How tenant bills are handled in the Czech Republic

We’re often asked by our foreign property management clients, who are not familiar with the Czech system, how the utility bills connected with their property are handled when a tenant is living there. The below article attempts to explain the main points:

The tenant is responsible to pay for their bills usage (see below what is included in “usage”). The owner is responsible for all other running costs.

The tenant pays a “bills deposit“, along with the rent each month, which should approximate their actual usage.

Some bills are kept in the name of the property owner and other bills can be transferred to the tenant:

• Service charge bills (which eg include costs for the common parts of an apartment building, heating and water) are always kept in the owners name.
• Electricity, gas and internet bills are sometimes kept in the owners name (and thus initially paid by the owner) and sometimes are transferred to the tenant. If the tenant is either (a) a foreigner or (b) only staying a short time, such bills are less likely to be transferred to the tenant. Also, some utility companies make it more difficult to transfer utility bills than others.

Every year (or at the end of the tenancy) SIM does the bills reconciliation which calculates how much the tenant has actually used compared to what they have paid as a bills deposit monthly.

• We then either refund the difference if they have an over-payment (and are on time with the rent) or request the difference if they have an underpayment

The amount the owner pays monthly and the tenant pays monthly is not always the same for various reasons:

• Electricity & gas: the utility company just approximates how much the owner should pay based on a typical previous usage, they only update this every 6 or 12 months (depends on them) and often the amount paid monthly can be very different than the actual usage of the tenant (which is one reason why we always calculate the tenants actual usage based on the meter readings in the apartment)
• Service charges: some service charge companies don’t bother much to update the service charges paid by the owner each year and just refund or request the over-payment/underpayment each year (depends on their internal system/policy)
• Service charges: the tenant is only responsible for the usage part of these service charge bills. What is classed as „usage“ is defined by law (no matter what is in the rental contract), in fact the law overrides anything written in the rental contract. Sometimes we can charge the tenant for „non-usage“ items depending on how well they know the law.
  • Usage items: water, heating, gas, sewerage, electricity, electricity in the common areas, cleaning of common areas, lift, dust bins, garage costs (where relevant)
  • Non-usage items:  building management fees, repair fund, insurance, accountancy, ownership committee salaries, maintenance, chimneys
  • Non-usage items (which we can often get the tenant to pay for): gardening, services in the building (security, receptionist…), revisions

Bills for short-term rental properties are usually paid completely by the owner of the property and are included in the rent paid by the guest/tenant.

Please beware that some property management companies are often too lazy to do a proper bills reconciliation each year, often leaving the extra cost of the tenants usage on the owner (which can be many thousands of CZK/year).

As part of our standard property management service, Sim Property looks after and pays all bills on behalf of the property owner so you don’t have to worry, and does full annual bills reconciliations with the tenants.