Questions and answers

Do you recommend what property to buy for investment?

We are happy to impart our beliefs concerning the market, however we do not give investment advice. Any such decisions to invest or not are made by the client, not us.

Buy to let - does it work?

Yes, but not the same as in the UK. Investors need to consider (in addition perceived long term economic and political influences) who will be letting the property, the strength and kind of tenancy agreements, ongoing costs of managing and holding of investments and the ability to manage property investments effectively. We are able to discuss these matters with you.

Regulated housing – what is it?

A large proportion of the population of the Republics reside in rented properties subject to rents which can be as low as [say] a fifth of the market rent of an equivalent ‘market property'. The tenancies are protected for a non defined term (indefinite) and are subject to government directive as to what level of rent can be charged. The tenancies can also be passed on. Thus they are seen as being in favour of the tenant, not the landlord and are valuable in the hands of the tenant. Clearly investors need to be aware of such matters if they are considering purchasing rented property.

What is a Co-operative housing property?

This is one which is subject to a legal association formed by the residents of a building. Effectively the decisions concerning such properties are made jointly. Consequently the prices of such flats tend to be lower as they are subject to influence other than by the owner.

What has been the performance of the economy over the past few years?

Growth has been rising strongly over the past three years, Slovakia being the fastest growing in the last year. Consequently the currencies of the Republics have strengthened against all major currencies.

What kind of regulation [consumer protection] is there in respect of reality agents in Czech/Slovakia?

Simply none.

Can one obtain interest only mortgages?

Not yet, although more sophisticated mortgage products (other than straight repayment mortgages) are anticipated to feature in the near future and are likely to be available to overseas investors in due course.

What kind of Loan to Value [LTV] can I get on smaller domestic property?

The price of a property and the valuation of the property calculated by the lender can be widely different. This can have implications as to the amount a lender will offer in respect of a property. The reasons for the variations arise from official valuation rules and fast changing markets/prices. The brokers with whom we co-operate are aware of these issues when obtaining finance for you. Where valuations are not in line with prices, this does not necessary mean that market price [which someone is expected to pay] is incorrect. By definition the market must always be right. Consequently, lending institutions are often accused of holding back the market.

Is your fee for brokering simply a fixed percentage of property price?

No, this is made up of many factors such as: type of property, location, the level of supply of such properties on the market, value of the transaction, urgency involved etc.

I am vat registered can I claim back Czech DPH (VAT)?

For certain services, VAT can be accounted for in the Country of the registered entity acquiring the services rather than collected and paid over in the Czech Republic. We are able to comment further depending on the exact nature of the services you require.

What additional costs in respect of brokering services may be incurred in addition to the fixed fee?

None, although if additional services are required which are not subject to terms and conditions of our brokering agreements then we will request additional fees. These are often payable in advance (as is commonplace with many services purchased in the Republics).

What are the other matters which are likely to influence the residential markets?

There are many, but we feel the coming of euro, interest only mortgages, removal of requirement for company structure, phasing out of regulated rents (and lease reform), the continued [but changing] imbalance of demand and supply of housing stock, reform of Katastrální Úřad (land registry), improvement in infrastructure and finally but not least, the increase in tourism and awareness of the Republics, to be issues which will without doubt affect the market in future.

Legal transfer process of property – how does this vary from the UK?

There is no point of exchange in Czech or Slovak law. Also it is commonplace for a memorandum of understanding agreement or an agreement which is conditional on a following purchase contract to pre-empt the contract concerning property transfer. Whilst purchase monies are paid at the signing of contracts, these are normally handled by a notary. Any contract concerning transfer of property is only valid when validated by the Katastrální Úřad (land registry).

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