Do you have an apartment or house which you are planning to rent out? In recent years, investment properties have been the focal point of interest not only for small investors. However, the Czech legal system places considerable demands on landlords, and you will therefore face many important questions and issues that will need to be actively resolved before you can start renting.
In this mini-series dedicated to renting real estate for residential purposes (i.e., an apartment or house), we will advise you on what to watch out for, what obstacles and restrictions you can expect when negotiating a rental or other similar agreement, and how to solve other practical problems and complications from the landlord’s perspective.
In the first article, we will focus on the suitability of the property for long-term and short-term rental, as well as practical issues and restrictions for landlords when negotiating a rental agreement. In subsequent articles, we will gradually address more specific topics, such as billing for services, the issue of tenant and landlord liability, and issues related to evicting a tenant without their consent.
The rent of residential premises under Act No. 89/2012 Coll., the Civil Code (hereinafter referred to as the “CC”), does not distinguish between whether an apartment or a house is being rented. These articles will do the same. If, in a specific case, a particular conclusion differs for an apartment and a house, this will be expressly stated in the text. Otherwise, the conclusions will apply to both types of real estate.
Suitability of the property for rent and basic conditions
First, it is necessary to clarify whether the property is suitable for long-term or short-term rental. Legal regulations set significantly different requirements for long-term rental (i.e., traditional housing) and short-term rental (accommodation services, Airbnb, etc.).
It should be emphasized that, in general, a building may only be used in accordance with the building approval decision (§ 230(1) of the Building Act),[1] with a different building approval decision being issued for residential properties and another for the provision of accommodation services. Buildings for long-term housing must meet legal requirements in areas such as connection to technical and transport infrastructure, requirements for daylight, sunlight, sound insulation, ventilation, heating, thermal protection, noise protection, and building safety (parameters for staircases, railings, etc.). These requirements differ from those for properties intended for short-term use, where the law places greater emphasis on fire safety and hygiene aspects, while requirements for lighting and room layout are less strict. Depending on your specific plans (and especially if you need to change the current building approval), we recommend consulting a construction engineer. Please also pay attention to the current zoning of the relevant location (especially if it is not a purely urban area, where these types of restrictions are not common), which may prohibit or significantly restrict certain types of buildings and their use. In such a case, the building authority would not approve the requested change to the occupancy permit.
If the use of the property is in conflict with the building approval decision, the owner would be committing an offense under the Building Act, which is punishable by a fine of up to CZK 1,000,000 (Section 301(3)(d) of the Building Act), depending on the specific violation.
Each apartment owner would certainly wonder whether certain restrictions on renting out the unit could arise directly from the HOA’s statutes. In light of the latest case law of the Supreme Court of the Czech Republic, it has been concluded that, given the nature of the HOA and its powers/obligations, the HOA cannot directly prohibit the rental of units to third parties in its statutes, not even short-term rentals (accommodation). However, this does not mean that the landlord is not limited in this regard. If the users of the unit violate their obligations within the building (in particular, disturbing other users and owners), the HOA may impose specific negative consequences on the owner of the rented unit and, in extreme cases (after repeated and substantial violations), even achieve the forced sale of the unit in accordance with Section 1184 of the CC. Despite the above, i.e. the impossibility of generally prohibiting the rental of units in a building, it is necessary, especially in smaller buildings, to take into account that frequent fluctuations in the number of strangers may result in negative attitudes or even actual resentment on the part of other users. It is therefore advisable to discuss such an intention with the other users of the building first.
The situation is slightly different in the case of cooperative housing. If the rented residential unit is owned by a housing cooperative (and therefore not personally owned by the landlord), the landlord acts as the tenant (not the owner). Therefore, if the tenant intends to sublet a cooperative apartment to another user, this will not be a tenancy relationship, but a so-called sublease within the meaning of Section 2274 et seq. of the CC. In this case, the tenant must take into account that the written consent of the cooperative is required before subletting the unit.
Rental and subletting: basic differences
Subletting is, from a certain point of view, a more attractive option for landlords, as subtenants do not enjoy the same strict legal protection as tenants. Although this article does not aim to describe all the possible differences between renting and subletting, the most fundamental difference is that subletting ends at the latest upon termination of the rental agreement, and the subtenant therefore has no overall control over the duration of their contractual relationship with the landlord. In other words, if the tenant ceases to be a member of the housing cooperative (e.g., sells their cooperative share) and/or terminates their rental agreement in any other way, the sublease of the apartment also terminates without further notice. In general, the reasons for which the landlord may terminate the rental agreement are also limited. These restrictions do not apply to subleases, and a sublease agreement can be terminated without giving any reason.
Although a sublease may seem attractive to a landlord, we do not recommend using this option unless it is absolutely necessary. If the landlord is not a member of a housing cooperative or the tenant themselves, it is necessary to conclude a rental agreement with the tenant with all the limitations that this entails. In practice, there are cases of purpose-built rental agreements (typically within families or between friends) that aim to move the end user to the level of a subtenant. Such a procedure could be considered in a dispute as a clear circumvention of the law, i.e., a concealment of the actual lease relationship.
What to watch out for when setting the basics of a rental agreement
If an apartment or house is actually suitable for rent, the landlord must first clarify how they will set up the rental agreement. The basic question for every landlord should then be whether the rental should be for a fixed or indefinite term.
Fixed-term agreement
A fixed-term agreement is, by its nature, limited in time. A fixed-term agreement primarily ends upon the expiry of the agreed period, but it can of course also be terminated, although the law significantly limits the grounds for termination compared to an indefinite lease. Both parties are thus guaranteed a relatively clear period of validity of the rental agreement, which is of course a welcome aspect, but it can also be a complication, especially if the parties disagree and/or the situation and needs of the parties change. At the same time, it should be noted that in the case of apartment or house leases, it is not possible to agree on grounds for termination in favor of the landlord other than those provided for by law, as this would be contrary to Section 2235 of the CC.
In terms of the length of a fixed-term rental agreement, the current market standard is 1 to 2 years. However, we are increasingly encountering fixed-term agreements with a duration of 6 months, which, according to the case law of Czech courts, is the shortest possible period for a valid rental agreement. A shorter period could not only be considered invalidly agreed, but such an agreement could also be regarded as a short-term use agreement within the meaning of Section 2235(2) of the CC. It is certainly necessary to mention the higher administrative costs on the part of the landlord in connection with the more frequent extension of the existing agreement or the search for new tenants.
The fact that the agreement is for a fixed term must be expressly stated in the agreement (e.g., explicitly or by specifying a time limit). If the parties fail to state this fact in the rental agreement, the rental agreement will be regarded as concluded for an indefinite period (Section 2204(1) of the CC).
In the case of a fixed-term rental agreement, the rental as such shall expire upon the expiry of the term. The landlord should always bear in mind the end of the term of the rental agreement, because if the tenant continues to occupy the apartment or house for at least 3 months after the end of the term and the landlord does not request in writing that the tenant vacate the premises, the rental agreement will be extended by law for the previous rental period, up to a maximum of two years (Section 2285 of the CC) under the same conditions that applied on the last day of the agreed rental period. The application of this provision may be contractually excluded between the parties, and this option is very often used in practice.
The rental may be extended by an amendment to the existing rental agreement or by a new rental agreement with effect from the day following the expiry of the previous rental. Alternatively, the possibility of automatic extension or an option may be agreed directly in the rental agreement. Automatic extension means an agreement that stipulates that if neither party notifies the other party by a certain date (e.g., two months before the end of the term) that it does not wish to extend the rental agreement, the rental agreement shall be extended for the agreed period without further action. An option, on the other hand, means that one of the contracting parties sends the other party a written request for an extension of the rental for a pre-agreed period by a certain date, and the other party may only refuse such an option for specific reasons. However, the relevant provision must always be formulated in such a way as to avoid disproportionate interference with the tenant’s rights or to avoid concealing the agreement as an agreement for an indefinite period.
Indefinite term agreement
Indefinite term rental agreements are not as common as fixed-term agreements. However, they do have their advantages. For the landlord, they mean less administrative work and flexibility if the space is needed for other purposes. This type of agreement is recommended especially when the parties have long-standing experience with each other and know what to expect. On the other hand, a rental agreement for an indefinite period can be easily terminated by notice, which does not provide either party with sufficient certainty regarding the duration of the rental. The parties may again extend the grounds for termination in the rental agreement. However, it is not possible to shorten them or agree on them to the detriment of the tenant.
If the rental is agreed for an indefinite term or for a fixed term of more than one year, it is highly recommended that landlords include a so-called inflation clause, on the basis of which the rent will be regularly increased by a predetermined amount set in advance or based on a selected coefficient (most often the average annual inflation rate announced by the Czech Statistical Office). This will cover the risks on the part of the landlord associated with price increases. In the absence of such a specific agreement, the law does allow the landlord to propose an increase in rent depending on the market rate of rent in the given place and time, but this is subject to the consent of the tenant or, if necessary, court intervention, which will entail time and administrative costs for the landlord. Given that the law also provides for the reciprocal right of the tenant to propose a rent reduction in a similar vein, from the landlord’s point of view, we recommend excluding the application of Section 2249 of the CC and agreeing on a contractual indexation mechanism, as mentioned at the beginning of this paragraph.
Form of the rental agreement
Landlords must keep in mind that a rental agreement for an apartment or house must be in writing. Although this is often the case in practice, there are also cases of so-called “rental agreements based on trust.” Although it may seem that a rental agreement without written form “does not exist,” only the tenant may claim the invalidity of a rental agreement due to lack of form (Section 2237 of the CC). In practice, this means that if a landlord verbally agreed (or effectively allowed) someone to rent a property, and the tenant moved into the apartment or house and paid rent to the landlord, the rental agreement would be valid (for an indefinite period), even though it was not concluded in writing. Respectively, only the tenant could object to its invalidity, and the landlord would have to behave as if the rental agreement had been concluded in writing under the conditions stipulated by law and/or the previous “accepted” conduct of the parties.
Invalid and prohibited provisions
Last but not least, it is necessary to bear in mind the legal rule laid down in Section 2235(1) of the CC, which states that provisions shortening the tenant’s rights laid down in the relevant subsection 2 (Sections 2235 to 2301 of the CC) shall not be taken into account, as well as the legal rule laid down in Section 2239 of the CC, which states that provisions imposing an obligation on the tenant that is clearly unreasonable in view of the circumstances shall not be taken into account. In other words, the landlord may not curtail or restrict the tenant’s statutory rights in any way unless the law expressly states that it is possible to agree otherwise. On the contrary, the landlord may impose an obligation on the tenant that is not provided for by law, but only if such obligation is not manifestly unreasonable. Otherwise, such conduct shall be disregarded and it shall be treated as if such a provision of the agreement had never existed and was not legally enforceable. Landlords should always bear this basic rule in mind, although in practice, provisions that violate this rule are often included in rental agreements (e.g., a prohibition on the tenant from taking up permanent residence at the address of the property or a prohibition on keeping animals in the apartment, etc.). Landlords nevertheless deliberately include such provisions in rental agreements (they do not render the rental agreement invalid), even though they are legally unenforceable, purely for psychological reasons.
Conclusion
Before renting out a property intended for residential use, the landlord should first verify that the property is suitable for the intended type of rental. The rental agreement itself should be drafted in such a way that it reflects the landlord’s interests to the greatest extent possible and provides them with sufficient flexibility and guarantees for the future, or contains sufficient protective mechanisms in case of breach of the agreement by the tenant. However, it is always necessary to comply with legal limits and restrictions.
As a landlord, even after the agreement has been concluded, you will have a number of other obligations related to, for example, the provision and billing of services, liability towards the tenant, or a number of issues in the event of a breach of the tenant’s obligations. We will address these topics in the next parts of this mini-series dedicated to landlords renting residential properties.
If you have any questions, not only concerning rentals or other areas of civil law, we are at your disposal. Please do not hesitate to contact us.
[1] Act No. 283/2021 Coll., Building Act, as amended.
Mgr. Ondřej Růžička, attorney – ruzicka@plegal.cz
Mgr. Karel Janeba, junior lawyer – janeba@plegal.cz
26. 6. 2025