Reservations, future purchase agreements, advance payments, buyer modifications and handover. A practical guide for Czech and international buyers who want to protect their money and avoid overpaying.
When buying a flat in a new development, two things matter most. First, any money you pay before the building is finished should be protected by an escrow arrangement, a bank guarantee or bank financing of the project. Second, the contract should describe the flat, deadlines, penalties and specification precisely. At handover, record all defects carefully in the handover report and raise them within the statutory time limits. Finally, compare the total price, including upgrades, parking and a storage cellar, honestly against a good-quality older flat in a similar location.
Prague's new-build market is expensive and still in strong demand. According to a joint analysis by the developers Central Group, Skanska Residential and Trigema, new flats on the Prague market had an average asking price of approximately CZK 187,800 per square metre in the second quarter of 2026, more than 10% higher than a year earlier. The average asking price of a flat exceeded CZK 11.8 million. At these prices, even minor inaccuracies in the contract or an unprotected advance payment can cost you hundreds of thousands of crowns.
Reservation, future purchase agreement and payment schedule
The sale usually begins with a reservation agreement. The developer takes the flat off the market and you pay a reservation fee. Before signing, check under what conditions the fee is refundable (for example, if your bank does not approve the mortgage), whether it counts towards the purchase price and how long the reservation lasts. If the building is still under construction, the next step is a future purchase agreement (smlouva o smlouvě budoucí kupní). In it, the developer undertakes to transfer the flat to you once the building has received its occupancy approval (kolaudace) and the unit has been registered in the Land Registry (katastr nemovitostí).
The future purchase agreement is the most important document for the buyer. It should contain a precise definition of the unit (floor plan, areas, share in the common parts), the technical specification as an annex, a final deadline for signing the purchase agreement and a contractual penalty for delay. It should also give you the right to withdraw if the deadline is significantly exceeded, and set out rules for deviations in floor area. Read the payment schedule carefully as well. Ideally, payments should be tied to actual construction progress (shell completion, occupancy approval, transfer of ownership) rather than simply to calendar dates. The final balance should fall due only at the moment ownership is transferred.
Foreign buyers, whether from the EU or elsewhere, can buy a flat in the Czech Republic on the same terms as Czech buyers. If you do not speak Czech, however, have the contracts translated and sign only a text you understand. The Czech version of the contract is usually the one that prevails. Bear in mind, too, that banks assess mortgage applications from non-residents more strictly.
How to protect advance payments before completion
Anyone paying advances on a flat that has not yet been built is, in effect, lending money to the developer. Yet Czech law does not, as a general rule, require developers to secure such advances. You therefore need to negotiate protection in the contract. In practice, the following tools are used:
- Escrow with a lawyer, notary or bank. The money is released to the developer only once an agreed condition has been met, typically registration of your ownership in the Land Registry.
- A bank guarantee for the return of advances. If the developer fails to complete the project, the bank repays your advances.
- A bank financing the project. If a bank is lending for the construction, you usually pay into a monitored project account and the bank continuously oversees the budget and progress of works. Check whether the land is mortgaged in favour of the bank and how the charge will be removed when the flat is transferred.
- Due diligence on the developer. Find out who the ultimate owner of the project company is, which projects it has already completed, whether it holds a final and binding building permit, and what the Commercial Register and the Land Registry show about it.
The higher the advances the developer requires before completion, the more important it is that they are secured. A developer's unwillingness to agree to escrow or a guarantee speaks for itself.
Buyer modifications: when they are worth it
Developers commonly offer buyer modifications (klientské změny), such as moving partition walls, changing the electrical layout or choosing different tiles and flooring. They make the most sense where a later alteration would involve demolition or work on the building services – that is, for the layout, water and electrical outlets, and preparation for air conditioning, smart-home systems or shading. Surface finishes can often be done more cheaply and to a higher standard by your own contractor after you take over the flat.
Have every modification priced in writing, including fees for design work and coordination, and check whether it will delay completion. Also watch out for the credit given for unused items of the standard specification, which tends to be considerably lower than what you would pay for them elsewhere. The contract should state who is liable for defects in the modifications carried out.
Standard and upgraded specification: the real price
The price per square metre on the price list is far from final. To compare offers, put together a total budget that includes:
- a parking space and storage cellar, which are often sold separately,
- upgraded fittings and buyer modifications,
- a kitchen, built-in wardrobes, lighting and shading, as the standard specification usually does not include them,
- the costs of the mortgage, escrow, lawyer and the fee for the application for registration in the Land Registry, which is CZK 2,000,
- future contributions to the repair fund and service charges according to the building manager's provisional budget.
Understanding VAT also helps. The reduced rate of 12% applies to buildings for social housing, which include flats with a floor area of up to 120 m²; otherwise the standard rate of 21% applies. Since 1 July 2025, the proportion of smaller flats in a residential building has been taken into account and floor area is calculated according to a special decree, so always ask the developer which rate applies to the particular flat. It is also worth comparing how each developer calculates floor area. Some include balconies and terraces, while others state the interior area only.
Handover of the flat and claims for defects
Bring a professional to the handover, ideally a building surveyor who can measure the flatness of floors and walls, check the windows, doors and seals, test the services and inspect the finishes. Record every defect in the handover report and document it with photographs. Do not sign a declaration that you are accepting the flat "without reservations" if you can see defects. Minor defects do not usually prevent you from taking over the flat, but the report must include a deadline for their remedy.
If you are buying a flat from a developer as a consumer, an amendment to the Civil Code effective from 6 January 2023 introduced a rebuttable presumption: if a defect appears within two years of the passing of the risk of damage to the property, the flat is presumed to have been defective at that time. This makes it easier for you to prove your case, although you still have to demonstrate the defect. By law, hidden defects in a building can be claimed no later than five years after acquisition; otherwise the seller may object that the claim is out of time. In addition, developers often provide a contractual warranty on individual parts of the building – check its scope and duration in the contract. Notify defects in writing and without undue delay as soon as you discover them.
A new build or an older flat in a good location
A new build offers a modern layout, low energy consumption, a lift, parking and minimal repair costs in the early years. A good-quality older flat – in a brick building in an established neighbourhood, for example – usually offers higher ceilings, better local amenities, a fully developed neighbourhood and the certainty of knowing what you are buying. However, you pay for wear and tear and often for a renovation as well.
When comparing, do not look only at the purchase price. Add the cost of renovation and consider the condition of the building (roof, risers, façade), the size of the repair fund, the finances of the owners' association (společenství vlastníků) and any planned investments. With a new build, on the other hand, weigh up the risk of delays, the time during which your money will be tied up without any return, and the fact that the surrounding area may remain a building site for years.
A new build as an investment
If you are buying a flat to let, or it is your third or subsequent residential property, expect stricter financing conditions. From 1 April 2026, the Czech National Bank (ČNB) recommends that banks apply an LTV limit of no more than 70% and a DTI limit of no more than seven times net annual income for investment mortgages. These are recommendations; each bank sets its own specific terms. For mortgages on owner-occupied homes, the recommended LTV remains 80%, or 90% for applicants under 36. You will therefore need more of your own funds.
Think, too, about tax on a future sale. For properties acquired from 2021 onwards, income from the sale is exempt from Czech income tax after ten years of ownership, or if you lived in the flat for at least two years immediately before the sale. Otherwise, the gain is taxed at 15%, or 23% for higher incomes. Rental yield depends on location, layout and demand. Small flats are more expensive per square metre, but they are usually easier to let.
Frequently asked questions
How much will I pay to register a new flat in the Land Registry? The administrative fee for the application for registration in the Land Registry is CZK 2,000. On top of this, you need to allow for the lawyer's fee for the contracts and escrow, and any costs associated with the mortgage.
Is it safe to pay large advances before the building is completed? Only if they are secured – that is, held in escrow, covered by a bank guarantee or paid into a monitored account of a project financed by a bank. Without such security, you bear the risk of losing your money if the developer fails to complete the project.
What should I do if the developer misses the completion deadline? Proceed in accordance with the future purchase agreement. It should include a contractual penalty for each day of delay and your right to withdraw and recover your advances if the delay exceeds an agreed limit. That is why it is important to negotiate these provisions before you sign.
This article explains general principles. Always consult a lawyer and a tax adviser about contracts, the security of advance payments and tax implications in light of your specific situation. DALILE LIVING can help you select and vet a new-build property and compare it with an older flat, including an estimate of renovation costs.
Sources
- ČTK / České noviny: Ve 2. čtvrtletí se v Praze prodalo více nových bytů, jejich ceny rostly
- Finanční správa: Informace GFŘ k uplatňování DPH u nemovitých věcí od 1. 7. 2025
- ČÚZK: Návrh na zahájení řízení o povolení vkladu do katastru
- Penize.cz: ČNB chce přísnější limity pro hypotéky na investiční nemovitosti
- ARROWS advokátní kancelář: Zákonná záruka na nemovitosti končí?
- Právní prostor: Koupě bytu od developera a potenciální rizika
- Zákony pro lidi: Zákon č. 89/2012 Sb., občanský zákoník
- Zákony pro lidi: Zákon č. 586/1992 Sb., o daních z příjmů
