International Property News

MPs turn down easier access for foreigners to buy flats

19th June 2009

The Chamber of Deputies Friday turned down the government's amendment to the foreign exchange law which was to allow foreigners to buy real estate for housing purposes in the Czech Republic without any limitations.

Social Democratic (CSSD) and Communist (KSCM) deputies voted against the proposed amendment.

Finance Minister Eduard Janota told journalists that this was a scandal. He warned that the Czech Republic might be sanctioned EUR1,000 a day for the limitations.

The ministry argues that the five-year period of time since the Czech Republic's EU accession, in which the country was allowed to have such limitations, will soon expire.

Janota said that based on the accession treaty, foreigners already could buy real estate for housing since the beginning of this year.

The article in the law which was to be amended is no more valid but the Czech Republic was to formally remove it from the law, he explained.

"You have just voted that sanctions will be imposed on the Czech Republic," Janota told the deputies.

He then told journalists that he would try to submit the amendment to the Chamber of Deputies again.

Experts share Janota's view.

"It is a bit ridiculous, it was really a formality, the article should have been removed because it is no more valid. The European law as of May 1, 2009 prohibits limitations on people and companies from other EU member countries when they want to buy real estate in the Czech Republic. Today's stance of part of the deputies will not change anything about it. If Czech authorities ignore this, a potential buyer may turn to court and win," Tomas Babacek of law office Ambruz & Dark told CTK.

Deputy Martin Doktor (Civic Democrats; ODS) said he did not understand why the CSSD voted against the amendment.

They have signed an agreement in which the Czech Republic pledged to remove discriminatory elements concerning real estate purchases in the Czech Republic, he added.

Some lawmakers of the formerly opposition parties did not like the fact that some richer foreigners could offer higher prices than domestic buyer can pay.

"The proposal seemed to us to be endangering Czech interests and interests of Czech citizens," Pavel Kovacik, chairman of KSCM deputies, said, adding that Czechs still do not earn enough to be able to compete with foreign buyers.

Real estate experts reject such danger.

"If foreigners can buy real estate in the Czech Republic as they like, we do not fear they will do it in mass because real estate prices in Prague and Europe are comparable, Klara Vanourkova of international consulting company Jones Lang LaSalle told CTK.

"Just the opposite, this would be a unique chance to revive the real estate market. In particular buyers from eastern Europe and Asia would welcome the new conditions. The Czech Republic is still attractive as regards investments into real estate," she added.

Source: Prague Monitor