Negotiating the rent in the contract: yes or no?

Contrary to some presumptions, rent is not a legally binding part of the lease contract. Nevertheless, we consider it a key part of the contract and recommend that you negotiate it in the agreement. This will save you a lot of issues and confusion in the future. If the quantity of rent is not agreed in the agreement, the property manager can claim the rent at the rate that is traditional in the city for leasing a comparable 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 lease?

Finding the perfect rent is difficult. If you do not use the services of a property representative, numerous realty websites can be a great guide. It is crucial to compare apartments with the exact same design, size and condition - for instance, whether they have actually been refurbished, how they are heated and the condition of the windows. Naturally, the area, the flooring of the building in which the apartment is located, whether there is an elevator, a cellar or terraces in the structure likewise affect the cost. It is likewise essential whether the apartment or condo is leased provided or not.

Finding numerous apartments with comparable criteria will help identify the rate range. It is a genuine goal of property managers to make as much cash as possible from the rent. However, it is true that if you set the price above the typical variety in the location, it will take much longer to find an occupant. Unless the apartment has something rather exceptional that other apartments in the location don't have, it is possible that the tenant will be tempted by more affordable competition and will quickly vacate, or not relocate at all.

Each month when the apartment or condo is empty, not just does it not bring any cash, however on the contrary, it is connected with expenditures for utilities and energy that the owner needs to pay. Therefore, it pays to find the right cost level for the lease.

What is included in the lease?

The rent itself is characterised as a payment to the owner for making use of his/her flat (or e.g. non-residential space). However, the proprietor and the occupant can concur that the lease will likewise include payments for services associated with using the home, or charge these services as a flat rate outside the rent. 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 attachment to the occupancy contract.

In the case of long-lasting leases, it is usually worth transferring the utilities to the tenant. This gives the occupant the flexibility to pick the provider and a better introduction of their expenditures. A bit of administration at the start can save both celebrations the inconvenience of settling overpayments or underpayments.

An often-discussed payment is the payment to the so-called repair work fund. According to lots of legal interpretations, this is a payment that does not directly benefit the renter and should not be charged. But if it is billed covertly, i.e. as part of the overall lease, regrettably the occupant has little option.

In addition to the lease, a sum of cash (typically described as a down payment, which we have talked about in detail in our post What to keep an eye out for when renting a home) can also be agreed in the contract, which the renter pays to the proprietor before the occupancy begins and which can be used in the future, for example, to pay rent arrears or to make up for damage caused by the renter.

Assist with the lease contract

By preparing a great lease agreement, you will save yourself the majority of the issues, whether as a proprietor or an occupant. We will prepare or examine the lease contract, or encourage on preparing an amendment to the agreement or terminating the lease. We will manage whatever rapidly and flawlessly.

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Can routine rent payments be guaranteed?

The services of business that lease an apartment or condo from the owner and after that use it to occupants for a commission have actually ended up being a hit recently. This guarantees the owner routine lease payments for the period of the contract and alleviates him of the hassle of discovering occupants and administration. For the property manager, this can be a very rewarding option that saves energy and time. However, it is essential to carefully compare offers from different service providers and check out evaluations before signing an agreement. This is since some business, in the experience of customers, do not always act relatively and may have a various method to occupants than what has been agreed with the landlord. It is for that reason key to study the conditions thoroughly and be clear about what both parties are dedicating to.

Rent increases

Rent increases can be approached in numerous methods. A popular one is to repeatedly participate in a fixed-term agreement (e.g. for one year), where the landlord provides a brand-new agreement with an increased rent each time the term ends. It is then up to the occupant whether they accept the new rate and wish to stay in the apartment or condo. In such a case, the property manager is not limited by law in the possible price increase. However, we suggest entering into fixed-term contracts if the objective of the lease is really short-term. If the proprietor means to rent the apartment for a long term, but takes the method of getting in into shorter-term fixed-term contracts, such tactics might backfire specifically because the tenants leave after a short duration of time and the property manager is hectic consistently trying to find new tenants.

The property owner can unilaterally increase the rent approximately the regular rent in the location, if this is agreed in the agreement.

Rent indexation to inflation

Another option for increasing the lease is to negotiate an inflation provision. This enables an automatic boost in lease depending upon inflation, normally on 1 January or on the anniversary of the lease arrangement. However, it is not possible to increase rent more frequently than once a year utilizing an inflation provision. The stipulation itself need to describe a particular inflation index (such as the Consumer Price Index). Naturally, the rent does not have to be increased by the complete worth of inflation, however an increase can be worked out, for instance, just if inflation rises by more than 2%, with the rent just being increased by the increase in inflation above this limit. At the exact same time, it is typically agreed that a negative increase in inflation will not impact the rent.

Settle on a greater price

The 2 celebrations can likewise settle on the lease increase together and write an addendum to the lease agreement, for instance.

The proprietor can also decide to increase the rent himself. As a rule, 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 occupant. According to the rules laid down in the Civil Code, an increase can be proposed no earlier than one year after the last increase. At the same time, there is a rule that the lease may be increased by an optimum of 20 % over three years. If your rent is CZK 15,000, it can be increased by an optimum of CZK 3,000 within three years. At the same time, there is a condition that the resulting rent does not exceed the abovementioned typical lease in the area. The in your area popular rent can be determined, for instance, by consulting real estate companies running in the locality or an expert's report. For your own orientation, the web calculator will also help you

However, the tenant does not need to accept the suggested boost. They can consider the proposal for 2 months and if they do not agree, the property manager can use to the court within three months to have the boost authorized. The court might determine in the proceedings that the rent will be lower (or higher) than the property manager's proposition. In case of difference, the occupant might exercise the right to end the contract by providing the appropriate length of notice.

Hint: We have actually also talked about lease boosts in more information in our article When leas can increase.

Can the state control rents?

After the transformation, the state also enforced specific restrictions on lease increases in the type of lease policy. Regulation was presented in the Czech Republic up until 2011. Some politicians are still thinking about the possibility of policy as an extraordinary and temporary step to prevent a sharp increase in lease costs, but no such step has yet taken concrete form. Recently, lease guideline has actually also failed in Berlin.

What is the danger of non-payment of rent?

Non-payment of lease can result in termination of tenancy. The landlord has the right to terminate the lease either with a standard notification duration, however if the rent and energy costs have not been paid for at least 3 months, the lease can be ended without notification and the tenant can be needed to hand back the apartment or condo without unnecessary delay. In addition, non-payers of rent may also need to fret about interest on late payments and court expenses if there are court proceedings.

However, it is ideal not to let the scenario go that far and to contact the tenant at the first delay in paying the lease with a notification of non-payment and a need for payment of the rent due, caution of the possible effects later (i.e. payment of interest or later on termination of the lease). Some scenarios can be rather minor, such as a misplaced or omitted standing order, and just providing a warning will assist solve them rapidly.

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

Summary

The lease agreement governs the relationship between the property owner and the tenant, with the crucial elements being the amount of rent, the possibilities of increasing it and the rules for payment of services. The landlord can unilaterally increase the rent only in cases attended to by law, while the tenant has the right to decline the modifications and, if necessary, look for a review by the court. Non-payment of rent can lead to termination of the lease without notification. When entering into a contract, it is important to clearly set out the terms of payment and to check out all legal provisions carefully to avoid misconceptions and disagreements in between the parties.