Rents to grow 19.2 percent annually |
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Rents to grow 19.2 percent annually |
2006-07-21 10:22:40 |
| autor: fs.kou/er |
Prague, June 27 (CTK) - Rents on price-regulated flats will grow 19.2 percent a year on average between 2007 and 2010 instead of the originally planned 14.2 percent, the Local Development Ministry told journalists today.
The new figures are based on the current prices of flats and will be adjusted every year, depending on the situation on the market, the ministry said.
In some cities, rents may grow by more than 30 percent. In Karlovy Vary in western Bohemia, for instance, the ceiling for a monthly rent hike for 2007 was set at 34 percent against the planned 23.3 percent.
In contrast, the growth in rents in the Ustecky region in northern Bohemia will be slower than the ministry expected. In Usti nad Labem, for instance, rents could rise by up to 3.9 percent in 2007 against the planned 8 percent.
In the Prague-1 district, the central part of the capital, the growth will reach 30.3 percent against the planned 24.7 percent.
A monthly rent for a first-category flat in Prague-1 occupying an area of 70 square metres could rise from around CZK 2,600 tenants pay now to CZK 3,380 next year. The ministry originally planned a growth to CZK 3,240.
"I would like to point out that the figures are ceilings of the rents increases," Local Development Minister Radko Martinek told a news conference.
The law expects that home owners and tenants will first attempt to agree on the amount of the rent. If they fail, only then can the owner raise the rent in line with the law, Martinek said.
Martinek expects that in a number of cases the parties will succeed in making an agreement without the need to raise the rent to the maximum amount.
People may use a calculator which the ministry wants to make available on its website www.mmr.cz next week to calculate the growth in their rent.
Stanislav Krecek, head of the Tenants' Association and an MP for Social Democrats CSSD, told CTK that data show rents for the coming years are high enough to secure enough money to owners but that a lot of people will find it difficult to pay them.
The higher-than-planned growth in rents is in line with law, Krecek said, but added the state will have to raise its spending to compensate the growth to people in need.
As of January 2007, households whose spending on housing exceeds 30 percent of their net income may get a contribution from the state. In Prague, households will get state help if the expenditures top 35 percent.
House owners say that faster deregulation is still insufficient and runs counter to the rulings of the Constitutional Court. Martinek has denied that the law is against the constitution.
House owners want the rents to grow to an amount which would at least cover their costs.
Libor Dellin, deputy chairman of the Civic Association of Home Owners, said that regulated rents in 99 percent of towns amount to between CZK 6 and CZK 22 per square metre. Experts say rents should grow to CZK 50 per square metre on average to cover costs.
Home owners have filed around 3,000 complaints over rents regulation with the European Court of Human Rights in Strasbourg.
Last week, French national of Polish origin Maria Hutten-Czapska won a legal battle with the Polish state over rent regulation in the European Court.
The case is a precedent for Czech house owners who expect the Court will now start to deal with their complaints.
"The faster the deregulation, the better," said Raiffeisenbank analyst Ales Michl.
Impact of the deregulation on economy will be limited as it does not concern most of population, said Michl.
"We expect inflation to accelerate by 0.4 percentage points owing to the deregulation set in the new proposal," he added.
Deregulation should not affect the prices of flats, Otakar Schuma from real estate agent Maxima Reality has said.
Prices of flats will remain at their current level this year, Schuma said, adding they are not likely to change significantly in 2007.
A larger three-bedroom flat in Prague's suburbs now costs around CZK 2.2 million, compared with CZK 1.9 million to CZK 2 million at the turn of 2005 and 2006.
The ministry calculates the rents on the basis of prices obtained from the Finance Ministry. For the year 2007, it used data from May 2003 until April 2006.
The ministry will update the growth in rents as of July 1 every year. For each year, the growth will be based on prices in the past three years.
The law on rents deregulation took effect as of March 31 this year. In line with the law, rents should start to grow as of January 2007.
The Czech Republic has had no legislation raising prices in flats with regulated rents since November 2002.
Regulated rents concern 760,000 flats, that is, nearly one-fifth of flats in the Czech Republic.
Growth in regulated rents as of January 1, 2007, based on data from Finance Ministry:
City Current maximum rent in CZK /m2 in 1st-category flat Monthly rent in 2010 in CZK /m2 Maximum growth in monthly rent in percent Monthly rent in CZK /m2 after 1st increase Growth in monthly rent in CZK /m2 in 2007 Difference against growth proposed earlier in CZK /m2
Prague-1 37.07 107 30.3 48.32 11.25 2.09
Ceske Budejovice 20.35 40.15 18.5 24.12 3.77 0.19
Plzen 25.63 54.98 21.0 31.02 5.39 2.26
Karlovy Vary 18.31 59.09 34.0 24.54 6.23 1.97
Ustni nad Labem 18.31 21.33 3.9 19.02 0.71 -0.75
Liberec 23.42 46.95 19.0 27.87 4.45 1.71
Hradec Kralove 20.35 67.74 35.1 27.49 7.14 2.65
Pardubice 20.35 42.85 20.5 24.51 4.16 0.86
Jihlava 18.31 51.56 29.5 23.72 5.41 3.08
Brno-1 27.42 80.58 30.9 35.90 8.48 3.01
Olomouc 25.65 56.65 21.9 31.27 5.62 2.51
Zlin 19.66 55.72 29.7 25.51 5.85 3.00
Ostrava 24.76 30.46 13.6 20.79 2.48 0.50
fs.kou/er
This story copyright 2006 CTK Czech News Agency.
The Prague Daily Monitor and Monitor CE are not responsible for its content. |
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