which can be utilized in the future, for example, to pay lease financial obligations or to compensate for damage caused by the occupant.

Assist with the lease arrangement

By preparing a good lease contract, you will conserve yourself many of the problems, whether as a property manager or a renter. We will draw up or examine the lease contract, or advise on drawing up a change to the arrangement or terminating the lease. We will deal with whatever rapidly and perfectly.

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Can routine rent payments be guaranteed?

The services of companies that lease a home from the owner and then provide it to renters for a commission have become a hit in the last few years. This ensures the owner routine lease payments throughout of the agreement and alleviates him of the trouble of finding tenants and administration. For the landlord, this can be an extremely rewarding option that conserves time and energy. However, it is very important to carefully compare offers from various providers and read evaluations before signing an agreement. This is due to the fact that some business, in the experience of consumers, do not constantly act fairly and might have a various technique to renters than what has actually been concurred with the property manager. It is for that reason crucial to study the terms completely and be clear about what both parties are dedicating to.

Rent increases

Rent increases can be approached in a number of ways. A popular one is to consistently enter into a fixed-term agreement (e.g. for one year), where the property owner provides a new contract with an increased rent each time the term ends. It is then as much as the occupant whether they accept the new price and want to remain in the home. In such a case, the landlord is not restricted by law in the possible rate boost. However, we suggest entering into fixed-term agreements if the objective of the lease is actually short-term. If the property owner means to rent out the house for a long term, however takes the method of getting in into shorter-term fixed-term contracts, such methods may backfire precisely due to the fact that the tenants leave after a brief time period and the landlord is hectic consistently trying to find new occupants.

The proprietor can unilaterally increase the rent as much as the typical rent in the location, if this is concurred in the contract.

Rent indexation to inflation

Another choice for increasing the lease is to negotiate an inflation stipulation. This enables an automated increase in lease depending upon inflation, generally on 1 January or on the anniversary of the lease contract. However, it is not possible to increase lease more frequently than as soon as a year using an inflation provision. The stipulation itself ought to describe a particular inflation index (such as the Consumer Price Index). Of course, the lease does not need to be increased by the complete value of inflation, but an increase can be worked out, for instance, just if inflation increases by more than 2%, with the rent only being increased by the rise in inflation above this threshold. At the exact same time, it is usually agreed that an unfavorable boost in inflation will not affect the lease.

Agree on a greater price

The 2 parties can likewise concur on the rent increase together and write an addendum to the lease contract, for instance.

The landlord can also decide to increase the rent himself. As a rule, he or she will then communicate his or her in the kind of a proposal for an increase, which she or he sends out to the tenant. According to the rules put down in the Civil Code, an increase can be proposed no earlier than one year after the last boost. At the very same time, there is a guideline that the rent may be increased by an optimum of 20 % over 3 years. If your lease is CZK 15,000, it can be increased by a maximum of CZK 3,000 within 3 years. At the exact same time, there is a condition that the resulting lease does not exceed the abovementioned typical lease in the location. The locally traditional rent can be determined, for example, by speaking with genuine estate firms running in the area or an expert's report. For your own orientation, the web calculator will also help you

However, the occupant does not have to consent to the proposed increase. They can think about the proposition for two months and if they do not concur, the landlord can use to the court within 3 months to have the boost approved. The court might figure out in the proceedings that the lease will be lower (or higher) than the property owner's proposal. In case of dispute, the tenant may exercise the right to end the contract by giving the suitable length of notification.

Hint: We have likewise talked about rent increases in more information in our post When rents can increase.

Can the state manage rents?

After the revolution, the state likewise enforced specific restrictions on rent increases in the type of lease policy. Regulation was introduced in the Czech Republic up until 2011. Some political leaders are still considering the possibility of guideline as a remarkable and temporary step to avoid a sharp increase in rent prices, but no such step has actually yet taken concrete type. Recently, lease policy has also stopped working in Berlin.

What is the danger of non-payment of lease?

Non-payment of lease can cause termination of tenancy. The property owner has the right to terminate the lease either with a standard notice period, however if the rent and energy expenses have actually not been paid for at least 3 months, the lease can be terminated without notification and the renter can be required to hand back the apartment without excessive delay. In addition, non-payers of rent may also need to stress about interest on late payments and court costs if there are court proceedings.

However, it is perfect 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 lease due, warning of the possible repercussions later (i.e. payment of interest or later termination of the lease). Some situations can be quite unimportant, such as a lost or omitted standing order, and just giving a caution will assist solve them rapidly.

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

Summary

The lease agreement governs the relationship in between the proprietor and the renter, with the essential aspects being the amount of rent, the possibilities of increasing it and the rules for payment of services. The property manager can unilaterally increase the lease only in cases attended to by law, while the tenant has the right to refuse the changes and, if needed, request an evaluation by the court. Non-payment of rent can cause termination of the lease without notification. When entering into a contract, it is essential to clearly set out the regards to payment and to check out all contractual arrangements thoroughly to prevent misunderstandings and conflicts in between the parties.