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Complete guide on how to buy a property (the EASIER way), with sample timeline and pro tips

Updated: Apr 13



Living in another country can be very challenging in the beginning. Once you start to acclimatise to life in the Czech Republic - find a flat, a job, friends, perhaps a partner and settle down — an obvious question then becomes: should I buy a property here?


We’re not going to tell you if you should or shouldn’t. Instead, we are here to explain the process to buy a property the easiest way possible.


 

The most common difference between a local and an expat buyer in the Czech Republic is the language barrier. That language barrier can have a big impact on the process and interactions. Buying a property involves a lot of steps and coordination with many parties. Typically, those parties include agents, lawyers, bankers, officers, property owners, valuers, financial office employees, and more. If you have the time and know-how on how to run the process and know the people, it’s not that difficult — a lot of Czechs manage on their own just fine. The main difference is that Czechs are fluent in the language and tend to be used to the bureaucracy. Plus, Czechs always seem to have a friend whose friend is a lawyer or a property agent or recently bought a property.


But for those who aren’t fluent in Czech, the solution is the same as in any growing business: you have to start involving other people to work for you. The best way is to simply outsource the whole process to a trusted party who has already done this process many times, has all the connections, the inside people and, most importantly, has a track record of successful deals for expats.


 

How the Process Works

Example time to be downloaded below. In this case we are describing the process from the very beginning, until the very end. The time from the point when you find a property until you get the keys is typically around 2-3 months and it may vary of course.

Example timeline on How to buy a property

Expats really need just one person who can walk you through the process, be with you from beginning to end and serve as the main point of contact for any questions you might have. Most importantly, this person will address all the administrative and bureaucratic issues.


With such a person on your team, buying a property in the Czech Republic is significantly easier.


There are five steps to buying a property, each with varying levels of difficulty:

  1. Have a clear idea of what you want to buy (easy)

  2. Check your financial options (medium)

  3. Go property hunting (hard)

  4. Find the ideal property and close the contracts (hard)

  5. Complete the change of ownership and handover (easy)


We aren’t going to pretend all of this is a piece of cake and you can relax while others do everything on your behalf. A certain level of collaboration is necessary. After all, in the end, you are the one buying a property where you may live for many years so this decision should not be taken lightly.


Taken to an extreme, it is possible for others to do everything on your behalf via lawyers and power of attorney so you need never meet anyone but your representative. In most cases there are only two hard parts you have to deal with personally: finding the right property (surprise) and deciding to sign the first binding contract. But we are jumping the gun too much here. Let’s take it step by step and outline the process so as to make it as easy as possible.



1. What property do I want to buy and where?


This step might be obvious, but it is vital to have realistic expectations!


Price: Property prices are rising fast, so if you have the pricing of two to three years ago in mind, you are in for an unpleasant surprise. Have a quick look at sreality.cz, where you can view various properties to get a feel for current rates.


Number of people: Are you a family of four with a budget of around 6M CZK? Then perhaps instead of looking into Vinohrady, consider the outskirts of Prague, or perhaps even some other locations with very good train connections, like Beroun or Lysá Nad Labem.

Time: Consider how long you are going to live in the property — is it a starter home for one person? Then you do not have to spend 10M CZK, 5–7M CZK might do just fine. Think of the next couple of years or even decades and how long the property might suit you. Perhaps there will be more family members in the future. You might even want to check the rental potential should you leave the country.

Down payment: You might be thinking, “I have 1M CZK saved and I need 20% down payment, so I can look for properties for max 5M CZK.” Really? How do you know there is no option for 9% financing? Just ask me so you know all your possibilities.

Pro tips:

2. How to pay the purchase price – checking the financing


Let's be honest — the vast majority of people will need financing from a bank when purchasing a property. Czech banks are a bit bureaucratic but tend to be friendly towards expats, unlike in some countries. The question is not "Can I get a mortgage?" More often, it is, "How high of a mortgage can I get?”.

How much can I borrow?: The answer is different in most banks; however, for employees, it is relatively easy to calculate — you can estimate it at eight or nine times the annual net income. So if your income is 70,000 total for a couple, we are looking at a maximum mortgage of 6.72 – 7.56M CZK. Still not enough? Some banks can go even beyond. Self-employed people must inquire at the bank or mortgage advisor for more precise calculations as each bank sees the self-employed income differently.

Compare: Maybe you went to your bank and they told you, "Without permanent residency, we cannot get you a mortgage," or "You need at least 20 per cent for a down payment". If you are lucky and the bank can accommodate your request, where is the guarantee their rates are the cheapest on the market? Have you been to all the banks to inquire and ask for discounts? That's why working with a mortgage advisor is a great choice. Professionals like us can bring you comparisons on the market and suggest the best options tailored for your needs.

Do not overstretch: Sometimes people will find a property at the very top of their budget and have to invest all their money plus borrow from their family to buy it. But is it really a wise decision? That can vary from person to person, but we recommend that you have some emergency funds saved somewhere in case things do not go as expected. The last thing you want is to be forced to sell your newly purchased property. Sometimes it is better to borrow more from the bank and take higher repayments just for the sake of extra security.

Which bank is the best?: There is no need to try to figure this out for yourself. In the Czech Republic, mortgage advisors are free for clients and are paid by the banks after closing a successful deal. There are no costs for you at all, so why not get free help from a professional? They will be able to get you the best rates and a full comparison of the market, and can even pre-approve your mortgage.

My situation is ... complicated: Then look for the best advisors who understand the struggles of expats. Cases like no residency permits, income from your own company abroad, unique work contracts — most mortgage advisors have found solutions for these problems at least in some banks.


Pro tips:
  • Life insurance can get you a cheaper mortgage rate but it costs much more than you save on the rate. Ask for RPSN (in English, APRC) as well as the interest rate.

  • Do not check just with your home bank for financing options. Where is the guarantee they are the cheapest one? Even if you get a mortgage with another bank, you can still keep your old account. There is no need to switch to the new bank completely if you are satisfied with the daily banking services.

  • Did you know you can repay the mortgage faster with no penalties? Don’t worry about stretching the duration of the mortgage to 30 years for lower repayments; if you have the money, you can repay faster anyway. By law, you can make early repayments of 25% of the original mortgage amount each year, so theoretically, in four years, the mortgage can be repaid fully with no penalties.


3. Property hunting


Now it’s starting to get serious. You know what you want, you know you can get the money, and now you just need to find the property. Back in 2015, it was easy to buy in Žižkov for 50,000 CZK per m2, no problem. These days, it’s most likely double that. With no exaggeration, this is the hardest part of the process.

You have to keep looking for good deals: There are still properties on the market; there are just fewer of them and they go faster, that's all. It is good to dedicate some time every day or week to scan the market for good candidates, and as soon you find something which matches your expectations, communicate with the agent.

The best deals are offline: An old saying amongst the agents is "the best deals are not online" — they are sold even before they reach the online market. Have you considered asking your landlord if they want to sell? There is nothing wrong with asking if you already like the property you live in.

(Under)ground floor and top floors: You’ll soon start to notice that the cheapest properties are usually on the ground floor or sometimes the basement — perhaps a renovated older cellar or commercial unit which was converted into accommodation. There is no surprise that these properties are cheaper than most in the building. Also, properties directly under the roof might have good views, but remember, sloped ceiling limits the use of space and the apartment can be hot during the summer.

Price per square metre: One of the most important indicators is price per m2. But watch for the ads and double-check the m2 of the property. A common trick is advertising an "apartment 90m2 with balcony and cellar", so you might expect 90m2 of floor plus cellar plus balcony. It depends how the advert is worded, and thus it’s no surprise that as part of the valuation, the bank always wants to double-check how many square metres are listed in the authorised documents.

Developments: Buying a property which is still being built or has only been designed is very common as well. Typically, you would sign a reservation first (3% of the purchase price), then sign a future purchase contract (another 7–17%, typically), and then the rest when the property is finished. Some developers will ask you to pay a certain percentage during the construction process as well, which is normal but will cost some extra money on the interest should you need the bank to cover this part. If no additional payments are required until the developer is finished, great! Your mortgage payments do not start until then.


Pro tips:


4. You’ve found the ideal property. What's next?



One day, you will surely find your perfect property. You went for the viewing and liked it a lot. Now what? Here comes the second hardest part. Don’t get too emotional about the next steps as we need to align the property with the bank's requirements and valuations. Let us break down this part into a few smaller steps:

Re-check your financial options: If you followed this guide, then you already know what to expect. Just check with your mortgage advisor that nothing has changed in the meantime, and make sure the advisor gives you the green light to move on to the next steps.

Consider when to sign the reservation contract and if you need to involve a lawyer now: This depends on the whole deal. For example, the suggestion is different if you are a Czech doctor who needs only 50% from the bank, versus if you are self-employed for your first year and you have only two banks to work with. We cover this exact topic in another article: https://www.expatsfinance.cz/post/when-should-i-sign-the-reservation-contract-for-my-new-property

Inform the agent about the valuation happening: It is very important to know how much the bank will value the property at if you are dependent on the mortgage. If you are counting the 90% financing from the bank and the bank will value the property at 10% under the sales price, the bank will actually pay only 90% from the valuation amount. It is good to negotiate the price once you know how much the bank values the property at. This process can take one to three days for online valuation and about a week for physical valuation. In some banks, you have to pay for the valuation, a price of about 4,000–6,000 CZK. The good news is that once you start speaking to the seller about the bank valuation, they’ll know you are serious so they might prioritise you amongst other potential buyers as you might be ahead of the process.

Renegotiate the price with regards to the valuation: The bank's valuation, should the report be lower than the asking price, is the strongest argument you can use to put in a lower offer. If it confirms the asking price, do not hesitate to ask for a discount anyway.

Consider signing the reservation contract: Depending on your position and if you are happy with the bank's feedback so far, consider signing the reservation contract to make sure no-one else will buy the desired property. We wrote about this topic in another blogpost here.

Finalise the mortgage and align the bank drawdown conditions with the purchase contract: Once the seller or agent provides the drafts of the purchase and escrow contracts, they are to be forwarded to the bank to approve the mortgage. Once the mortgage is approved, make sure there are no surprises and share with the seller the bank's pledge contract so they can review it as well since the seller will be also signing it.

Meet with the seller in order to sign all the contracts: Now, all the contracts should be approved, and in most cases, we meet first to sign the mortgage together and then continue the same day to meet the seller. In the bank (or with your mortgage advisor), you should have signed the mortgage-related documents; later, with the seller, you should also sign the purchase, escrow, and pledge contracts.


Pro tips:
  • If you are happy to pay the asking price, try to negotiate with the agent to have a clause in the reservation contract that they will return the reservation deposit should the valuation come in under the asking price. This way, you can proceed even faster and have the property secured sooner.

  • It is common to keep the agent posted about the progress with the bank, as they like to know what is happening. This way, you can prevent the property from being sold to someone else whilst you are still making the final steps with the bank/valuation.

  • Do not hesitate to put your mortgage advisor directly in touch with the agent. They can take care of most of the boring admin for you.

  • Always include a lawyer in the process! If you are buying through a real estate agency, they will provide their own lawyer to draft the contracts, but we recommend hiring your own to make sure the contract is solid and even for both parts. Quite often, penalties arise only for the buyer, and somehow it is forgotten to apply the same to the seller.

  • If you are getting some furniture or equipment with the property, do not forget to list it into the purchase contract.

  • You can try to negotiate early handover. If the property is already vacant, the seller might allow you to access the property even before the official change of ownership on the land registry.



5. Change of ownership and handover


Now you can finally relax and let the authorities finish the process. At this point, you should have signed all the contracts (mortgage, pledge, purchase, and escrow contracts), and now it is purely a matter of processing. In this stage, it is rare that something goes wrong if the contracts were drafted correctly. You can expect the following now:


  • a) If you paid the purchase price both from your own sources and the mortgage, the seller's lawyer should deliver the signed and verified version of the purchase contract to the land registry, typically in less than five days from receiving all the money into the escrow.

  • b) Once the purchase contract is placed there, the land registry will notify all parties with a letter that the change has started to take place and the 20-day (regular, not business days) protection period starts.

  • c) After the end of the protection period, the land registry should make the change any day now. Theoretically, the land registry has up to 30 days to make this step, but in real life, it is done in about a week.

  • d) When the change is officially approved, all parties are notified again by a letter from the land registry. Keep this letter! You will need it for your annual property taxes in the next year.

  • e) Lawyers typically notice the change before you receive that letter, so expect an email from them suggesting the handover date with the owner/agent.

  • f) On the day of handover, you are invited to get the keys from your new property and you should sign the handover protocol: sealing the numbers on the electrical, water, and gas meters, and get documents to change the bills into your name for the service companies. You can also get documentation for the property, like warranty certificates or building plans. At this point, make sure all the furniture you agreed with is left in the property, and in case there are any differences, you can refuse the handover or at least make a note in the handover protocol.

  • g) At this step, the seller/agent should also introduce you to the homeowners association to receive monthly billing for your new property – in case you are buying a flat.

  • h) Now that you have the keys, you can start moving in! 🙂 You should contact the service companies for billing, like water, gas, and internet, with the handover protocol, and set up the billing. Once you move from your old address completely, do not forget to notify the Foreign Police (Ministry of Interior Affairs) to update your residency and update all institutions.

  • i) By the end of January next year, you are due to file an annual property tax return and register for paying annual property tax. Inquire with your accountant or tax advisor for more information.



T-t-t-that's all, folks! Now you are the proud owner of your new property and it’s time to celebrate this big step in your life properly!

Congratulations on this big step in your life!


 

Conclusion

So what do you think? Does it look easy, or could you use some help? Our company, Expats Finance, provides full guidance in all the steps mentioned above, typically for free, when using our mortgage advisory. By law, mortgage advisory is always free of charge for the clients as brokers are paid by the banks separately. This is a win-win situation for all clients using independent mortgage advisors — you get free help from the professionals, and they get paid by the banks, not by you!

In the Czech Republic, helping expats buy property is a very niche market in which few companies excel. Expats Finance’s Robin Petrásek is one of these guides.

Robin is the admin and moderator of the biggest Czech Facebook group, Expats Property Owners group. A professional mortgage advisor specialized in working with expats, he worked for four years in the two biggest Czech banks, and has spent the past nine years helping expats with property purchases. Among more than 300 closed cases, he has a 100 per cent success rate. He holds a university degree in marketing and management.

Expats Finance mainly works with expats, providing full service so you can avoid struggling with the process of buying in different countries.

As you’ve seen, there are many steps; over the years, we have helped hundreds of expats with their purchases and we are proud to share that all transactions have been 100 per cent finished. None of our clients have ever lost a reservation deposit due to not fulfilling their obligations!



If you would like a free consultation, get in touch with Robin at robin@expatsfinance.cz or call 777877849.



We would be glad to meet you over a video call or in person at your earliest convenience.





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