ASK AN EXPERT: Can a landlord legally increase your rent in Czechia due to inflation?

With record inflation digging into the pockets of consumers, businesses, and entrepreneurs all around it's no big surprise that rent hikes are a heated topic of discussion these days. Does soaring inflation alone give the landlord the right to raise your rent? If so by how much? We asked Ondřej Hlaváč, head of residential rentals, at Engel & Völkers to explain.

Hlaváč told us that, yes, a rent increase or inflation clause (“inflační doložka”) is typically agreed upon when you sign a rental contract in the Czech Republic. However, depending on the type of contract you have, the landlord may have the right to raise your rent even if there is no inflation clause in the contract.

"If the contract is for a limited period of 1 year, the landlord can legally ask for an increase of any amount. In practice, a few months before the expiration of the contract, the landlord and tenant negotiate a new price for another year," he says.

Hlaváč told us that these kinds of contracts represent 80 percent of all signed contracts in Prague and are the preferred type of lease agreement by most landlords because any amount of increase can be implemented upon the expiration of the contract.

He adds that given the situation with rents in Czechia, especially in Prague, with rents growing faster than inflation, most landlords will not sign a lease contract for longer than one year.

"It gives them the flexibility to increase the rent, but on the other hand, it also gives the tenants the flexibility to move to a better or more affordable apartment." It's a balanced mechanism for both parties at a time when the market can rapidly fluctuate, Hlaváč adds.

Multi-year contracts may include an inflation clause but this duration applies more to villas or larger apartments where a bigger investment is needed to furnish the property and the usual length duration of the contract is between 2-5 years. These types of contracts are less common, representing around 15 percent of lease contracts signed for more than a year.

In the case of an unlimited period contract, which is uncommon (representing at most 5 percent or less of all signed lease contracts in the Czech Republic), the increase can go up to 20 percent within 3 years. These types of contracts are usually between family members of the owner or are historic lease agreements from the communist era.

In all cases, Hlaváč advises tenants to get their rental contract in writing before they sign the lease. When in doubt ask a legal professional to review your contract. If you feel like your rent has been raised illegally, reach out to a lawyer.