New deregulation law could lead to higher rent throughout Czech Republic

The government decided on Wednesday to gradually fade out its transitional policy of regulating rent prices for privately owned property as well as for council flats. A new law proposed by the cabinet will allow owners to determine the level of rent for new tenants, and the authorities will only intervene when the two sides cannot agree. For current tenants an increase of 10 percent annually is allowed. Alena Skodova has more:

Until now, rent in council flats - as well as privately owned property which had been previously state-owned - has been regulated by the state. Owners were obliged to observe regulations allowing only minor increases in rent each year. This will change, if the new legislation is passed by parliament - the state will intervene only in cases when the landlord and tenant are unable to reach agreement.

Experts say the system resembles that applied in Germany, which makes it possible for property owners to increase rent while protecting tenants against excessive rises. But could higher rent in the Czech Republic cause dramatic changes in people's social situation? Economist David Marek from the Patria Finance company: