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Investing in real estate has always been an attractive option for generating passive income, and the Czech Republic is no exception. This country offers numerous opportunities for purchasing property for rent.
However, before making a final decision on investing in rental property in the Czech Republic, it’s crucial to understand the pros and cons of such an approach.
Why You Should Consider Buying Property for Rent in the Czech Republic:
reaming of living or having a business in a comfortable European city? In 2021, the Czech Republic became the third wealthiest region in the European Union. Digitalization, industrialization, rapid development in IT, and advanced technologies have turned this country into a hub of modernity in the heart of Europe.
According to the consulting company Adecco, Prague ranks eighth in the world for working conditions and opportunities for professional growth. The city surpasses global capitals like Washington, London, and Paris in this regard. The country is among the top 20 in the world in the Social Development Index, evaluating the state of the social system.
The most comfortable city for living and profitable for buying property for rent is undoubtedly the capital. Prague boasts a well-developed public transportation system, making it unnecessary to own a car. The city offers easy access to childcare facilities, schools, clubs, and more.
Administratively, Prague is divided into 10 districts, from Prague 1 to Prague 10. The historical center, Prague 1, is considered the cultural heritage of the city. Expatriates typically choose properties in Prague 2 and 3, as these are prestigious and sought-after areas with numerous parks, shopping and business centers, restaurants, and more. Districts 4–10 are numbered according to their distance from the center. The farther the district, the less attractive it is for buyers. However, for those who prefer a moderate pace of life and tranquility, cozy cottages, small apartment buildings, etc., can be found here.
Even during economic crises and financial fluctuations, real estate in the Czech Republic has remained stable. Property and commercial space prices consistently rise, making purchasing property for rent a potentially profitable business. Expats can create an opportunity to earn passive income while being in their home country or abroad.
The Czech Republic has a large number of students, tourists, and foreign workers who are constantly looking for rental housing. This creates a steady demand for rented apartments and houses, ensuring a continuous flow of tenants.
At the end of 2023, the average rental cost in Prague was 388 Czech crowns per square meter. Over the past year, the property rental price increased by 4% nationwide. In the capital, the fastest price growth occurred in Prague 1, reaching 8.2% (up to 475 crowns per sq. m), in Prague 6 – 7.7% (up to 365 crowns per sq. m), and in Prague 8 – 7.3% (up to 397 crowns per sq. m).
Factors to Consider:
Here are some of the drawbacks of buying property for rent in the Czech Republic:
- Financial Expenses and Maintenance: In addition to the property cost, you’ll need to consider renovation expenses, taxes, and other costs.
- Risk of Damage: If good tenants cannot be found, losses may occur.
- Property Tax: Property owners in the Czech Republic are required to pay property tax (Daň z Nemovitosti) annually, regardless of their residency.
Buying property for rent in the Czech Republic has its advantages and disadvantages. It can be a good source of passive income; however, this decision should be carefully aligned with specific risks and expenses. Before making any investments, thorough market research, risk assessment, and consultation with a professional are crucial.
