Lease Agreement: Everything About Rent

Negotiating the rent in the agreement: yes or no?


Contrary to some presumptions, rent is not a legally binding part of the lease contract. Nevertheless, we consider it an essential part of the contract and recommend that you negotiate it in the contract. This will save you a great deal of complications and confusion in the future. If the amount of lease is not agreed in the contract, the property owner can claim the lease at the rate that is customary in the regional area for leasing a comparable flat or home. However, this must be proven.


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


How to identify the optimal lease?


Finding the perfect rent is difficult. If you do not use the services of a real estate representative, numerous real estate sites can be an excellent guide. It is very important to compare homes with the exact same layout, size and condition - for example, whether they have actually been renovated, how they are heated and the condition of the windows. Obviously, the area, the floor of the structure in which the apartment lies, whether there is an elevator, a cellar or balconies in the structure also influence the cost. It is also important whether the house is leased supplied or not.


Finding numerous apartments with similar specifications will help identify the price range. It is a legitimate objective of property owners to make as much money as possible from the rent. However, it holds true that if you set the price above the normal variety in the area, it will take much longer to discover a renter. Unless the house has something quite remarkable that other homes in the location do not have, it is possible that the renter will be lured by more affordable competitors and will quickly move out, or not relocate at all.


Monthly when the apartment is empty, not just does it not bring any cash, however on the contrary, it is connected with expenses for utilities and energy that the owner has to pay. Therefore, it pays to discover the right cost level for the rent.


What is consisted of in the lease?


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


In the case of long-term leases, it is typically worth transferring the utilities to the tenant. This gives the occupant the freedom to select the company and a better introduction of their expenses. A little bit of administration at the beginning can conserve both celebrations the inconvenience of settling overpayments or underpayments.


An often-discussed payment is the payment to the so-called repair fund. According to numerous legal interpretations, this is a payment that does not directly benefit the occupant and needs to not be charged. But if it is billed discreetly, i.e. as part of the total lease, sadly the tenant has little recourse.


In addition to the lease, a sum of money (commonly referred to as a down payment, which we have gone over in information in our post What to watch out for when leasing a home) can likewise be agreed in the agreement, which the occupant pays to the landlord before the tenancy begins and which can be used in the future, for instance, to pay lease defaults or to compensate for on by the renter.


Assist with the lease contract


By preparing a good lease arrangement, you will conserve yourself the majority of the issues, whether as a property manager or a renter. We will draw up or examine the lease contract, or advise on preparing a modification to the contract or ending the lease. We will manage whatever quickly and flawlessly.


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Can routine rent payments be guaranteed?


The services of business that lease a home from the owner and after that use it to renters for a commission have actually ended up being a hit in current years. This guarantees the owner routine rent payments throughout of the agreement and relieves him of the hassle of finding tenants and administration. For the proprietor, this can be a really profitable solution that saves time and energy. However, it is necessary to thoroughly compare offers from different service providers and check out reviews before signing an agreement. This is because some companies, in the experience of customers, do not constantly act relatively and might have a different approach to tenants than what has been agreed with the proprietor. It is for that reason key to study the terms thoroughly and be clear about what both celebrations are devoting to.


Rent increases


Rent increases can be approached in a number of ways. A popular one is to repeatedly enter into a fixed-term contract (e.g. for one year), where the proprietor provides a new agreement with an increased lease each time the term ends. It is then approximately the renter whether they accept the new price and want to remain in the apartment or condo. In such a case, the landlord is not restricted by law in the possible rate boost. However, we advise entering into fixed-term agreements if the intent of the lease is actually short-term. If the property manager means to rent out the apartment for a long term, however takes the tactic of participating in shorter-term fixed-term agreements, such strategies may backfire exactly since the occupants leave after a brief time period and the property manager is busy consistently looking for new tenants.


The proprietor can unilaterally increase the rent up to the regular lease in the area, if this is agreed in the contract.


Rent indexation to inflation


Another alternative for increasing the rent is to work out an inflation provision. This permits an automated increase in rent depending on inflation, generally on 1 January or on the anniversary of the lease agreement. However, it is not possible to increase lease more often than when a year utilizing an inflation provision. The stipulation itself must refer to a specific inflation index (such as the Consumer Price Index). Naturally, the lease does not have to be increased by the complete value of inflation, however a boost can be worked out, for example, just if inflation increases by more than 2%, with the rent just being increased by the increase in inflation above this threshold. At the same time, it is normally agreed that an unfavorable boost in inflation will not impact the rent.


Settle on a higher cost


The 2 celebrations can also settle on the rent increase together and write an addendum to the lease arrangement, for instance.


The property owner can likewise choose to increase the lease himself. As a rule, she or he will then communicate his or her objective in the form of a proposal for an increase, which he or she sends out to the renter. According to the guidelines set in the Civil Code, a boost can be proposed no earlier than one year after the last boost. At the same time, there is a rule that the rent might be increased by an optimum of 20 % over three years. If your rent is CZK 15,000, it can be increased by a maximum of CZK 3,000 within 3 years. At the same time, there is a condition that the resulting lease does not surpass the abovementioned regular lease in the location. The locally customary lease can be determined, for instance, by consulting realty firms operating in the locality or a professional's report. For your own orientation, the web calculator will also help you


However, the tenant does not have to agree to the proposed boost. They can think about the proposal for 2 months and if they do not agree, the landlord can apply to the court within three months to have the boost authorized. The court may identify in the procedures that the rent will be lower (or greater) than the proprietor's proposition. In case of argument, the occupant might work out the right to end the contract by providing the proper length of notification.


Hint: We have also gone over rent boosts in more information in our post When rents can increase.


Can the state manage leas?


After the transformation, the state also imposed particular restrictions on rent increases in the type of rent policy. Regulation was introduced in the Czech Republic until 2011. Some politicians are still thinking about the possibility of guideline as an exceptional and temporary step to prevent a sharp increase in lease rates, however no such step has yet taken concrete form. Recently, lease policy has likewise stopped working in Berlin.


What is the threat of non-payment of rent?


Non-payment of rent can lead to termination of occupancy. The property owner can end the lease either with a standard notice period, however if the lease and energy expenses have not been spent for a minimum of 3 months, the lease can be ended without notice and the renter can be required to hand back the apartment without undue delay. In addition, non-payers of lease may also need to stress over interest on late payments and court costs 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 hold-up in paying the lease with a notice of non-payment and a need for payment of the rent due, warning of the possible repercussions later on (i.e. payment of interest or later termination of the lease). Some scenarios can be quite trivial, such as a misplaced or omitted standing order, and simply offering a caution will assist resolve them quickly.


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


Summary


The lease contract governs the relationship between the property owner and the tenant, with the essential elements being the amount of lease, the possibilities of increasing it and the guidelines for payment of services. The landlord can unilaterally increase the rent just in cases offered by law, while the renter has the right to refuse the modifications and, if necessary, obtain an evaluation by the court. Non-payment of rent can cause termination of the lease without notice. When participating in a contract, it is very important to clearly set out the terms of payment and to read all contractual arrangements carefully to prevent misconceptions and conflicts in between the parties.