Why Invest?

Out of all the countries in Central & Eastern Europe (CEE) the Czech Republic has proved to be the most stable in terms of economic developments and has also had the highest level of FDI. The domestic demand has increased in importance over the past five years since 2005. Microeconomic reforms have contributed to a steady annual growth, price stability, and a decrease in unemployment.

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Market Report

Our forecast is that we will see steady growth in prices around the 10-20% per annum range for the next 2-3 years possibly falling to the 10-15% range by about 2009. Despite the rapid capital growth in the past, we still believe there is plenty of room for further steady growth well into the future.

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Economic Overview

The Real annual GDP growth will be 5.4% in 2006-07 because of the increasing domestic demand. And it will play a vital role in the expansion of the economy. We also expect that the inflation will slightly increase in 2006 and will fall back in 2007.

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Visa/Residency Issues

The EU citizens can travel to the Czech Republic either with a valid passport, or with a valid national ID-card. The validity of these travel documents does not have to exceed their stay in the Czech Republic. Nationals of other countries must have a passport, whose validity exceeds by three months the intended period of stay in the Czech Republic.

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Getting to Czech

The location of the Czech Republic in the very heart of Europe contributes to the fact that one can get there easily and fast. Direct flights from the UK take around two hours.

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Fees & Taxes

• The real estate agent's commission is commonly 5% in Czech Republic.
• A seller must pay a property transfer tax. This is 3% of the sale price.
• The corporate tax on capital gains (currently 26% but dropping to 24% by 2006) is unavoidable. There is pressure to further lower corporate tax rates, however, in years to come.
• A treaty between the Czech Republic and the United Kingdom prevents double taxation. The withholding tax for UK residents is 5%.
• A real estate agent typically charges between 2.5% and 5% and is almost always paid by the seller.

 
Czech Republic

Basic Information

Czech Republic Overview

The Czech Republic is a landlocked country in Central Europe. The country has borders with Poland to the north, Germany to the northwest and west, Austria to the south, and Slovakia to the east.

Average Property Prices

• One-bedroom apartment.... £35,000 and £70,000
• Two-bedroom apartment.....£50,000 and £85,000
• Three-bedroom villa.............£60,000 and £100,000

Buying Process

• The restitution of property after Communism complicated ownership in many cases, which is why most overseas buyers prefer to buy in fully restored apartment blocks, or newly built specialist residential apartment blocks, where ownership is no longer in dispute. Fortunately, there are many of these available.
• Each buyer should perform adequate due diligence in order to check the title of the property. In Prague there is a central registry of ownership known as the Kadastral. This institution holds records of ownership, mortgages, liens etc. It is the most useful first step to determine the ownership of the real estate. This like in the UK normally carried out by the lawyers on behalf of the client.
• As a foreign buyer you will have to form a limited company, or purchase an existing limited company to make your purchase, but the process is quite simple. It can take up to three months to form a company and costs are approximately the same as purchasing an off the shelf corporation. It is recommended that an existing off the shelf corporation be purchased, which results in a speedier purchasing process.
• The process of acquiring real estate is well established. Buyer and seller negotiate conditions. Typically, the purchaser will lodge the purchase price in a notaries or escrow account to which the seller will have access only after the Purchaser is registered as the new owner.