The increase in the real estate tax, which has been in force since the beginning of the year, will have a minimal impact on the final rental prices in apartments. In a 60-square-metre apartment, the annual increase should amount to CZK 200 to 800, depending on the location. In percentage terms, this could mean an increase in rents ranging from 0.5 to one per cent. Representatives of the Association of Rental Housing (ANB) announced.. The reason for the minimal increase in rents, according to them, is that landlords will not be willing to accept the property tax increase as their net cost. Another reason may be that most municipalities did not agree to a tax increase on residential properties after January 1.
“It is true that property tax settings in the Czech Republic were among the lowest compared to the most developed countries in the world. In this respect, its increase can be considered fair. This possibility has been discussed for a long time and it can be said that everyone on the housing market is counting on its increase. However, it should be remembered that in the case of rental apartments, property tax is a cost for the owner, which will certainly be reflected in the rental price,” said Jakub Vysocký, vice-president of ANB and director of the Investment and Real Estate Administration.
The property tax rate has increased by up to 80 percent since the new year. At the same time, an inflation coefficient is being introduced to calculate the tax, which will take into account the development of the price level in the coming years. The approved consolidation package, of which the property tax increase is a part, also changes the taxation of certain types of land. For example, owners of certain garages will have to file a tax return in January because of this. The law also gives municipalities the option to reduce the property tax in their area, as they can now apply a local coefficient between 0.5 and 0.9. If no coefficient is set, its value is calculated as one.
According to data from the Financial Administration, more municipalities have used the local coefficient to increase their property tax this year than last year. This year, 5,416 municipalities, including towns and municipal districts, did not set a coefficient, compared to 67 more last year. No municipality used the option to reduce property tax by the local coefficient. However, according to Alexandra Kocková, the deputy communications officer of the Union of Towns and Municipalities, most municipalities did not decide to increase property tax on residential properties until last autumn. They were unsure how the increase would financially burden residents. A number of municipalities did, however, increase the local coefficient on commercial space. Since the law has only been in effect since the New Year, Kocková said there is no information yet on whether municipalities will increase property taxes on residential properties in the future.
An analysis by real estate portal UlovDomov.cz shows that in the fourth quarter of last year, the average rent in the Czech Republic was CZK 16,576, down four percent quarter-on-quarter and year-on-year. Rental prices rose by one to six percent year-on-year in most cases. However, some apartment layouts, or apartments in some regional cities, deviated from the average.
Source: ANB and CTK
