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Covid-19 Measures:Price Moratorium on Rent from Apartments - Rents Cannot be Increased!  

by KSB Covid-19 Task Force

Published: May, 2020

Submission: May, 2020

 



Price moratorium on rent from apartments - rents cannot be increased!



On 24 April 2020, a moratorium on rental prices of apartments, issued by the Ministry of Finance (“MF”) came into force, which was adopted in the form of Government Decree No. 202/2020 Coll. This is a protective measure for tenants, which stipulates that the rent for an apartment cannot be increased for a limited period of time. This price moratorium is related also to Act No. 209/2020 Coll., which protects tenants from termination.


The government adopted a price measure due to reduced mobility of the population, limited possibilities of inspections and removals during the validity of crisis and emergency measures during the COVID-19 epidemic issued by the government, the Ministry of Health or regional health stations. Landlords are therefore not entitled to increase rents until the relevant measures are repealed or expire.


According to the interpretation of the Ministry of Finance, the price moratorium should also apply to cases of chaining rents, which means that if a tenancy is terminated during its duration and a new tenancy is concluded during the validity of extraordinary measures, the landlord is obliged to apply a maximum rent for which he rented the property to the last tenant.


The price moratorium was issued in connection with Act No. 209/2020 Coll., which protects the tenant or subtenant of an apartment, house or part thereof, if the purpose of the (sub) rental is to satisfy housing need, against termination. Specifically, the law stipulates that in the period from 27 April 2020 to 31 December 2020 (hereinafter referred to as the “Protection Period”) the landlord may not unilaterally terminate the (sub) lease only because the (sub) tenant is in arrears with the payment of rent, if the delay occurred from 12 March 2020 to the day following the date of expiry of the emergency measures during the epidemic, but no later than 31 July 2020 (hereinafter the "Relevant Period"), and at the same time such delay occurred mainly due to restrictions from extraordinary measures during the epidemic, which made it impossible or significantly difficult for him to pay his rent properly. The (sub) tenant is obliged to provide documentation to the landlord, being a confirmation from the Labour Office, to which the (sub) tenant must provide documents in order to receive such confirmation certificate, the form and requisites of which are set out in the methodological instruction of the Ministry of Labor and Social Affairs. If the (sub) tenant does not pay all rental receivables that became due at the Relevant Period during the Protection Period, the landlord has the right to terminate the lease without notice. The landlord has this right even if the tenant declares or otherwise it becomes unquestionable that he will not pay these receivables even during the Protection Period. It should be noted that protection does not extend to non-payment of service costs at the relevant time. Therefore, if the (sub) tenant does not pay advances to pay for housing-related services, he continues to be exposed to the risk of termination.


It should also be noted that the rent due will be subject to a financial penalty for late payment; the landlord can thus claim interest on arrears on the amount owed. The proposer of the law also warns the Ministry for Regional Development that in those cases where the tenant and the landlord have agreed on a security deposit, the payment of arrears can be used primarily by such funds and there is no need to use the protection provided by law. The tenant will then increase the security deposit again within the period specified in the contract.


Unlike the law, the price moratorium does not fix a protection period, during which it is not possible to increase the rent from the apartment, by the latest date (in the case of the law, this is 31 December 2020). Therefore, as long as only one of the above-mentioned extraordinary measures applies, it will not be possible to increase the rent from apartments. In connection with the current discussions on strengthening the powers of the Ministry of Health in issuing these measures, it cannot be ruled out that the price moratorium will last much longer than the state of emergency itself.


 



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