Property For Sale Prague

Despite what you may have heard about property that is for sale in Prague, foreigners currently only represent about 1-2% of the buying of property in the housing sector. Basically their spending power is not completely materially moving the market on its own, particularly outside of Prague. However, foreign interest in housing here is likely to fuel strong steady growth in the sales prices of residential in the future. The greatest thing that works for the benefit of property for sale in Prague is that foreigners who are looking for greater yields than what they get at home are able to offer much to the economy. This is particularly the case in the UK where there seems to be a basic assumption that the market has topped out. Recent availability of mortgage financing to foreigners has also helped to get people to use the “buy-to-let” strategy of property purchasing.

Owning property that is for sale in Prague through a company may not sound great, but it does provide some administrative barriers and additional costs to owning the property. One of the biggest disadvantages to this is the taxation when it comes time to sell the property. Direct property owners such as the locals are not liable for tax on gains that are realized from the sale of a property if it is held for 5 years or more, but only 3 years if the owner lived there. Companies are liable for corporate tax which is currently set at 24% on profits from the sale pf the property no matter who owns it. Still this is a better deal than what you would get in the UK, for example, their taxes are 40% and more.

Nowadays the gross investment yields, which are the annual gross rental value or purchase price on residential housing in general, have a typical retail level of 8%. Yields in the city centre are even less than that and you can’t ignore the high vacancy rates that the luxury flats have. Just last year we were seeing yields of 10-12%. Falling yields are the natural result of sale prices growing faster than rental rates do. In theory this is supposed to show a maturing and stabilized economy. The lowered rate of return is simply a reflection of the lowered risk of investing into the Czech Republic. Although investors who are able to recognize that the risk/return ratio of the Czech property for sale in the Prague market are way more attractive than those of Western Europe.

If you are one of those people who are looking to take advantage of the “buy-to-let” strategy of investing into rental properties, my advice for you is to bet on properties that Czechs can afford to pay for rather than hoping for a big spender to come along. By this I mean 50-75 sq. m. properties outside the Prague city centre because you will have more success this way as those who are looking to rent from you will come along quicker. Doesn’t that make more sense? Either that or you can buy a bigger property and turn it into more than one flat because the bigger flats regularly don’t sell as quick.