Number of Czech Tenants Defaulting on Their Rent Triples in a Year

The number of people in Czechia who cannot pay their rent is increasing, with cases tripling year-over-year in some areas of the country.

A worsening economic situation and inefficient processes in relation to the rental market have led to a concerning rise in non-payments. Tenants often find it difficult to find alternative housing, resulting in an accumulation of debt, while landlords often experienced legal difficulties in evicting non-paying tenants, costing them significant time and financial resources.

According to data from the Ideal Tenants service, the number of defaulters rose by 11 percent year-over-year in the last quarter of 2022 before rising by 34 percent year-on-year in January.

“In the statistics we present, we consider a tenant as a defaulter when he owes more than one month and at least 500 crowns, in order to filter out possible small arrears that could have arisen through oversight,” spokesman Tomáš Skolek told Echo24.

Both landlords and experts at the Ministry of Labor believe that legislative reform is required to enable the market to work more effectively. They claim that by reducing the default period required before a landlord can evict a non-paying tenant, landlords would be more inclined to offer longer-term contracts to tenants, providing many with more security and potentially resulting in an uptick in rental properties being made available. Such a view is shared by the Association of Rental Housing, which bemoans the fact it can currently take several years to evict non-payers.

“From simplifying the options for evicting a non-paying tenant, we also hope that the number of long-term leases will increase, even for several years, because apartment owners would stop fearing the situation where they cannot get a non-paying tenant out of the apartment,” said Jakub Vysocký from the Ostrava-based Investment and Real Estate Administration (SIAN).

According to a recent SIAN study, the number of non-payers also increased threefold in the Czech city of Ostrava. In the first quarter of 2022, the number of defaulting tenants was 2.3 percent, while this figure has jumped to 8 percent a year later.

“Just as the number of people who have trouble paying rent is increasing, so is the number of people we help to get housing allowances,” Vysocký said, adding that in many cases the situation is being resolved and the number of non-payers should begin to decrease with the market stabilizing during the year.

The rental market in Czechia is considerably smaller than in some European countries — 20 percent of people in Czechia rent their homes compared to the European Union average of 30.1 percent.

Experts, however, believe this figure could rise by up to 15 percent in the near future. According to Miroslav Linhart and Petr Hány from the consulting company Deloitte, an increase in demand for rental housing can be expected. This is mainly due to the trend of people moving to larger cities for work but not being financially able to buy an apartment.