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To Rent or Not to Rent?

Covid-19’s Influence on AirBnb and the Rental Market

For several months the world has been struggling with the COVID-19 pandemic which, in one way or another, has affected the lives of everyone across the globe including the Czech Republic. The virus has also caused enormous damage to the economies and many different industries in the affected countries. Countermeasures to limit the spread of the virus have been implemented by most national governments and the level of financial impact is predominantly down to the severity of the imposed regulations. The closing of national borders has been particularly concerning for countries whose economies rely on international tourists and when it comes to the big companies operating in this sector, perhaps none have suffered more than AirBnb.

The Czech Republic at the beginning of the epidemic

The first three cases of COVID-19 in the Czech Republic emerged on March 1st, setting the foundation for a radical change in the everyday lives of citizens here. As the number of cases increased, various measures were gradually introduced to at least slow down the spread of the virus. Only twelve days after the first cases had been discovered, the government announced a national state of emergency, and shortly afterward at midnight on March 15th, the borders of the Czech Republic were closed. For a long time, they remained almost completely impenetrable and only in recent weeks have they started to re-open. Therefore, it certainly comes as no surprise that this hiatus had, and continues to have a huge impact on AirBnb’s short-term accommodation providers.

 

AirBnb’s dependency on international tourism

As you would expect, here in the Czech Republic AirBnb has suffered its most severe damage in Prague which is currently and historically one of Europe’s hottest travel destinations. At the beginning of the year, there were around 13,000 apartments available.

Since AirBnb apartment owners didn’t have any way of predicting how long the borders would remain closed to tourists, many decided to put them on the market for long-term lease, which suddenly increased the supply. However, since there was no increase in people looking to move apartments and nobody was immigrating to Prague from abroad for work, the demand remained low. 

 

 

What you should watch out for

An apartment that was originally used for AirBnb accommodation can be recognised quite easily. Check the photos for sanitary products such as soaps and towels, and pay attention to how beds are situated in rooms more like in a hotel than in an actual apartment.

As soon as it becomes obvious that the apartment you are interested in was originally intended for short-term rentals, it is wise to become cautious. Although the owners have decided to make their apartments available for long-term rental, there is a small risk that not all of them will be honest in their intentions. That is not to say that some owners won’t be entirely honest in their intentions; they may well have indeed decided to turn away from AirBnb for good as a result of the situation. However, beware as others might try to force out their new tenants as soon as foreign tourists start flocking back into the Czech Republic. 

There are also apartment owners who aren’t interested in offering long-term contracts but are, on the other hand, inclined to make their apartments available on a one-year lease and have no problem informing potential tenants about their intentions. For those who came to the Czech Republic for work, or simply do not want to be tied to one place for a long time, this may be ideal.

Though there is certainly nothing wrong with renting an apartment that was originally used for AirBnb purposes, it is important to keep in mind that every AirBnb apartment owner can have a change of heart regarding long-term rentals. Even more importantly, some of these owners already know that they’ll go back to short-term leases on their apartments as soon as the situation allows it. So what should raise a red flag when trying to rent an apartment that was previously available as an AirBnb rental? 

 

  • It is the lease agreement that will help you the most. Pay attention to what it contains and focus especially on the length of the lease and the terms for termination of the contract. Besides that, it is vital that the lease agreement be in accordance with the Czech Civil code which is legally bound for all civil contracts. Therefore, even if the apartment owner tries to deceive you and you only find out that there was something wrong with the lease agreement once it is too late, the Czech courts will be on your side in case you have to sue. 
  • Even when everything seems to be alright with the lease agreement, it is recommended that you insist on the inclusion of a fine for early termination in the agreement. You can judge a lot by the reaction of the apartment owner to the inclusion of the fine; if they are serious about the long-term contract, they are more likely to be fine with it. And if they try to convince you to trust them enough not to have it included, or even claim such a fine to be illegal, you will probably be better off searching for a different place to live.
  • Another thing to watch out for is the rent price. There is a chance the owner will offer you a long-term contract but will increase the rent once the contract has been signed. In this case, it is good to read the contract carefully and to ask the owner of the apartment about the rent. If you ask them about their plans on increasing the rent and they brush your question off, trying to convince you that there is no danger of that happening, stay alert. They will either increase the rent anyway, or won’t care too much anyway as they are just waiting for tourists to start coming into the country again. Should this be the case, they won’t increase the rent but instead will try to get you out of the apartment and put it back on the AirBnb market.

 

Future development

The situation is gradually returning to normal in most countries, and with that there are many questions arising about what will happen next. This is especially the case with AirBnb apartments and there are ultimately two ways as to how the situation will play out: either the current situation will last for the foreseeable future and many AirBnb homeowners will decide to start selling their apartments, or the situation will improve to the point where tourists start pouring into the country again and the apartments will slowly return to the AirBnb market. 

At any rate, you need to be careful about who is renting the apartment to you and whether they are serious about long-term renting. Otherwise you may soon find yourself looking for a new home again.

This article was written for Oko! Magazine by Anna Minjaríková from Foreigners – a relocation agency based in Prague, Brno and other three Czech cities.

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