This ratio comes from data published by the Ministry of Regional Development of the Czech Republic. It illustrates the gradual transformation of the rental market, with many landlords using this route to minimise their risks. These include, for example, the difficult eviction of non-paying tenants or otherwise problematic tenants.
Demand for open-ended or multi-year contracts certainly exists, but in today’s market it is nowhere near matched by the supply of such contracts from property owners
Pros and cons of a fixed-term contract
If you need to get a slightly better grasp of the whole issue, you will certainly appreciate a clear list of pros and cons for both types of contract. It is important to stress that we describe the whole situation purely from the landlord’s perspective, that is, the flat owner. So what should you prepare for if you choose a fixed-term contract? + The option of more flexible selection of suitable tenants. + Easier ongoing rent increases so that the amount reflects market reality. + Better ongoing control of the condition of the property. + The contract end date is the ultimate safeguard in case of problems or disputes. - Administrative burden every time the contract is renewed or a new one is signed. - The risk of greater tenant turnover, as tenants may decide at the last minute not to extend. - The flat sitting empty during the transition period and the resulting loss of rental income. - Because of the short contract, tenants do not see the flat as a “real home” and may therefore neglect routine maintenance.
Every month a flat stands empty is in fact very costly for the owner
Pros and cons of an open-ended contract
It might seem that a never-ending contract has nothing but drawbacks for the property owner, but that is not the case. Take a look at a clear list of arguments for and against an open-ended contract: + If you hit the “jackpot” with good tenants, you are often sorted for life. + Minimal time and administrative burden. + Tenants typically look after the flat as if it were their own (although you cannot rely on this entirely). - More demanding administration if you eventually need the flat for your own purposes, for example as housing for your children. - The risk of unpaid rent – in the Czech Republic, every 40th household owes rent. - An administratively extremely demanding eviction process (unless you apply a direct enforceability clause).
Few decisions in life are black and white, and this one is no exception
It follows from the above that the decision on whether a fixed-term or an open-ended contract is better for a particular tenancy is largely individual and must be adapted to the specific circumstances and needs of both parties. Data from the Ministry of Regional Development and from private online property platforms clearly show that the current trend is a stronger preference for shorter contracts on the landlords’ side. For those looking for rental housing, on the other hand, the potential for the certainty of stable housing is very important, including when deciding whether to start a family. For you as a landlord, therefore, being open to an open-ended contract may, once all the risks are weighed up, also mean the potential for higher monthly rent, which some applicants will be willing to pay for that certainty. Would you like to entrust your investment flat to an experienced manager who will carefully select a suitable, solvent tenant for you and handle all the paperwork? Then do not hesitate to try the services of FLAT SERVICE in the Partner or Garant variants. Arrange a no-obligation flat viewing and a guaranteed rent calculation with us on +420 277 000 330 or by e-mail at sales@flatservice.cz.
