Czech landlords have gotten new hope in their ongoing battle with the government over regulated rent following a recent ruling by the European Court of Human Rights (ECHR) in Strasbourg that has set a precedent against state rent control.

For the past six months, thousands of Czech landlords who filed complaints with the ECHR eagerly awaited the court's ruling in a dispute between Polish landlord Maria Hutten-Czapska and her government. Hutten-Czapska filed a complaint in 1993 challenging the legality of government rent control.

On June 19, the ECHR ruled in her favor, saying she was one of 100,000 landlords in Poland suffering under a restrictive system. It said the Polish government had to change the laws to secure a fair balance between the interests of landlords and the community.

It also awarded Hutten-Czapska 30,000 euros ($37,800/855,000 Kč) in nonpecuniary damages and 22,500 euros for costs and expenses. The Polish government has to settle the pecuniary damages within six months.

Given the fact that European courts closely adhere to precedent, the ruling increases the chances of more than 3,000 Czech landlords in their case against the government and could expedite a decision by the ECHR, said Milan Krček, vice chairman of the Civic Association of Home Owners (OSMD).

"We've asked the ECHR to prioritize our case, and we hope that a verdict could be made next fall," said Krček, who was in Strasbourg when the verdict in the 'Hutten-Czapska vs. Poland' case was handed down.

Today, there are approximately 750,000 rent-controlled flats in the Czech Republic, or approximately one-third of all housing. Landlords say the money they collect isn't enough to cover basic maintenance costs and have requested more than 50 billion Kč ($2.2 billion) in compensation for past losses.

If the ECHR finds similarities between the Polish and Czech cases, there's a good chance it would rule in favor of the landlords, said Eva Hubálková, a lawyer working at the ECHR. If this happens, tenants wouldn't be affected because the government would have to pay for the damages.

This would deepen the country's budget deficit, which was 56.4 billion Kč last year, according to Mirek Topolánek, leader of the Civic Democratic Party (ODS), which won the majority of votes in the June 2–3 parliamentary elections and is now trying to form a new Cabinet.

Outgoing Prime Minister Jiří Paroubek of the Social Democratic Party (ČSSD), however, has insisted that a new law on rent deregulation that passed in Parliament in March should prevent Strasbourg from leveling any fines.

According to the law, rents will grow 14.2 percent a year from January 2007 to 2010. In 2011 they will be deregulated.

Civil courts step in

But changing the legislation won't be enough to prevent the ECHR from ruling against the government, said Klára Veselá-Samková, the lawyer for the landlord association.

"It's also about compensating past losses," she said.

Patria Finance analyst David Marek said restrictive rent control costs landlords about 22 billion Kč a year when maintenance costs and lost profit are taken into account.

"Were the government to allow rent deregulation and pay subsidies to people in order to compensate for the rise in rents, it would still pay less money than the amount that could be lost in Strasbourg," he said.

Apart from the ECHR, Czech landlords have started turning to local civil courts after the Constitutional Court ruled in March that they can sue tenants to get higher rents and the government for damages.

The Constitutional Court ruled that civil courts should decide rent dispute cases between tenants and landlords. They began dealing with these cases in June, and are legally bound to issue a verdict