CZECH REPUBLIC Trends and Developments Contributed by: Matěj Manderla, Jan Wagner, Ivo Hartmann and Aleš Malach, Tenacta, advokátní kancelář, s.r.o.
BTR sector, where whole buildings are bought by insti - tutional funds for long-term lease. Legal practice confirms that BTR transactions require very sophisticated structuring. Investors do not want to wait until the building is finished; they want to secure the asset in the early stages. Therefore, for - ward-purchase or forward-funding contractual struc - tures are most often used. Economic Feasibility and the Fiction of Consent Returning to the permitting processes, the pending amendment introduces two process innovations that will fundamentally alter the risk allocation and negotia - tion dynamics for developers. • First is the introduction of the economic feasibility principle. Historically, authorities applied technical standards rigidly, regardless of the cost. As a new development, authorities will assess the economic feasibility of projects when applying technical standards. Under this principle, certain techni - cal requirements do not need to be fully applied if the costs of compliance would be economically wholly disproportionate to the benefits. Illustra - tively, if strict noise or vibration limits would require extremely costly noise barriers in a dense urban context where the marginal benefits are limited, these requirements may be relaxed. • Second is the introduction of the fiction of consent for public infrastructure operators, often referred to as utility or network operators. Obligations on these operators will be strictly expanded. If the operator fails to respond to a request from the applicant within 30 days (maximum of 60), the fiction of consent arises, and it is legally pre - sumed that the operator has no objections to the construction. This represents a significant shift in favour of developers, as it avoids open-ended delays caused by the simple inaction of utility companies and reduces co-ordination bottlenecks significantly. Planning Agreements and Development Contributions The upcoming amendment seeks to strongly support municipalities and developers through the formalisa -
tion of public-law planning agreements and the stand - ardisation of development contributions. In the past, these agreements were often negotiat - ed in a grey zone. Now, they represent a structured public-law mechanism to co-ordinate and finance public infrastructure. Developers will be able to con - tribute financially to public amenities such as parking, greenery and wastewater treatment capacity on a co- ordinated, area-wide basis. The aim is to accelerate and make transparent the negotiation and delivery of infrastructure across neighbourhoods or districts. For the investor, it is essential to reflect these con - tribution costs in the financial models from the very outset of the project. At the same time, a properly negotiated and carefully drafted planning agreement significantly enhances legal certainty, as the munici - pality typically undertakes to refrain from any conduct that could obstruct the permitting process and to pro - vide all necessary co-operation to ensure its proper course. Limiting Judicial Review: Strengthening Legal Certainty The new law narrows the grounds for legal action and introduces significantly shorter time limits for fil - ing lawsuits against issued permits. The clear legisla - tive intention is to provide greater legal certainty after administrative approvals are issued, ensuring that per - mitted projects can finally proceed to the construction phase without the threat of protracted, multi-year legal uncertainty. Green Leases and ESG Compliance The last major operational trend that must be men - tioned is the deep integration of ESG standards into the real estate market. A few years ago, these clauses were only seen in the contracts of the biggest inter - national corporations. Today, because of European directives like the Corporate Sustainability Report - ing Directive (CSRD), it is becoming an increasingly important regulatory and commercial requirement for market participants. If a commercial building does not meet expected energy performance standards, the financing banks will either outright refuse to provide a loan or will increase the interest rate significantly.
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