Bohemian rhapsodies

With a two-hour flight time to the capital, the Czech Republic is ideal for a second home, says Katy Pownall

Hundreds of thousands of we Brits own, or aspire to own, a property in Spain. For over a generation its Costas have tempted overseas house hunters and this popularity endures even today, but what is it that prevents us looking further afield?

Hundreds of thousands of we Brits own, or aspire to own, a property in Spain. For over a generation its Costas have tempted overseas house hunters and this popularity endures even today, but what is it that prevents us looking further afield?

For those with a little imagination and, perhaps, an adventurous streak, the Czech Republic proves a worthy rival to any Spanish hotspot. Granted it may not have year-round sunshine or beaches but then it also sidesteps high-rise, expat ghettoes and overbearing tourism.

What the Czech Republic does offer is one of the world's greatest capital cities, a diverse landscape, a fascinating history, ease of access and much, much more for your money. "Property often isn't as cheap as many think it's going to be," warns Mark Batt, of Prague-based property agency Identity, "but prices are competitive compared with Western Europe and it can be an excellent investment. Naturally, Prague commands a premium but you just have to look at the architecture to see why.

An hour outside Prague, in Tabor for instance, property is around a third of the price though the new motorway link should increase its value in the next few years."

Identity currently has a refurbished manor house near Tabor for sale. Boasting extensive gardens, which contain their own lake as well as several outbuildings.

The property is on the market for just £845,000. The house comprises a staggering 20 rooms, 10 bathrooms, an indoor pool and a terrace with views over the grounds.

A 20-minute drive from central Prague, in Mirosovice, Identity is also marketing a fully refurbished farmhouse. The property has four bedrooms, two bathrooms and a vast living room as well as 2,000 square metres of land. It is priced at £415,000.

And not only is the country beautiful and easy to get to with reasonable property prices to boot; you can expect good capital growth too. For the past four years, Prague has experienced annual property price growth in double digits, and there is nothing to suggest this will change in the near future, especially when buying restrictions are eased in 2009.

In addition, off-plan property gurus Prague Property Investments suggest that gross rental yields on new apartments in Prague are currently running at between 7.5 and 8.5 per cent.

The same company is offering for sale off-plan penthouse studio apartments that should offer lovely views of the city. They are being created in a converted Mill situated in Palmovka, which borders the city centre. Prices start at £42,000 and the development should be completed by August 2005.

Prague Property Investments is also offering off-plan apartments in River Diamond - a prime (and rare) city centre, riverside location. Here, two bedroom apartments cost around £113,000, studios from £70,000, while the penthouses are approximately £400,000.

Should you fancy something with a little age, Identity has a charming, refurbished garden flat up for grabs in a 1930's building situated in Prague. With three bedrooms, a fully-equipped kitchen, a large living/diner space, two bathrooms and a study as well as a south facing private garden, this property seems an absolute steal at £334,000.

"The cost of buying a resale property in the Czech Republic is about 7 per cent of the cost of the property, though you have to add on a little extra if you need to arrange a mortgage." says John Howell of John Howell and Co International Solicitors.

He adds: "That's still cheaper than a lot of Western Europe. Though people might be put off by what they consider a complex and risky buying process it really is as safe as buying in the UK provided you get independent professional advice."

John Howell & Co: 020-7420 0400, www.europelaw.com

Prague Property Investments: 0845 070 5545, www.praguepropertyinvestments.com

Identity Ltd: 00420 222 72 61978, www.id-online.cz

CZECH LIST

CONSULT A LAWYER

Ensure that he/she has knowledge of Czech property law. Discuss issues like the ownership structure you will adopt - the options can make a difference to your tax liability.

FIND YOUR PROPERTY

The large choice of agents in the UK and the Czech Republic, the internet and specialist publications will help.

SIGN THE RESERVATION CONTRACT

This is common practice. You will also need to pay a deposit, typically around 50,000 Czech kroner (approximately £1,100).

SET UP A CZECH LIMITED LIABILITY COMPANY (SRO)

Until 2009, there will be restrictions on foreign nationals owning property even if they are EU nationals. It is likely you will need to set up an SRO to officially own the property. It is a simple and relatively inexpensive (typically around £1,000). Instruct your lawyer to do it for you. Setting up an SRO takes a few days.

LEGAL CHECKS

With the reservation contract signed, you have several weeks in which your lawyer can conduct all the legal checks. It is also advisable to commission a survey on resale property.

SIGN THE CONTRACT OF FUTURE SALE

This document is binding so make sure your solicitor has completed the necessary checks before signing. Your deposit should be handed over at this stage too. In the Czech Republic, this is anywhere between 10 and 40 per cent of the asking price, usually 30 per cent.

FIND A MORTGAGE

Though you may have an agreement in principle for the purchase, The Contract of Future Sale can be used for making a formal mortgage application. Mortgages for foreign nationals are available from several banks and typically offer 70 per cent of the purchase price over 15 or 20 years at rates comparable with Western Europe.

SIGN PURCHASE CONTRACT

This is the final contract and it actually transfers ownership of the property to you. The title is then registered at the Czech equivalent of the land registry (Cadastre). This can take a couple of months though the property is legally yours from the moment you sign the purchase contract.

Katy Pownall is the editor of 'Buying Property in Eastern Europe 2005', published by Merricks Media