There are many articles on the Internet about how the real estate market will evolve during and after quarantine. No one knows what other government measures will affect us. We asked Filip Šejvl, Managing Partner of Philip & Frank, how the real estate agencies work in this difficult time and what the measures really mean for clients.
How does your company work during quarantine and how does a personal viewing of a property work?
Real estate companies can work normally, by doing so, they aren't violating any government regulations. Our team works in such a way that our agents adhere to the state of emergency rules and by this they protect their health . Of course, people are still looking to buy or rent a property even in the current situation, nothing has changed.
How do you recommend one should go about viewing a property since only going to and from work or to a pharmacy and grocery is allowed?
Clients ideally shouldn't be present at a viewing at all. Nevertheless we are doing all we can to show a property to our clients as best as we can. The agents livestream from an apartment, make virtual tours, describe the location in great detail etc. If a client insists on a personal viewing, we practice social distancing and we use all necessary safety precautions. The viewing should be brief and ideally only one person should attend it.
What about foreign clients? How do you sell or rent a property to a person who cannot come to Prague?
We also rent and sell at a distance. Thanks to a long standing collaboration with Dvořák & Křiváček law firm, which has experience with foreign clients, we are able to finish transactions with clients from anywhere in the world. The ability to communicate in many languages is a matter of course. Whether selling or renting a property, both can be done without the client being present physically in the Czech Republic. So even in the current situation we can manage transferring property rights at a distance.
When renting we also recommend video tours or live streaming, research and study of the location in detail. If necessary, foreigners can send a friend or a colleague working in Czech Republic for a tour. Even in this case we follow all safety precautions. If the client likes the apartment we are able to arrange all without a physical presence of the client. Unfortunately, no one knows how long the current precautions will last and it would be a pity to lose a dream property. .
Airbnb has been hit the most by the coronavirus. A large number of flats that had not been available before came to the market in a short time. What does this entail and what are the risks of renting such apartments?
Who wouldn't want to live in Lesser Town with the view of the Prague Castle? We all did at some point in our lives. Normally flats like these are on offer for a very short time and are very costly. But such an opportunity exists now. Almost overnight hundreds such apartments have entered the market. The logical outcome is surplus of similar apartments in these locations creating pressure on rental prices. Owners and property managers are trying to cover the costs and because of the competition prices have been dropping. The flats are located in very attractive places often with above standard amenities and services.
That's all great. What seems to be the problem then?
I think that people interested in renting an apartment aren't often aware of the fact that the offer might not be coming from the owner directly. In fact, it is possibly being subrented by property managers, who are renting it from the owner. So clients are then signing sublease agreements instead of classic rental agreements. In a sublease agreement there might be different conditions for contract termination and even fees, which regular tenants aren't used to.
What exactly are the risks to the new tenant?
Sub Rental agreement can for example have just one month termination notice period and even sanctions. It could be in the property manager's best interest to have the apartment back on the market as a short term lease flat since it is far more profitable.
Let's look at the issue from the other side, the point of view of the property manager is quite different. Often they are stressed for time, because they must pay their financial obligations such as rent to the owners and in some cases loans. They enter contracts without sufficiently checking tenants, so they may be renting an apartment to someone they would not have normally chosen. These hasty actions may result in problems such as damage to the property , problems with neighbours, or more than the agreed number of people living on the premises.
What solution do you recommend to property owners who want to rent their apartment?
I recommend setting the agreement terms to accommodate both parties. Tenants are looking for fair conditions and prices, they do not want to worry about what will happen when the borders reopen. Thanks to the well set conditions, the apartment is rented faster and with a bit of luck you will come across long-term and reliable tenants.Of course when setting the price of the lease you should take into account the mortgage, monthly costs, competition in the area and all other factors. Think about the conditions from a long-term perspective and be wary of questionable individuals who may want to take advantage of your situation.
Our company offers verification of future tenants and can request references from previous landlords. This way it is possible to avoid trouble and complaints. The final decision about a tenant is always made by the owner or the property manager, but we try to choose a person that best fits the owner's idea. It doesn't matter who sees the apartment first and who last, or who turns up with an envelope full of money.
So, what should a property owner do if he hasn't got time to look for tenants or lives abroad? Can such a situation be solved, or does such a person simply have no chance to rent an apartment?
In this case we offer owners complete property management services. This saves a great deal of time and hassle. Whether clients live in Prague or abroad, we have their apartments fully managed in any situation. In all circumstances, taking care of property is time-consuming and not all owners can (or want) be involved full time. Especially when it comes to caring about tenants and their needs.
What is included in the service?
It is an individual service that is tailored exactly to the needs of the property owner and can be continuously adjusted aiming for client's full satisfaction. Whether it is representation at offices, joined property owners meetings or communication with tenants, we are able to manage all of them. When representing a client at an owners meeting, all points are of course consulted in advance.
Does it make sense to buy property at this time? Should people wait? Are prices of properties going to go down at all? Our company specialises in real estate in attractive parts of Prague. If something is attractive and trendy the demand is logically higher.The probability of prices decreasing in such locations is therefore lower than in locations out of Prague or in Prague’s periphery. But it all depends very much on how long the current crises will last.
So Prague will not be affected by the fall of prices, in your opinion?
Drop in prices is to be expected in less attractive parts of Prague or in hard to sell properties. In the long run, however, I think the prices will return and will most likely continue to rise in the upcoming years. Prague will always be an attractive place to live. And I mean on a pan-European scale.
What is your advice to those thinking of buying a property?
No one knows what's coming our way tomorrow. But I remain optimistic. The restrictions will be lifted one day. If those interested found their dream property in Prague, I would not discourage them from buying.The center of Prague is not inflatable and there will always be a lack of flats rather than a surplus. Banks are starting to offer interesting interest rates and there is a possibility of cancellation of the property transfer tax.
Most likely AirBnB apartments will appear on the market, some of the owners might be forced to get rid of them.. So I recommend watching the offers and if something interesting comes up, I wouldn't wait long. In the long run, these properties will be profitable.. Of course, everything depends on the individual situation of each client. If you need any advice on selling or renting a property, please contact us.
After my studies at Charles University (West European Studies) and consultancy in the area of subsidies from the European Union, since 2008 I have been selling real estate in Florida to Czech clients. Experience and detailed knowledge of the advanced real estate market let me to apply some knowledge to the Czech market in a family business. I found that a truly personal and sincere approach is rare in the Czech real estate market. Since 2014, together with “Frank” we have been creating and improving Philip & Frank. I also apply my experience in the well-known American reality TV show about housing and real estate „House Hunters International.“