European Property Investments

Invest in Prague www.europeanpropertyinvestments.co.uk Telephone : UK : 07809 226112 IRELAND : 08713 20830

Below we have set out the main advantages of buying an investment property in Prague from European Property Investments. e deal we have set up is totally unique and is quite possibly the best investment opportunity available. e prospectus then sets out in more detail everything you would need to know :

In BrIef 

100 % Mortgages ( No Deposit required & only available to our clients e bank has agreed this deal with EPI only due to our track record with investors from UK and Ireland)



No UK Credit Checks



Very Low Interest Rates (Typically 2.4% max)



High Quality Brand New Apartments



Property Management taken care of at just 8% of rental Income



Full Inspection Tours Available



Capital Prices Now Rising Again



No Capital Gains Tax if owned for 5 Years



No Purchase Taxes



No Stamp duty



Fantastic Rental and Re-Sale Market



You are Investing in an EU Capital City

ToTal CosTs Involved

Mortgage Deposit - Zero Purchase Taxes - Zero 

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is is the best buy to let opportunity in the whole of Europe

Stamp Duty- Zero

Legal Fees - £ 1300 (fixed)

Bank Fee- £ 350

Other Fees- Zero

T H e C Z e C H rePUBLIC e Czech Republic was formed on January 1, 1993 when newly democratic Czechoslovakia split into two countries.

Four years earlier Czechoslovakia had returned to democracy through the peaceful Velvet Revolution, with the Communist government being replaced by one led by the playwright and dissident Václav Havel. By 1992, several Czech and Slovak leaders had come to an agreement to dissolve Czechoslovakia, and not long after, the Czech Republic and Slovakia emerged as Europe’s newest nations. e Czech government began to institute economic reforms that ensured the rapid growth of the country’s market economy. ere was the privatization of several banks and industries and the implementation of the Schengen Agreement, which had the country opening its borders on December 21st 2007 to its immediate neighbours— Poland, Germany, Austria, and Slovakia. Subsequently Czech Republic became the first post-Communist country to receive an investment-grade credit rating by the world’s leading credit organizations. It is also a member of the Visegrad Group, the OECD, NATO and, since 2004, the European Union but not the Eurozone. e country maybe officially only 17 years old but it has a fascinating long history. Made up of the historic regions of Bohemia to the west and Moravia to the east which includes parts of Silesia. e low mountains of Bohemia surround a

water basin that is drained by the River Elbe and the River Vltava. Moravia is in the main a hilly country, which is drained by the Morava River. e Czech Republic is divided into 13 regions in addition to the capital city of Prague. Each region has a Hejtman (President) leading a Regional Assembly however Prague is governed by a mayor and the city council.

Once the seat of the Holy Roman Emperors, Prague is one of the most beautiful cities in the world and is often described as a fairy-tale city of palaces, elegant bridges, lovely parks and gardens. e massive Prague Castle sits on top of a hill looking down on the rest of the city and the winding Vltava River. Once a well-kept secret among knowledgeable world travellers, Prague has been discovered by tourists and is now one of the most visited places in the whole of Europe.

However so many other areas of the Czech Republic are arguably just as beautiful. Outside of Prague you will find the castles and chateaus of Karlštejn, Konopiště, and Ceský Krumlov, the healing spas of Karlovy Vary, Mariánské Lázně and Františkovy Lázně, and the world-famous breweries of Plzeň and České Budějovice. Outdoor activities are a huge attraction too such as hiking and skiing are best enjoyed in Ceský ráj, Sumava, and the Krkonosě Mountains.

A solid economic growth is transforming the Czech Republic into one of Europe’s most progressive and modern countries, but certainly not at the expense of the rich culture and heritage of which the Czechs are quite rightly proud of.

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Bu y T o l e T I n P r ag u e a s a n I n v e s T menT :

The ProPerTy markeT In Prague:

European Property Investments are delighted to offer an amazing opportunity to invest in the beautiful city of Prague and have been able to negotiate a package to make it extremely easy to do so but more importantly in a way that enables almost anybody to be involved without the cash reserves and obstacles that are normally associated with a property investment.

When making any property investment one of the most important aspects to consider is the exit strategy. Everybody’s situation can change at any given time and having an investment that is no longer required is not a scenario that anybody needs. is is absolutely one of the reasons why we believe so heavily in the property market in the Czech Republic and Prague in particular. It has a property market…

Czechs buy property….there is a good re-sale market and of the 1000 investment properties that we sold in Prague in the 3 years of 2003-2006, not a single client was left with a property that was no longer required. It was a different world of course and our clients who chose to cash out were able to sell their property at a significant profit but be assured this was not the case in many other investment ‘hotspots’ that were promoted around central and eastern Europe in that period. To be told your property has risen by 30-40% in value is good news of course but if there is nobody who is going to buy it from you then it is actually worthless if you need to sell. Prague is an EU capital city. Not a holiday hotspot that goes out of fashion after a few years leaving huge quantities of unwanted property and nobody paying any rental income anymore. Let’s use those words again…an EU Capital City. Always a demand as there is in London and again in Dublin since the recovery has begun. e only difference of course is affordability of investments.

Even after that simple first paragraph the normal response would be one of scepticism and you would be reading the following information looking for the catch. ere really isn’t one and we have been able to set up the opportunity only because of our extremely successful past history of selling investment property in this beautiful city and our relationships with banks and developers. ere is a desire within the city to once more attract investors from the UK and Ireland, as happened before the boom of 2003-2006 and this desire has led to us being able to negotiate a deal with one of the country’s largest banks that otherwise would not be possible. e feel good factor has returned to Prague with property prices now beginning to rise again and expected to continue to do so. Nobody is projecting huge property price increases in the very short term but growth is growth and if ultimately somebody else is paying for the property for you with rental income (Prague has a very strong rental demand), then any sort of growth is a bonus. e market in Prague like everywhere has seen a decline in prices throughout what has been a very difficult economic period world-wide but now is beginning to recover and the last 12 months has seen property prices moving in an upward direction again. If ever there was a time to get involved it is certainly at the beginning of the curve and that is where we are.

We will set out below the simple terms of what we are offering and as much important information as possible but we are subsequently happy to answer any further questions. Just to mention that scepticism again, we can genuinely back up the deal that is set out below and we urge you to be as excited about it as we are. is is a real opportunity and we are extremely proud to be able to offer it to our clients.

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e feel good factor has returned to the property market in Prague with developers once again having the confidence to build multiple stage developments that dictate price increases at each subsequent stage. New developments continued to be built during the economic crisis but smaller single stage developments as the confidence was not there that prices would increase with each stage. Much of what is happening now reminds me of our initial arrival in Prague in 2003 and the feeling we got then that this is a really stable and safe property market. at’s what we all want…as little risk as possible and that is what you will get from Prague.

So W H aT I S THe DeaL: In simple terms we are offering our clients a deal to buy a property with a 100% mortgage in developments that offer the perfect buy to let opportunity. ere are no high interest rates to take the shine off things with the current interest rate being offered of 2.4%. We will then rent your property for you and in many cases the rental income will exceed the mortgage outgoings. All mortgages are capital and interest repayment mortgages which quite simply means that your tenant is buying the property for you. In some cases there may be a slight shortfall but with a 100% mortgage this is to be expected and the shortfall will certainly only require a small monthly/annual contribution but with property prices on the rise again in Prague the variance between how much you owe on the mortgage and the capital price of your property should get greater year on year. is is just a summary and we will give you more information regarding mortgages later in this proposal.

Although hardened investors may be tempted to take the plunge on this investment simply because of its ‘no brainer’ appeal we urge all of our clients to visit Prague to look at exactly what they are buying and also to get a feel for what a great city they are investing into. is is another great advantage of buying an investment in Prague….it’s such a beautiful city. You may expect that a deal such as we are able to offer would only be possible in some hell hole where nobody wants property or a third world destination with risks as long as your arm. is is Prague… and for those of you who have already been you will know exactly what I am talking about. For those who have not yet visited, you will be in for a very pleasant surprise.

Prague is very accessible from the UK and Ireland. Flights are fairly well daily all year round from most airports and are still relatively cheap. e days of £29.99 return flights are a thing of the past but still the low cost airlines fly to Prague(not Ryan Air). We ask our clients to book their flights to Prague at a

suitable time which must include at least 1 full working day.

(Mon-Fri) is is due to the necessity to collect a ‘residency permit’ which is a simple document needed to own a property in Czech Republic. Our lawyers will take care of the paperwork regarding this and this document has no legal status or implications but must be obtained.

When you land at Prague airport you will be collected by our representative and taken to your chosen hotel. We have special deals available on our website (www.europeanpropertyinvestment.co.uk) at 2 of the city’s best located hotels and we can book this in advance for you or you are quite welcome to take care of your own accommodation arrangements.

During the trip you will be shown a selection of our developments that are available to buy and of course you will be able to ask any questions you want during the trip. You will also be able to meet the lawyer who will take care of the entire process of buying / arranging mortgages / and handing over of your property. In addition you will also meet the property management company who will rent your investment for you after purchase. e lawyers are Czech lawyers but speak perfect English and will take care of the entire process for you for a fixed fee of £1300. is includes all documentation/licenses/mortgage arrangement/residency permit etc so there will be no additional fees at all for disbursements.

If in addition to this you would prefer to have a UK lawyer check everything over (there is no reason for this but simply for your peace of mind), we can put you in contact with a UK/Czech specialist real estate lawyer who has offices in London and Prague. ey will charge you £500 for their services and of course operate under UK Law Society regulations. is is optional but we want you to feel very comfortable with your purchase and so this would be completely your own choice.

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Th e m o r T g ag e d e a l :

As discussed earlier we are genuinely able to offer to you 100% mortgages on an investment purchase. is is effectively unconditional on purchases up to 2.5million CZK which is approximately £72,500. e only criteria to qualify for the mortgage is to be able to show regular (monthly) income into your UK bank account of £850 per month.

100% Mortgage ere are no UK credit Checks. e Interest Rate is currently just 2.4%. e figure of £72,500 is in most cases sufficient to buy a new build studio or 1 bedroom apartment on our selected high quality developments.

If you prefer to buy a more expensive larger property then we are still able to offer you 100% mortgages on any purchase however the bank will then want a security bond…determined by the property price which will be held in their escrow account for a period of 3 years and will then be returned to you. is is their security for offering you a no deposit 100% mortgage. An escrow account is a completely safe holding account that will have certain conditions such as the non-payment of the mortgage.

Other than the specified conditions nobody has access to the funds and the return date will be triggered automatically. If you were to sell your investment within the three years and the mortgage was redeemed then the bond will also be returned to you immediately. so h o w m u C h I s T h e B a n k B o n d r e quIred for a more exPensIve PurChase ?

e answer is not so much and here is a rising chart to explain : Mortgage

Amount in £

Mortgage Bond

Amount in £

2,500,000 czk

Up to £ 72,463

Zero Bond

Zero Bond

2,750,000 czk

£ 79,710

50,000 czk

£ 1,450

3,000,000 czk

£ 86,956

100,000 czk

£ 2,898

3,500,000 czk

£ 101,450

200,000 czk

£ 5,797

4,000,000 czk

£ 115,942

300,000 czk

£ 8,695

Ta x e s a n d P u r C h a s e C o s T s :

e opportunity to put your foot onto the investment ladder or increase your property portfolio with no deposit required is quite clearly fantastic for any investor. is is not available in the UK /Ireland and in fact it appears to be quite the opposite currently with UK banks if anything making it more difficult to attain mortgages at all never mind at sensible loan to value levels. I urge you again to not look at what we are offering with the ‘too good to be true’ glasses on. It is exactly as we have explained and there are no catches.

What we do want to make clear to you though is that no property investment can come without any costs at all and although they are very small we would like you to be aware of all potential costs and taxes involved in the process. Once again though there are huge advantages of buying into the Prague market as you will see below.

Pr o P e r T y T r a n s f e r Ta x ( s Ta m P d u Ty ):

One of the other significant costs when purchasing a property in the UK is Stamp duty. is runs into many thousands of pounds and is always a major consideration in any purchase. e good news again is that the Czech equivalent of Stamp duty is called ‘e property Transfer Tax’ (4% of purchase price) and this is actually the responsibility of the Vendor to pay. erefore you do not have any concern regarding any taxation in the purchase of a property. ere is further potential good news on the horizon for this too as the government has been discussing for some time the possibility of changing this so that the responsibility is that of the (transferee) purchaser. ere is a possibility that over the next 2 to 3 years this will be implemented which will mean that when you come to sell your investment in the future you will not have this liability either. However as legislation stands you must be aware that on any future sale of your investment the property transfer tax that you would be liable for is 4%. Hopefully by this time you will have made a sizeable profit from your purchase price and also your mortgage will have been significantly reduced and this small burden (if it were still to be your liability) will be very easy to accept.

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Ca P I Ta l g a I n s Ta x :

e sole principal of any investment is of course to make a good financial return. I have to say that when I am asked the question regarding how much gains tax I will have to pay, the jovial reply I always give is that I hope you pay an awful lot of tax. is is quite simply because you do only pay Capital Gains Tax on your profit. at is difference between your original purchase price and your net gain when you decide to sell and cash in on your investment. However there is also more good news here with the fact being that if you retain the property for a minimum period of 5 years, your investment is completely Capital gains Tax free. You pay nothing and this is another one of the many huge advantages of investing in Prague. If you were to sell the property within the first 5 year period then the current rate of Gains tax is 19% of your profit. ere are no restrictions on repatriation of funds and so therefore transferring your capital back to the UK does not incur any problems or further taxation.

significantly reduced). is is for dealing with the developer/vendor, the bank and the mortgage and the previously mentioned residency permit. In fact this is for taking care of the complete conveyance and all of the paperwork to the point of handing over the keys to you and/or the letting agent. You can sign a limited power of attorney with the lawyer who of course will keep you informed of every step and then you have nothing else to concern yourself with. We really do make it that easy and you will of course have meeting with the lawyer (in perfect English don’t worry) during your inspection trip. ere is also the option of course to have a UK/Czech specialist lawyer in London working under UK law society rules to check over the entire process if you so wish. e UK lawyers have quoted us £500 for this service and this is completely optional. kITChens :

w h aT d o yo u h av e T o Pay ? :

As we mentioned earlier although the purchase costs of a property in Prague are extremely minimal there are certain costs as you would expect associated with any property investment. Typically when buying a property abroad a good guide line is to budget your purchase costs at around 10% of the property value. is will be in addition to the mortgage deposit that you would have to pay. is is absolutely not the case with this opportunity. Part of the reason is because of the previously discussed non-liability of stamp duty but here is what you can expect to be liable for.

Ba n k a d m I n Is T r aT I o n C o s T :

e bank will charge a fee of £350-£400 for the administration involved in setting up your mortgage and also setting up bank accounts for you which you will need to receive your rental income and pay your mortgage. Almost all banking in Czech Republic is done on-line and so you will have no issues accessing and controlling your funds. le g a l C o s T s :

As discussed earlier there is a fixed fee that is charged by the lawyers for taking care of the whole process for you which is £1300. (if you purchase more than 1 property this is

Aha..here is the catch I hear you say. Well not really. A strange feature of the way the Czech property market works is that if you were to buy a brand new property it would in-fact not be finished with kitchen units and appliances. is is simply and easily explained by the concept being if you buy a new property in which to live then you will probably want to choose the colour scheme in one of the most important rooms in the property.

All of the plumbing is done of course and in fact everything is ready for the simple fitting of the kitchen. You will also have a choice of kitchen so that you can really put your own personal stamp on how your investment looks although we suspect that as the chances are you will not be residing in the property that cost will be a more important factor to you than having an expensive kitchen included. Although a beautiful kitchen may be more attractive to the potential tenant it will not necessarily add to the rentable value.

Our developers will assist by actually fitting kitchens to your property prior to purchase and then include this cost into the purchase contract price. is is clearly the most straightforward arrangement and once again removes the necessity for any cash outlay on your part.

Our bank lenders have already confirmed that they are more than happy to include the cost of the kitchen and any required appliances into the agreed mortgage loan. You do of course have the option of paying cash for this if you prefer.

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e apartment is still essentially being purchased for you by your tenants and you are benefitting from the anticipated capital growth too. We are sure that if you look at your mortgage statement each year and see the balance of the mortgage on your investment reducing and the capital price increasing and the gap simply getting larger and larger on an annual basis it will be all well worthwhile. re-sale:

re n Ta l a n d m a nag e m e n T o f yo u r Pr o P e r T y :

So finally if you decide to make the investment, you need to be re-assured that it will be looked after for you and that your rental is collected promptly in order for your mortgage to be paid on time. e rental market in Prague is excellent with good demand and good levels of rent to be expected.

Although capital prices declined during the financial crisis, rental levels remained steady and therefore there are no dramatic rental increases expected over the coming years. As with any economy rental prices will always increase with inflation but in real terms the rental market has remained strong.

We have a number of Management companies who would like to take care of your property and therefore we have been able to negotiate better fee structures. Essentially the management fee will be around 8% of your rental income.

Your first month’s rental is usually taken as the letting fee for the agent and you can expect a first class management service with regular property inspections etc. We have to say that in our experience the Czech culture is one of pride and care and you will find that your property will be the pride and joy of your tenant and they in almost all cases will look after it as if it was their own.

With your first ‘let’ you may find that the management company will ask that you pay to have blinds fitted to the windows and light fittings fitted to the ceiling. is is not a large expense and will be very much a one off. e only additional requirement could possibly be the supply of a washing-machine. is is not always required but is usually seen as part of the fitment of an ‘unfurnished’ apartment.

However very often the tenant will likely have their own washing-machine. w I l l m y r e n Ta l C ov e r m y m o r T g age ? :

e answer is generally yes although you will appreciate that as you are obtaining a 100% mortgage the figures of your mortgage outgoing to your rental income can be quite close.

Each apartment will be different: for example very often a smaller and therefore cheaper 1 bedroom apartment in terms of purchase price will command the same rental as a larger 1 bedroom apartment as essentially the rental market is largely dictated by the number of rooms and the purchase price is dictated by the square meter size of the apartment. erefore the smaller apartment may well have a positive cash profit on a monthly basis and the larger one may not but at the point of re-sale the larger one is likely to have increased in value by a larger amount.

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Prague is a capital city….with a real property market. Over the last 10-15 years Czechs have realised the benefits of owning their own property and a very healthy property market has evolved very quickly. As there was always generally a no debt culture in the Czech republic a mortgage was seen as a burden that was not necessary but this has changed rapidly and the Czech property market has gone from strength to strength with beautiful new build developments springing up around the city and a new desire for the middle classes to own their own property. is has created a strong market and quite simply means that when you want to sell your apartment and cash in on your investment, there are plenty of buyers out there.

One of the pitfalls of investors taking advantage of low prices in central and eastern Europe historically has been that they have really only been inspired by that initial opportunity to buy a ‘cheap’ property with little or no thought going into the exit strategy further down the line. is is why we had so much success in Prague for our investors in the period of 2003-2006. It’s that capital city thing again and the fact that Prague is now very much a prime EU capital city. You will not be burdened with an investment that you no longer want.

We are also very active in the Czech market selling locally to Czech citizens and when you want to sell and move on…we will take care of that for you too.

We are not going to sell you a property and then wash our hands of any further involvement in your investment. We are here for the long haul to help with any issues that may arise whilst you own your property and then to ensure that it is sold for you in the future.

When you go to Prague you will be looked after whilst you are there by our team and they will continue to be ‘on the ground’ to help after the purchase process. Of course you will have your management company taking care of your property on a day to day basis but you will still have our team to fall back upon if anything concerns you.

We still do this now for our clients who purchased more than 10 years ago.

As do our lawyers and accountants who are always available for you to ask anything that you may be concerned about. is really is an investment opportunity like no other. We will stay with you all of the way.

European Property Investments www.europeanpropertyinvestments.co.uk info@europeanpropertyinvestments.co.uk Tel: UK : 07809 226112 - IRELAND : 08713 20830

SP e C I a L D eaLS: In s P e C T I o n T o u r C o s T :

As with new property in the UK and Ireland developers will set a price and as the market is so strong will not deviate from this price unless a deal is seen to be special or unusual. By this we mean that if we had a client who for example wanted to buy multiple properties (3 or more) then we could approach a developer for a small discount from the purchase price of each unit.

Typical Purchase From One Of Our Developments 100% Mortgage: 36.5czk = £1.00 = 1.27 euro 1 x Bedroom Ground Floor Apartment 50m2 internal living space plus 24m2 garden/terrace

We do of course have requests as with any business transaction to make the deal a little different from the ‘normal deal’ from time to time.

Purchase Price : (2,449,000czk) £ 67,095 Euro : 85,210 Deposit :

£0.00

0.00

e flexibility we have within this is not very great but certainly one option we have is to refund the cost of the flights or the accommodation for a successful purchaser which would be our way of saying thank-you. is is not something we can simply offer to every client and there would have to be a specific reason for doing so. Examples I can think of would be a client who buys more than 1 property or it may be that a group of 3 people visit together and all purchase a property.

Any refund would be upon completion of the purchase.

Bank Bond :

£0.00

0.00

Purchase Taxes :

£0.00

0.00

Stamp Duty :

£0.00

0.00

Fixed Legal Costs :

£ 1,300.00

Euro 1,651

Bank Fees :

£ 350.00

Euro 445

Total Cash Outlay :

£ 1,650.00

Euro 2,096

le g a l C o s T r e d u C T I o n :

100% Mortgage Monthly Repayment : £ 261 Euro 332 Monthly anticipated rental Income :

£ 301 Euro 382

For a purchaser buying more than 1 property, we would automatically offer a significant discount on legal fees for additional properties. is would be negotiated with the lawyers but there would be a considerable saving.

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Heritage House 9b Hoghton Street Southport PR9 0TE Tel.: 01704 516564 Mob.: 07809 226112 www.europeanpropertyinvestments.co.uk