Everything you need to know about apartment owners' committees in the Czech Republic

Post date: Mar 18, 2015 9:26:31 AM

Everything you need to know about apartment owners' committees in the Czech Republic

Most apartment owners in the Czech Republic pay a regular monthly sum, literally a "repair fund" (in Czech: fond oprav). By law, the owners (and not the tenants) are responsible for depositing money in the repair fund for the building's upkeep. Any sums remaining in the fund are subsequently used to maintain the building and for improvements such as a new elevator, renovating or replacing tile roofs, restoration of the building's exterior, improving the building's insulation – which reduces heating costs – or installing new windows. Before deciding to buy an apartment or a house in the Czech Republic there are three questions you should ask with regard to maintenance fees.

What is covered by the monthly fees charged by apartment owners' committees in the Czech Republic?

The total monthly fee per apartment includes the water, electricity, gas, and waste disposal bills, as well as payment for the upkeep of common areas and for building management and maintenance. The sum deposited in the repair fund for each apartment is calculated on a relative basis according to the size of the apartment. The rent charged should include the maintenance fee. If the maintenance fee requested is too high it will be hard to ask for a reasonable rent and the investment will produce lower yields. Every building in the Czech Republic has its own maintenance plan, and therefore maintenance fees vary considerably. In general, the fees may be said to depend on the type of building. Experts cite a rule of thumb whereby the maintenance fee for old panel buildings is 30 Koruna/sq. m., while for brick buildings (typical of classic 20th century construction) the fee is usually (but not always) 25 Koruna per sq. meter.

The sum deposited each month is usually constant but may change. This requires the approval of all owners, as decided at a owners' meeting. Sometimes excess sums remain in the fund and then a decision is made to reduce the monthly fee. In contrast, when outstanding expenses are anticipated, such as a roof that requires renovation or the installation of an elevator, the fee may be raised.

What is the current financial state of the committee's repair fund?

It is strongly recommended to ascertain the balance of the building's repair fund. An apartment in an unattractive building may suddenly prove an interesting investment if it becomes apparent that sufficient funds have accumulated in the repair fund and the building is about to be thoroughly renovated. An opposite case is evident when a building appears completely modern but its repair fund seems to have insufficient funds even to fix a blocked pipe. Another possible scenario is a building that appears recently renovated but the renovations required a very large loan that has not been paid and will be charged to the owners over the next few years, possibly resulting in high monthly fees.

How well is the repair fund managed and what is the anticipated investment plan?

The building's history should be checked out to ascertain whether it has been properly managed. For example, it is more important to fix a broken roof than to restore the exterior of a brick house. A good relationship between the apartments' owners is also very important for efficient management of the building. A committee incapable of reaching rational decisions is a threat to the future of the building.

Although it is obvious that excessively high payments to the repair fund may make an investment unattractive, the owners also do not wish to be surprised by sudden unexpected costs and therefore they invest more in the repair fund. In addition, the building's maintenance has a direct effect on the apartment's future value. All these considerations must be taken into account when buying an apartment in Prague.

In conclusion, if you wish to buy an apartment in Prague or the Czech Republic, we would be glad to share our extensive experience with you and to provide you with support throughout the process. A wide array of considerations must be taken into account when buying an apartment in a foreign country – and that's exactly why we're here: to provide you with professional, efficient, clear solutions in English or Hebrew, based on years of experience in the Czech market. Contact us here.