Most flats in the Czech Republic are rent controlled. The maximum rent that can be charged for a flat is set by law. This has caused some large distortions in the housing market and results in many properties being brokered as commodities on the black market.
Rent control means the amount of rent the property owner can charge is regulated. Flats are divided into four categories (1 to 4, 1 being the best quality) according to their condition and amenities.
A category 1 flat will be most expensive and will typically be the best you can rent. However, there are exceptions as a refitted flat in perfect condition may not have a modern heating system, which will make it a category 2 flat. However, it will still be a much better place to live than a similar category 2 flat that is falling to pieces but has a modern heating system.
Regardless of category, the rent an owner can charge for a rent controlled flat is a quarter to half the price he can get on the free rental market. Many landlords have a tough time earning enough to pay for maintenance, repairs and renovations. If the property is let through a management company, the owner has to pay both the agency and yearly tax on the rent. Owners also have little power to enforce rent payment, so many lose out through non-paying tenants.
These are some of the reasons why quite a few flats remain in such ill repair. Sometimes there is no money to invest in proper maintenance, even though this is required by law.
You may be surprised to know that you are extremely unlikely to rent your flat from the property owner. Instead, you are more likely to be renting your flat from one of the following:
Confused yet? This is all caused by the fact Czech renters need to qualify for rent controlled apartments. If the tenant moves, for example, he might disqualify for a rent controlled flat. Moreover, if the rental contract of a price regulated flat is cancelled, this flat then can be put on the free market and the owner could demand higher (and appropriate) prices. Therefore, normally flats are rented by individuals for a very long time in order to avoid losing their qualification for a rent controlled flat and, thus, a good price.
Due to this, a great number of cheap flats are let by private individuals, and lack legal protection. This can lead to quite a few inconveniences. It might, for example, happen that your mailbox does not have your name on it, as you are not the registered tenant. Also utilities may be billed to the actual owner, which may cause confusion about how much you actually have to pay.
A rental agreement containing every detail of the lease is generally the best way to avoid trouble. Although this is not a guarantee that everything will work out well, it will help you in any dispute with the lessor.