Buying Guide: Czech Republic

So much so, this culturally rich country has witnessed an incredible rise in the number of foreigners choosing to buy in the post-communist state, whether as a second home or for its strong investment potential. When picking your spot to set up camp, it’s natural to be drawn to Prague and it’s impeccable historic charm, but don’t forget to consider the rest that this beguiling country has to offer. From chic chalets with views of the slopes, to your very own grey-brick castle in the middle of a forest, keep your eyes well peeled for that little piece of European real estate heaven.

Real Name: Czech Republic
Population: 10.3 million (Source: FCO)
Currency: Czech Crown (CZK)
Capital city: Prague
Major cities: Brno, Ostrava, Plzen
Languages: Czech, Slovak, Polish, German, Romani

Climate
The country offers plenty of variety – from the snowy surrounds of Cheb, where winter temperatures can drop to around -17°C, to 33°C in Prague in the summer. Each region certainly offers something a little different climate-wise.

Location
The Czech Republic borders Poland to the northeast, Germany to the west and northwest, Austria to the south and Slovakia to the east.

Economy
Inflation rate (consumer prices): 1.1 percent (2009 est.)
GDP (official exchange rate):  $189.7 billion (2009 est.)
GDP (purchasing power parity): $256.7 billion (2009 est.)
GDP (real) growth rate: -4.2 percent (2009 est.)

The Czech Republic is widely regarded as one of the most stable and prosperous of the post-communist states. The economic growth it has witnessed has largely been driven by high levels of foreign investment, its hearty export industry and determined domestic consumer spending.

However, like most other countries, the Czech Republic has been negatively affected by the global economic downturn; industrial production fell by 18.4 percent and unemployment rates rose to 7 percent. An austerity package of tax rises and benefit reductions was developed in late 2009 to lower the rising public deficit in 2009.

The country is due to join the Eurozone, but no date has yet been set.

Restrictions
It is unlikely those planning a move to the Czech Republic from within the EU (plus Iceland, Norway or Liechtenstein) will face any restrictions, as the country has been forced to move its property practices in line with the rest of the European region. That said, some banks may still request certain legal paperwork, or even residency papers, before being willing to discuss lending terms.

Those hoping to move here from outside the EU will face a more complicated road. They must have a visa, be married to a Czech resident or remain in the Czech Republic for seven years to obtain a green card allowing them to buy property here.

Forms of ownership
There are two main types of properties in the Czech Republic and you’ll find them on real estate listings as OV (osobní vlastnictví) and DV (družstevní vlastnictví). These essentially translate as Private Ownership (freehold) and Cooperative Ownership, respectively.

With the occasional exception of cottages built on state-owned land, there is no leasehold system to be found here. Most new properties are will be designated OV, and although they are often a little more expensive, they are definitely easier for foreigners to buy. DV properties can be changed into OV if the cooperative is willing, however this is known to be a pretty long and tiresome process, especially if any disagreements crop up along the way.

How safe is it?
The crime rate in the Czech Republic is pretty low, although street crime – particularly pick-pocketing and muggings – is a problem in touristy areas.
Purchasing property here is regarded to be safe, especially as you are protected by the same legal framework found everywhere else in the EU. Nevertheless, an English-speaking legal representative is essential and it’s best to discuss all contracts with him/her at every stage of the process.

Mortgages
It is certainly becoming easier for foreigners to secure a mortgage in the Czech Republic, although buyers should bear in mind that funds will not be available until the property is complete and legally registered, which could put a dampener on your plans if you’re not careful.

The minimum repayment term is usually five years, with the maximum set at 20. There is no maximum amount that can be borrowed, but the mortgage cannot exceed 85 percent of the property’s valuation or purchase price (whichever is lower).

The buying process
You don’t have to have sorted financing out before you decide to buy property in the Czech Republic, but this certainly puts one in a stronger position to bargain and quickly move into negotiations. Either way, once agreed on a price, a deposit of between 10 and 30 percent is paid as security on the chosen property. Both the buyer and the vendor will then be given the time to comply with both sides of the agreement, this process takes an average of 122 days to complete.

As in the rest of the EU, it is best to move through the buying process with the help of an English-speaking notary or legal professional, who will oversee any contracts and ensure that any fees that need to be paid are done so promptly and fairly.

Choosing an area
There’s no doubt that Prague is a gem of historic and cultural importance, and it is no surprise that thousands of foreign investors are drawn here every year. Nevertheless, it’s worth considering the many wonders that the rest of the country has to offer potential property buyers.

There are hundreds of little towns bursting with treasures for property seekers across each of the country’s 13 regions. For instance, in the west, the spa town of Karlovy Vary and Mariánské Lázne is particularly beautiful, while in the northeast, the Bohemian Paradise (Ceský Ráj) is a must for anyone with outdoorsy ambitions of hiking and mountain biking.

Meanwhile, the south, in areas such as the Sumava Mountains, promises world-class skiing resorts and breath-taking snow-capped views. And for something entirely different, the eastern Moravia region is alive with the splendour of yester-year, from its pretty castles to numerous folk activities.

Viewings
From quaint cottages to modern high-rises, you’re bound to find your dream home dotted somewhere across the Czech Republic. Thus, it is certainly highly recommended that you arrange to view properties well in advance of your desired move-in date. There are many estate agents in the country, and most will happily arrange full viewing programmes to ensure you get a good taste of what’s out there.

Legal Representation
It is essential to appoint an independent, Czech and English-speaking lawyer to review all contracts that are to be signed. Czech law often swings in favour of real estate agents, so it is important to iron out any kinks before buyers find themselves in deep water as miscommunications can get pretty costly.

Taxes
All properties are subject to a nominal annual real estate tax, depending on the property’s size and position. Meanwhile, thanks to recent changes in the law, certain homes may also be subject to between 10 and 20 percent VAT. It is best to discuss this with your realtor before proceeding.

Area Guide

Prague & Central Bohemia
It’s hard not to fall head over heels for Prague. Situated along the Vltava River in central Bohemia, the city has been the political, cultural and economic centre of the Czech state for more than a millennium. Since 1992, this historic centre has been included on the UNESCO list of World Heritage Sites that help it attract over 4.1m international visitors annually.

Currently the city is officially home to around 1.3m people, although estimates take that figure up to 1.9m. It is definitely its beauty that draws people here, coupled with its nightlife, great culinary reputation and well-connected location.

As one may expect, property prices here are comparable with other major European cities. A large, detached house with plenty of outside space will set you back anything from £400,000 to £1m, while a selection of apartments are available at around a third of that cost. Nevertheless, property in the capital and this region is very desirable, so be prepared to negotiate.

For those who don’t fancy being right in the thick of things in the capital, the relatively nearby areas of Karlín, Letná, Smíchov and Vinohrady are also extremely picturesque and popular.

Ostrava & Northern Moravia
In the 20th century, industrialised Ostrava, the centre of the coal-mining district, became the capital of this region of Silesian miners, metalworkers and engineers. Today it is a place for composure and rest, with plenty of hiking routes in the stunning surrounding countryside.

Culture is also abound here. Hukvaldy, near Frydek-Mistek, is the birthplace of Leos Janacek, the world-famous composer of many operas and symphonies, to whom this region was a major source of inspiration. Meanwhile, visitors are equally drawn to the imposing Gothic castles of Sternberk, Hukvaldy and Helfstyn.

Today northern Moravia it is regarded by many as something of a property hotspot, helped by the fact that numerous international companies have chosen to set up here in recent years, each bringing hundreds of staff into the area. Additionally, its position near Poland, its university, and its ethnically diverse community, all give the area a very vibrant and cosmopolitan feel.

Property here remains comparatively inexpensive, although the demand from the rental market has driven costs up slightly in recent years.

Brno & Southern Moravia
Brno is located in the southeast of the Czech Republic, right at the confluence of the Svitava and Svratka rivers. The city itself is the political and cultural hub of the entire south Moravian Region, while it also represents the centre of the province of Moravia, one of the historic lands of the Czech Crown.

Thanks to its setting between the Bohemian-Moravian Highlands and the southern Moravian lowlands, Brno enjoys a very pleasant and moderate climate. There is a university, an annual wine festival and numerous cultural activities to keep locals busy throughout the year. In fact, it boasts many of the benefits of a large city but in a refreshingly tranquil environment that makes it’s the ideal getaway location.

The region’s transport links are currently in the midst of major redevelopment works, making it the idea time to invest.

Plzen & Southwest Bohemia
Yes, Plzen is the birth place of Pilsener beer, but there’s quite a lot more to the place than just that. With its gorgeous countryside, deep forests, bubbling rivers and great wealth of cultural monuments, many foreigners are choosing to invest in this little piece of west Bohemian beauty.

Architecturally speaking, there is also a lot going on here, with everything from simple peasant architecture to rare technical monuments. Renovated historical buildings are the order of the day, and many challenges await those seeking to transform a centuries-old building into a modern home or commercial property.

Nature-lovers will also be impressed by the unspoiled nature of the countryside, where they can admire centuries-old oaks and beeches, grand rock formations and the quiet beauty of water lilies decorating the many lakes and ponds. While Plzen is also a district of industry and agriculture, its lovely countryside makes it one of rest and recreation. This is definitely the destination for anyone with a retreat in mind, as well as, possibly, beer on the brain