www.lobkovi.cz is under construction
... Or watch the things (your predecessors) gave your life to, broken,
And stoop and build 'em up with worn-out tools:
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
The "controlled" rent issue.
When we started to get back our mostly devastated property in 1991, I saw our house in Vinohrady (Prague) as the most likely source of hard needed cash to rebuild afresh. My grand-mother Ilka certainly realised in the thirties that the income of land alone (partly due to the first land reform) was not going to be any longer sufficient for the upkeep of the family manor and wisely bought this apartment house to storm difficult times ahead. We knew the rents were controlled by the state and expected they would be deregulated within a few years. Little could I foresee that what constitutes a major household expense in the world (rents or mortgages) was there to stay for more than a decade at the level of the household's beer consumption, thanks to government politically motivated irresponsibility.
The consequences at my level are that not only I have to forget about expecting any return from the house for the reconstruction of the Lobkovice Castle, but also about preventing the house to fall into dereliction. Even if the rents had been deregulated ten years ago, the house could have never yielded in my lifetime the couple of million EUR required for bringing it to European standards.
The Czech Constitutional court ruled in 2006 that the current control of rents was unconstitutional (ref and also), and yet rentees of a large part of the flats in the Czech Republic are still protected by laws that were written under the communist regime. The majority of the people benefiting from such rents (presently one-quarter to one-half of market price) are not those in need of social assistance. Whose interest is it to maintain this unsustainable situation, allowing houses to remain in derelict condition, let alone be improved to match the European standards which are being imposed on the owners? The rent control is probably the last bastion where the rules of free-market does not hold whilst everything else in our economy is subject of the law of the market....
Back in 2000 the Constitutional Court already ruled against rent control:
...On June 21, the Constitutional Court struck down regulations regarding rent control. In the past, rent controls have effectively forced landlords to subsidize housing for a vast majority of tenants. While Czech landlords were among the few in the Eastern bloc who could reclaim their lost property, the post-1989 governments had not dared to touch rent control. Any amendment of this law would certainly have provoked a public uproar since a majority of tenants benefit from rent regulation. While a (rent in) one-room apartment in central Prague may cost around 10,000 crowns ($250) per month, rent in a regulated apartment might be (was still recently) between 500 and 2,000 crowns. Rent control has crippled the Czech housing market, making the decision to move to another city a very costly one, and thus immobilizing the population.
In its decision, the Court struck down Ministry of Finance Ordinance No.173/1993, which limited the landlords’ ability to increase rents by more than a few percent per year, arguing that the ordinance violated landlords’ property rights. The Court ruled that the ordinance violated Arts. 4.3 ("limitations of fundamental rights and freedoms by the law must extend to all cases that fulfill the conditions stipulated for them") and 4.4 ("when applying the provisions on restrictions of fundamental rights and freedoms, their core area must be preserved. Such restrictions may not be used for purposes other than those for which they were instituted") of the Constitution because the regulation only applied to certain categories of landlords. The Court also ruled that the measure violated property rights as guaranteed in Art. 11 of the Charter of Freedoms and Rights. According to the decision, the ordinance is declared invalid as of December 31, 2001, giving parliament sufficient time to come up with proposals to balance the interests of landlords and tenants.
Rent-control reform plan approved by cabinet
(Radio Prague news 13.07.2005 17:20 UTC):
"The Czech government has approved a bill that sees regulated rent rise dramatically as of October next year. In the bill, proposed by the ministry for regional development, rent is to be raised annually by an average of 9.3%. After a period of six years, in 2012, it will be left up to the flat owner and the tenant to come to an agreement over the future rent. If that should fail, a court will make the decision. An estimated 750,000 flats are rent-controlled in the Czech Republic."
Lower house passes bill phasing out rent control
(Radio Prague news 20.12.2005 19:01 UTC, Pavla Horáková):
"The lower house has passed a bill under which state-controlled rent should increase by 14.2 percent annually between 2007 and 2010. Some 750,000 flats in the Czech Republic have controlled rent, which is about one fifth of all apartments in the country. At present, a dual system exists with the market rent of an identical flat in the same apartment building being several times higher than that of one subject to control. The bill has yet to be approved by the Senate and signed by the President."
"Rent Control" Pl. US 20/05 - decided 28 February 2006
"The long-term inactivity of the Parliament of the Czech Republic, consisting of failure to pass a special legal regulation defining cases in which a landlord is entitled to unilaterally increase rent, payment for services relating to use of an apartment, and to change other conditions of a lease agreement ( § 696 par. 1 of the Civil Code), is unconstitutional and violates . 4 par. 3, . 4 par. 4 and . 11 of the Charter of Fundamental Rights and Freedoms and . 1 par. 1 of Protocol no. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms."...
Here are some more articles covering the rent control (repetitively tedious):
Rent control extended to 2012 (a flair of "déjŕ vu")
Rent control faces up to market
Landlords gain in rent-control fight
The new rent law that wasn't
(The Prague Post, February 19, 2003 doc file)
Constitutional Court: landlords can sue state over losses caused by rent control http://www.radio.cz/en/article/77836