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SMALL AND CHEAPER FLATS ARE IN HIGH DEMAND

A lively market for rental apartments

It can be said with little exaggeration that Slovakia is a country of property owners – the ownership rate for flats and family houses is among the highest of any EU country. Although the exact number of people living in rented housing is hard to estimate because some rental units are not registered with the tax office and are offered on the black market, the proportion of renters in Slovakia is likely to be well under 10 percent.

Many Slovaks prefer commuting to work on a daily or weekly basis rather than change their permanent address. (Source: SME -Ján Krošlák)

It can be said with little exaggeration that Slovakia is a country of property owners – the ownership rate for flats and family houses is among the highest of any EU country. Although the exact number of people living in rented housing is hard to estimate because some rental units are not registered with the tax office and are offered on the black market, the proportion of renters in Slovakia is likely to be well under 10 percent.

Real estate experts report that owning one’s own apartment is preferred by most Slovaks because of the feeling of security it provides as well as because of their conservative nature. Many Slovaks much prefer commuting to work on a daily or weekly basis rather than changing their permanent address, quite unlike many Americans who often permanently relocate for new jobs as many as 10 times in their lives.

But even though owning one’s apartment or family house is more desirable for Slovaks than renting, real estate experts say that the rental apartment market in 2011 is quite lively.

Supply and demand


Real estate agents agree that rental prices for apartments have gone down over the recent past by as much as 30 percent, but the specifics on rental prices depends a great deal on which region of Slovakia.

According to Silvia Heleninová, the operations director for the Bratislava regional office of RE/MAX Slovakia, a real estate agency, monthly rents have dropped moderately and currently are stable, just like the prices for housing that is for sale. She added that the market for housing loans also has an impact on the prices of rents, with more people preferring to purchase a flat rather than live in a rented apartment when home ownership loans are more easily accessible and affordable.

Heleninová said that rental prices depend on the type of property and that smaller, standard one or two-room flats with a reasonable price are in the most demand right now. These are preferred by young people who, for instance, move to the city for a temporary period to study or work or who are interested in buying an apartment only after they have established a family, Heleninová added.
“If you have a one or two-room flat for rent, the [interested] clientele is wide and I don’t expect prices will drop,” she said. “But there is minimum interest in renting luxury flats and prices are starting to adjust to that.”

Daniela Danihel Rážová, the director of the Bond Reality agency, stated that the kinds of rental apartments most absent in the current market are those with lower rents in the range of about €300 a month.

But on the other hand, the Hospodárske Noviny (HN) daily reported in February 2011 that the largest gap in the rental real estate market is for luxury apartments. The newspaper wrote that finding a standard apartment for rent in Bratislava at about €800 per month, including fees, is no problem but that it is difficult to find an above-standard flat for €1,500 or more.

Some developers are now trying to plug gaps in the market supply by building apartment projects aimed exclusively as rental units, such as the Diplomat Park or Hlboká 7 buildings in Bratislava, HN wrote. The current supply is limited, according to HN, in both the overall number of rental units and as well for certain locations, with HN writing that it is nearly impossible to find a luxury rental apartment outside Bratislava.

Being a Slovak landlord


When an owner of an apartment decides to rent his or her property through a real estate agent, the agent should handle the whole transaction, including the details of the lease contract, Heleninová said, adding that an agent should also be able to advise the future landlord about the tax requirements that apply to renting a property.

“If an owner decides to rent the property without an agent, he should first be cautious about whom the apartment is rented to and secondly about how good the contract is that the parties sign,” Heleninová told The Slovak Spectator. She said the most important items are to establish the period and conditions of the rental agreement, the rental price, the dates and method of payments and protection against damages to the property.

“We definitely do not recommend that our clients rent a property without contract documents prepared by a lawyer,” Heleninová stated, explaining that there are many issues that can become stumbling blocks or cause problems when renting an apartment even though it is an administratively easier transaction than selling a property.

The rental contract


The rental agreement is the key document for both the tenant and the landlord and needs to include some particular items. Slovakia’s public administration portal (www.portal.gov.sk) specifically mentions that the contract must feature a clear description of the property to be rented, including a complete description of its location and a clear statement of the monthly rent. The rental contract must also describe the fixed equipment within the apartment and a full description of the condition of the flat. If the flat is furnished, the contract should include a list of all furnishings.

The contract should then describe in detail the rights and obligations of both the tenant and the landlord. A usual requirement for the landlord in the rental contract is to rent a flat in a suitable living condition. The obligations of the tenant usually include being responsible for small repairs (up to €6.64) caused by regular use of the flat and fixing any damages caused by the tenant or paying the landlord for the costs of repairing the damages. A contract usually also states that the tenant is not permitted to make any construction adjustments to the flat or any other significant change without the consent of the owner.

The conditions for the tenant or the landlord to terminate a lease are also in the contract, including the required notice period. If a notice period is not stated in the contract, notice of three months is required by law. The notice period starts on the first day of the month following the month in which the termination notice is delivered. The Civil Code, however, prolongs this period to six months when a contract is terminated by a landlord for failure to pay rent and the tenant can prove that he or she is in material need, based on objective reasons, on the day when termination notice is delivered.

Taxes on rental income


Those who rent a property in Slovakia are obliged to pay taxes on the rental income they receive. According to Danihel Rážová of Bond Reality, a legal duty of registration and announcement applies, meaning that each owner of a rental property is obligated to register with the tax office and announce any change in the rental contract to the tax office.

Danihel Rážová said that foreigners pay the tax in the form of so-called deduction tax, one in which the tax is deducted directly from the person paying the rent, and that this tax applies to rental income exceeding €500 a year.

The current government also originally required all landlords to pay health insurance levies on rental income in the same manner that self-employed Slovaks with rental income of more than €500 annually pay, but this obligation was abolished as of May 1, 2011.

More information about Slovak real estate market you can find in our Real Estate and Construction Guide.

Topic: Real Estate


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