Prague is dealing with short-term rentals. All this at a time when it is experiencing the biggest tourist boom in its history so far.
More than a tenth of apartments in Prague are empty according to many experts. Especially in the city center, due to this, units are being turned into short-term housing. Some analyses therefore also argue that this phenomenon not only increases average prices in a given place, but also has a negative impact on the availability of housing. What's the reality?
After residents of selected western metropolises, such as Barcelona, Paris or Lisbon, began complaining about services like Airbnb, a similar discussion also arose in Prague.
Privacy protection
The main target of criticism is the fact that homes often become public spaces where people constantly change. This sometimes leads to the destruction of home furnishings, violations of night rest, or rude behavior of visitors. Airbnb can therefore sometimes break up neighborhood communities.
A third of the city's inhabitants also consider the impacts of their operation to be predominantly negative, as was revealed by last year's research by the agency STEM/MARK. It is no surprise that more than half of Prague's citizens call for their restriction.
"The higher percentage of Prague inhabitants who want to limit short-term accommodation mainly stems from more frequent negative personal experiences, which 3 out of 10 Prague citizens have compared to 9 percent of the entire population,"
Dalibor Stehno from the STEM/MARK agency explained in a press release.
High profits
But that's not the only problem. The vast majority of units - up to around 80 percent - are owned by hosts who rent out two or more units in the capital. Overall, there are around ten thousand such apartments, according to current Airbnb statistics. This number can still increase. After all, in the pre-covid period, there were more than 13 thousand of them. Income from rent is usually higher for similar types of services than for long-term rentals. Airbnb data claims that the average short-term rent in Prague is now less than 100 euros, which is less than 2,500 crowns per night. This of course pushes the overall price of rental housing up.
Such housing is therefore already an interesting opportunity for investors who prefer higher returns from short-term stays instead of long-term rentals. The aforementioned trend significantly influences not only prices but also the availability of housing for local residents who struggle with rising rents.
Affordable Housing
According to the Tenants' Association of the Czech Republic, the state is losing taxes and thousands of apartments are disappearing from the market, which could otherwise be intended for ordinary tenants. Because of this, the service increases the unavailability of housing in the city.
"According to the latest census, there were almost 94 thousand uninhabited apartments in Prague, which represents 13 percent of the local housing stock. The potential price impact could be between 19 and 33 percent. However, we do not know if these apartments are really vacant, as we do not have enough reliable data. For example, in Bratislava, the actual number of empty apartments is about a third of what official statistics claim. If this were the case in Prague as well, we're talking about 30 thousand apartments and a potential effect somewhere between 6 and 10 percent,"
The main economist of Česká spořitelna, David Navrátil, stated for LP-Life.
To prevent the short-term rental market from becoming a complete jungle, the leadership of the first city district presents general rules that landlords are supposed to stick to. Lodging providers must not only have their establishment identified, but they must also record accommodation fees and report accommodated foreigners to the police. Of course, they also have contracts with the accommodated. Entrepreneurs also have the obligation to arrange for waste disposal and sorting. And if the entire house was rented for short-term accommodation regularly, it would be a circumvention of the law.
Prague authorities have also imposed several fines on the owners of such apartments. These can be imposed repeatedly, with their amount potentially reaching up to half a million crowns.
Long-term rentals
The phenomenon of short-term rentals is also spilling over into long-term rentals. All this at a time when owning a home is becoming an unattainable dream for a large part of young Czechs, especially in Prague and other large cities. The situation leads to a significant increase in interest in long-term rental housing. However, the supply is limited and currently, there are more than 100 applicants for one rental apartment in the capital. The average rent for a 2+kk apartment in the wider center of Prague last year was around 25,000 crowns per month. This represents an increase of 4,000 crowns compared to 2023.
The situation is further complicated by limited construction of new flats and inefficient regulation of the market. According to experts, it is key to support the construction of new flats and introduce regulation of short-term rentals for market stabilization.
Furthermore, it can be assumed that the trend of short-term rentals will increasingly surface in discussions in the future. The number of tourists coming to the capital is most likely going to continue increasing. Last year alone, over 8 million people visited Prague, which was the highest in its history so far.
Sources: own inquiry, Airbnb, STEM/MARK, Prague 1, Association of Tenants of the Czech Republic, Czech Statistical Office
