Post date: Jul 26, 2015 12:34:51 PM

Flat owners' association (SVJ) fees – who pays what?

According to Czech law, every building is obliged to establish a legal entity that is in charge of the financial management of the owners' committee. In Czech this is called a ‘společenství vlastníků jednotek‘, or SVJ for short. Freely translated, it means the "owners' association" or the "flat owners' association".

In many cases, owners of rental properties lose quite a lot of money because they find it hard to understand the owners' association statements (exampleof an SVJ statement) or simply pay for items that should have been the responsibility of their tenant.

In other cases, tenants can be asked to cover the entire bill, however then the rent must often be reduced because most tenants focus on the total cost rather than only to on the rental fee.

Owners' association statement – understanding the charges

A typical statement from the Czech owners' association of the building where you bought a flat will have recurring Czech terms. In this article we will go over the different parts and clarify the meaning of each of these terms. We will also state whether each part is normally paid by the tenant or the owners.

In addition, note that the owners' association statement and the charges included in it are only an estimate based on actual costs from the previous year. The owners' association usually reads the electricity, water, and other meters in the spring or at the end of the year and then makes all the calculations of actual usage for the previous year and performs the necessary adjustments.

Owners' association fees – our recommendation

We recommend that owners of flats for rent in the Czech Republic collect 35% to 50% more than the lessee's monthly deposit because:

· Actual owners' association fees usually go up during the year while you are still paying last year’s fees.

· The current tenant may consume much more heating / electricity / water than the previous tenant.

· It is extremely hard to collect additional sums after the tenant vacates the flat. This may happen even before you receive the previous year's statement from the owners' association.

Remember that when tenants request adjustments and deductions for the time they lived in the apartment, the owners are required to do so. For this reason, the owners of the property should keep very accurate records of the meter readings before and after the tenant leaves.

Are you interested in receiving more information about Czech real estate? Read more articles here or read about investing in Czech real estate.