Lease Agreement: Everything About Rent

Negotiating the lease in the agreement: yes or no?


Contrary to some assumptions, lease is not a lawfully binding part of the lease agreement. Nevertheless, we consider it a crucial part of the contract and suggest that you negotiate it in the agreement. This will save you a lot of problems and confusion in the future. If the quantity of rent is not concurred in the agreement, the proprietor can claim the lease at the rate that is customary in the area for renting a comparable flat or home. However, this must be proven.


Tip: Read what to bear in mind when concluding a lease contract for a house.


How to figure out the optimal rent?


Finding the perfect rent is not simple. If you do not use the services of a property agent, numerous realty websites can be a good guide. It is essential to compare apartment or condos with the very same layout, size and condition - for example, whether they have been remodelled, how they are heated and the condition of the windows. Obviously, the location, the floor of the building in which the home lies, whether there is an elevator, a cellar or balconies in the building also influence the rate. It is also important whether the house is rented furnished or not.


Finding several apartments with comparable criteria will assist identify the rate variety. It is a legitimate goal of property managers to make as much money as possible from the lease. However, it is real that if you set the rate above the typical variety in the area, it will take a lot longer to discover an occupant. Unless the apartment or condo has something quite extraordinary that other apartment or condos in the location do not have, it is possible that the tenant will be lured by cheaper competitors and will soon leave, or not relocate at all.


Every month when the home is empty, not just does it not bring any money, however on the contrary, it is connected with expenditures for utilities and energy that the owner needs to pay. Therefore, it pays to discover the ideal rate level for the lease.


What is included in the lease?


The lease itself is characterised as a payment to the owner for using his/her flat (or e.g. non-residential space). However, the property owner and the occupant can agree that the rent will also include payments for services associated with using the apartment or condo, or charge these services as a flat rate outside the rent. This includes, for example, utilities, energy or water charges. All of these payments can likewise be noted in a" record sheet", which can be an accessory to the occupancy contract.


In the case of long-term leases, it is typically worth moving the utilities to the tenant. This offers the occupant the freedom to pick the company and a better introduction of their costs. A little bit of administration at the beginning can save both parties the inconvenience of settling overpayments or underpayments.


An often-discussed payment is the payment to the so-called repair work fund. According to numerous legal interpretations, this is a payment that does not directly benefit the tenant and must not be charged. But if it is billed discreetly, i.e. as part of the total rent, regrettably the occupant has little option.


In addition to the rent, an amount of cash (commonly referred to as a security deposit, which we have actually discussed in information in our post What to look out for when leasing an apartment or condo) can likewise be concurred in the contract, which the tenant pays to the landlord before the occupancy starts and which can be used in the future, for example, to pay lease financial obligations or to make up for damage brought on by the tenant.


Assist with the lease agreement


By drawing up an excellent lease contract, you will conserve yourself the majority of the problems, whether as a landlord or an occupant. We will draw up or inspect the lease agreement, or recommend on drawing up an amendment to the arrangement or ending the lease. We will deal with everything quickly and perfectly.


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Can regular lease payments be ensured?


The services of companies that rent an apartment or condo from the owner and after that provide it to occupants for a commission have actually ended up being a hit in recent years. This guarantees the owner routine lease payments for the period of the contract and relieves him of the inconvenience of finding renters and administration. For the landlord, this can be an extremely successful option that saves time and energy. However, it is necessary to carefully compare offers from different service providers and read evaluations before signing a contract. This is because some business, in the experience of customers, do not constantly act fairly and may have a various technique to tenants than what has actually been agreed with the landlord. It is for that reason key to study the terms thoroughly and be clear about what both parties are devoting to.


Rent increases


Rent increases can be approached in a number of ways. A popular one is to repeatedly get in into a fixed-term agreement (e.g. for one year), where the property manager provides a new agreement with an increased lease each time the term ends. It is then as much as the occupant whether they accept the brand-new cost and wish to remain in the house. In such a case, the proprietor is not limited by law in the possible price increase. However, we suggest getting in into fixed-term contracts if the objective of the lease is actually short-term. If the proprietor intends to rent out the home for a long term, however takes the technique of participating in shorter-term fixed-term contracts, such techniques may backfire precisely because the occupants leave after a brief duration of time and the landlord is hectic consistently trying to find brand-new occupants.


The landlord can unilaterally increase the rent as much as the normal lease in the area, if this is concurred in the contract.


Rent indexation to inflation


Another alternative for increasing the rent is to work out an inflation clause. This enables for an automatic boost in rent depending on inflation, usually on 1 January or on the anniversary of the lease contract. However, it is not possible to increase rent more regularly than once a year utilizing an inflation clause. The clause itself must refer to a particular inflation index (such as the Consumer Price Index). Naturally, the rent does not need to be increased by the amount of inflation, but a boost can be worked out, for example, just if inflation increases by more than 2%, with the lease only being increased by the rise in inflation above this threshold. At the exact same time, it is generally concurred that a negative increase in inflation will not impact the lease.


Settle on a higher rate


The two celebrations can likewise settle on the lease increase together and compose an addendum to the lease agreement, for instance.


The landlord can also decide to increase the rent himself. As a rule, she or he will then communicate his or her intention in the kind of a proposal for an increase, which he or she sends to the occupant. According to the guidelines put down in the Civil Code, an increase can be proposed no earlier than one year after the last increase. At the same time, there is a rule that the lease may be increased by a maximum of 20 % over 3 years. If your rent is CZK 15,000, it can be increased by a maximum of CZK 3,000 within 3 years. At the same time, there is a condition that the resulting lease does not exceed the aforementioned regular lease in the area. The in your area popular lease can be ascertained, for example, by speaking with real estate firms running in the region or a specialist's report. For your own orientation, the web calculator will also help you


However, the occupant does not need to agree to the suggested increase. They can consider the proposition for 2 months and if they do not concur, the property owner can apply to the court within three months to have the increase approved. The court might determine in the proceedings that the lease will be lower (or higher) than the proprietor's proposal. In case of dispute, the tenant might exercise the right to end the contract by offering the appropriate length of notice.


Hint: We have also gone over lease boosts in more detail in our article When rents can increase.


Can the state regulate leas?


After the revolution, the state also enforced specific restrictions on rent boosts in the kind of rent guideline. Regulation was presented in the Czech Republic until 2011. Some politicians are still thinking about the possibility of policy as an extraordinary and short-lived step to prevent a sharp increase in lease prices, but no such measure has yet taken concrete form. Recently, rent regulation has also failed in Berlin.


What is the threat of non-payment of rent?


Non-payment of lease can result in termination of tenancy. The property manager can terminate the lease either with a traditional notification period, however if the rent and energy expenses have not been spent for at least three months, the lease can be terminated without notification and the occupant can be needed to hand back the apartment or condo without excessive hold-up. In addition, non-payers of rent might likewise need to stress over interest on late payments and court expenses if there are court proceedings.


However, it is perfect not to let the go that far and to contact the renter at the first hold-up in paying the lease with a notification of non-payment and a need for payment of the rent due, caution of the possible effects later (i.e. payment of interest or later termination of the lease). Some situations can be rather minor, such as a lost or omitted standing order, and simply offering a warning will assist solve them quickly.


You can likewise discover out how to pay tax on rental residential or commercial property.


Summary


The lease contract governs the relationship in between the property owner and the renter, with the essential elements being the quantity of lease, the possibilities of increasing it and the rules for payment of services. The landlord can unilaterally increase the rent only in cases provided for by law, while the occupant has the right to refuse the modifications and, if required, request a review by the court. Non-payment of rent can result in termination of the lease without notification. When entering into a contract, it is essential to clearly set out the terms of payment and to read all contractual arrangements carefully to prevent misunderstandings and disputes in between the celebrations.