Government wants to prevent chaining of lease contracts

Chapters of the article

• Prohibition of chaining of contracts
• New options for rent increases
• Expedited eviction

Renting is a relatively popular way of living in most European countries. This can be judged at least from the much higher percentage of people living in rented accommodation. In the Czech Republic, the proportion of renters is extremely low compared to our neighbours, which has not changed in the long term.
There are several reasons for this: for example, the need of Czech men and women to provide for their retirement and old age. The pension reform is so far more of a cosmetic adjustment than a real security in old age for the current generation of people of working age. Owning one’s own home is also a matter of prestige in our country, it represents an opportunity to provide for one’s offspring in the future and, last but not least, many people are driven into it by the fear of an insecure tenant status. We see less and less the situation when the whole family lives in a rented apartment for many years, does not plan any change and de facto thinks of the rented apartment as “their own”. On the contrary, rented housing is becoming more the domain of young people who leave their parents’ or dormitory accommodation and stay in it before they decide to buy their own flat.

In most developed countries, the reality is different. Austria and its capital Vienna are most often mentioned in this regard. Even middle-class people, doctors and government officials live in rented accommodation here without any problems and undoubtedly do not accept the perceived lower prestige of their housing. In fact, 73% of the population chooses this form of housing here. Nevertheless, Vienna has been ranked among the top cities for quality of life for years. Certainly, many factors play a role in the ranking, such as the environment, education and safety in the city. But the City Hall’s approach to housing plays no small part.

In Vienna, Austria, it is primarily the city’s substantial subsidies that favour rental housing and make it attractive. Czech cities have not yet taken similar steps, and often do not even have enough apartments on which to implement such a housing policy. So a plan to at least somewhat alleviate the reluctance to rent housing has now been presented by politicians at government level. However, everything is still at the stage of plans and preparations.

Prohibition of chaining of contracts

According to a survey by the Department for Regional Development, one in five tenants surveyed have contracts of less than one year and one in four have contracts of no more than 2 years. This leaves up to one million people living in relative uncertainty about their housing. This reality is set to be changed by the first planned legislation to address the chaining of short-term fixed-term tenancies. But this should be ended by a planned amendment to the Civil Code, which would cap the number of fixed-term contracts and their length. According to their proposal, a fixed-term contract of less than three years could be concluded between a tenant and a landlord at most twice in a row. This would then have to be followed by a tenancy agreement of at least three years or indefinite duration. If the contract did not respect this rule, it would be regarded as having been concluded for three years. If a period of at least one year has elapsed since the termination of the last obligation under the lease between the parties, the previous leases would be disregarded.

New possibilities for rent increases

The second proposed change would link investments in energy savings and the possibility to increase rents at the same time. Under it, the landlord will be motivated to invest, for example, in insulation, efficient heating or other energy saving measures. In addition to the current possibility to agree with the tenant on a rent increase of up to ten percent of the reasonable costs, the Civil Code would allow the landlord to seek a rent increase in court and alsounilaterally increase the rent by 3.5 percent of the reasonable costs per year. At the same time, however, the law would not allow such a provision to be abused to impose an unreasonably high rent. It would anchor the so-called reverse burden of proof. The landlord would therefore have to prove, if necessary, that he is entitled to set the rent in this way. At the same time, the tenant would be able to terminate the contract when the rent is increased.

Expedited clearance of the apartment

According to the Ministry , it is also necessary to speed up the eviction of an apartment or house. The length of such a process can now take more than a year. This is related to the upcoming change of government. Although landlords have legal tools to get rid of a tenant who, for example, does not pay rent or otherwise grossly violates his or her obligations, in practice such proceedings take a disproportionately long time. Therefore, a so-called Order to vacate an apartment or house is being prepared. This should speed up the protection of the plaintiff’s property rights in the event that the defendant uses the leased apartment or house without legal justification.

The court could decide that the tenant must vacate the apartment or house within 15 days of service of the order and pay the costs of the proceedings, or file a resistance within the same period.

The proposed changes will be discussed with representatives of associations, associations and other representatives of tenants and landlords in the market before being developed into legislative changes.