When rent increases can take place

For example, Tereza, a student from Český Krumlov, suddenly received a letter from her landlord stating that from the beginning of January he would be demanding CZK 5 000 more for her Prague apartment. There was no claim for a rent increase in the contract. However, the contract was ending at the end of the year and the increase was a condition for concluding a new contract. Therefore, there was no choice but to accept the demand in order to continue the lease.

It is therefore possible to agree in the lease agreement to increase the rent annually or, on the contrary, to exclude rent increases altogether. But what if the lease contains no such agreement and is for a very long period or for an indefinite period? Can the landlord increase the rent unilaterally?

The landlord is indeed not completely without legal representation. It can propose in writing to the tenant to increase the rent up to an amount comparable to the normal rent in the locality. However, this is subject to the condition that the proposed increase, together with that which has already occurred in the last three years, does not exceed 20 per cent.

In this way, the law has prevented a leap in rents that would have meant many tenants having to end their tenancy. Therefore, the landlord cannot increase rents arbitrarily and thus get rid of tenants who were previously lured by low rents.

If the tenant agrees to the proposal to increase the rent, the tenant shall pay the increased rent as proposed, starting from the third calendar month after receipt of the proposal. If the tenant does not notify the landlord in writing within two months of the receipt of the proposal that he agrees to the rent increase, the landlord shall have the right to request the court to determine the rent within a further three months.

The tenant in turn has the right to argue that the application was filed late. The court would then not grant the application. On the landlord’s motion, the court may decide on the rent up to the amount that is customary in the place and time. The tenant would then pay more from the date of the application to the court.

However, there is an exception where the provision prohibiting a jump in rent does not apply. Specifically, in the case of so-called regulated rents. In particular, in the past, there have been properties in places where the rent has been set by legislation and has not been so set by agreement of the parties or by the court. In the case of very low rents, a very slow increase could lead to an unfair disadvantage for the landlord. The landlord may therefore increase the rent directly to the locally customary rate. This is a similar case in the well-known case of flats in prefabricated buildings in Prague Písnice. ČEZ sold the panel houses with 700 flats to a new owner who increased the rent by leaps and bounds, which the local residents demonstrated against.

However, the situation where the landlord and the tenant agreed on the amount of rent according to the legal regulation in force at the time (on regulated rent)remains controversial. It is not clear whether the rent is a rent based on a legal regulation or a rent agreed between the parties. We do not yet have any case law on this matter, i.e. a decision of the Supreme Court or the Constitutional Court, which would unify the interpretation.

We prepared this article for the Lidové noviny series “Law & Housing”. See also other articles from the series:

1. What to watch out for when buying a property
2. How to get a mortgage
3. What to check before buying a property
4. Who pays the property transfer tax and how?
5. What should be included in the property purchase contract
6. The most common mistakes when drafting a proposal to the Land Registry
7. Buying a property from a developer
8. Keeping the purchase price when buying a property
9. The difference between a condominium and a freehold
10. What is an annuity?
11. How to properly gift a property
12. What is the purpose of an easement or servitude?
13. Making a will and settling an estate
14. What is a collation
15. What shouldn’t be missing in a lease agreement
16. When rent increases can be made
17. Termination of the lease
18. Agreement to end the tenancy
19. How to draw up a work contract with a tradesman
20. Hidden defects and cancellation of a work contract
21. When do you need planning permission to renovate a property?
22. Home Rules
23. What does serving on a condominium board entail?
24. Why not underestimate the bylaws in a condominium
25. Common areas in a block of flats
26. What is involved in refurbishing a block of flats
27. Can a condominium or housing association go into debt?
28. How to renovate a house or cottage
29. What to watch out for when dealing with a construction “company”?
30. Building a house on a “green field”
31. How to remove land from the agricultural fund