The Pros and Cons of Buying Property as an Expat

As an expat, whether you’re planning to stay in the Czech Republic long-term or not, investing in property can be a good idea if you have the funds for it.

In general, property is a relatively safe investment that will appreciate over time and can provide a steady income if rented out.

Of course, property investment anywhere is not without its risks and in this article, I’m going to discuss some pros and cons of buying property in the Czech Republic as an expat.

Let’s look at the pros first.

Property prices vs average incomes of an Expat

While properties in Prague can be expensive, as with any capital city, in general the cost of property throughout the Czech Republic compared to average expat salaries and the cost of living can be an attractive proposition compared to other countries such as France or the UK. While the Czech Republic doesn’t necessarily have a great ratio of income to property price (an average of 18 salaries for an average Prague flat), expats typically earn more than the average Czech salaries.

Popular location for international businesses

Thanks to its advantageous position in the centre of Europe and the relative lower cost of doing business than in surrounding countries, the Czech Republic is a popular place for international companies such as Novartis, MSD, Microsoft, Amazon, and more. In addition, it has a strong manufacturing sector and offers a trade transit hub for the rest of the EU.

This combination makes property investment a good long-term option.

Relatively low down payment rates

Have you read Robert Kiosaki’s Rich Dad / Poor dad? He says “leverage is using other people’s money and resources to increase your own.” When applied to the property market, we can look at it as investing just 10 or 20% (as is the current down payment requirement in the Czech Republic) of the cost from your own money and leveraging a mortgage to fund the rest of the purchase price, potentially buying a second or third property with other money you might have, thereby gaining more assets and ultimately amplifying your returns. Compared to down payment requirements in other countries, the Czech Republic offers an attractive rate.

Strong rental market

The Czech Republic, especially its largest cities and Prague in particular, has strong demand for long- and short-term rental properties driven by student migration, an influx of refugees, and a strong tourism sector.

Even if you plan to move out of the Czech Republic, this shouldn’t affect your property ownership rights, therefore leaving you with an income. It also makes multiple property investments a good option to add revenue streams.

Now let’s look at the cons.

Financial ties

Being financially tied to the Czech Republic especially if you need to move in a hurry and want to recoup your investment to help fund that move or set you up in your new home could be seen as a risk or a con.

Indeed, if you have invested a significant sum, or even all, of your savings as a down payment, recouping that in a hurry can be very difficult. It’s true Prague in particular has a strong rental market and should you be able to afford it, retaining your property and renting it out could be a good option. However, sometimes the rental prices can’t match mortgage repayment obligations and other costs such as repairs.

That being said, right now the market is experiencing a correction so if you know you might leave in one to two years, purchasing a property with today’s market could be a good investment. 

Language barrier

Czech can be a very difficult language to learn and while some of you may have to learn it to obtain your residency permits, being able to speak or understand it well enough to navigate the legal and administrative process involved in buying a property can be difficult, even for people who already speak a Slavic language.

Bureaucracy

This exists in any country and the Czech Republic is certainly no different. I would say buying property as an expat in any country would be made more difficult not having grown up with the local bureaucratic style. Add in the inability to speak Czech well, and this can a lot of headaches for expats especially.

To summarise, property investment, like any investment, comes with both risk and reward. When it comes to investing in the Czech Republic specifically, I would say the pros outweigh the cons for most expats, particularly with the strong rental market and high demand for properties. When it comes to the cons, a lot of that is down to not being able to understand Czech fluently or know how to negotiate the local bureaucracy. The good news there are professional agencies who can help you with that!