Recently published data from the Bezrealitky.cz portal shows that more and more Czechs prefer to extend their existing lease rather than move to a new rental. The main reason is the more favourable financial terms of staying in the same flat, compared with the likely significant increase in monthly rent if they move, typically once a fixed-term contract of one year comes to an end.
Tenancies are lasting longer
According to the latest survey, people now stay in one tenancy for 50 months on average, whereas just three years ago it was “only” 26 months. In a short space of time, roughly two years spent in the same home has turned into more than four years! The growing length of tenancies shows that a considerable number of leases are currently being extended by another year, usually on the existing terms.
People today value a good home and a functioning tenancy more, so empty flats and removal vans are becoming a rarer sight
According to real estate market experts, this trend is driven by the rocketing growth in rents. The data clearly shows that the pace at which average rents are rising and the length of tenancies go hand in hand. You can read more here about the year-on-year jump in housing costs in individual regions. Another reason tenancies are lasting longer is the smaller supply of flats, especially in the capital and regional cities. At the same time, the attitude of Czech families towards rental housing is gradually changing – in the past it was seen more as a temporary solution, while today many regard it as their preferred option. We have already written in the FLAT SERVICE Advisor about how interest in rental housing has been growing over the long term and that it is used by roughly a quarter of Czechs. The market situation in rental housing is also significantly influenced by the currently rather lower mortgage interest rates and the ever-rising purchase prices of properties, which are breaking records in Prague. In the Czech Republic, compared with other OECD member states, the availability of owner-occupied housing is poor, and households that cannot (yet) afford it therefore often opt for an extension of their existing lease. Bezrealitky.cz data also reported a rise in the average number of months people stay in the same rental during the Covid pandemic. Back then it climbed from 2.1 years in 2019 to 2.5 years in 2021. After that, however, the usual length of a tenancy essentially stagnated for several years.
Stability of the tenancy comes first
Moving out after a year, the term for which fixed-term contracts are typically agreed, brings with it, among other things, a likely increase in monthly rent. Year-on-year differences between Prague districts are more pronounced than you might expect. That is why people prefer not to change their rental housing unless they have a compelling reason to do so, such as the birth of a child and the need for more living space.
Many Praguers would rather stay in their current flat in the wider city centre than move to a better address where they would pay far more for housing
Quite simply, tenants want to hold on to a lease with good payment terms, while landlords appreciate the reliability of occupants they have already vetted. And that is despite the fact that filling their property with new people every year could earn them considerably more in rent under current market conditions. Owners tend to raise rents year on year far less sharply than is the case with newly concluded contracts. Do you have a vacant flat in Prague that you would like to rent out, but you are worried about the hassle involved? Turn to the professionals at FLAT SERVICE! Thanks to extensive experience in property management and constant monitoring of the latest housing trends, they can set the right rent level and find the ideal applicant. They will also take care of all the paperwork and day-to-day maintenance of the property. That way you do not have to deal with non-paying or unreliable tenants, or any problem situations. For more information, write to sales@flatservice.cz or call +420 277 000 330.
