Edyta Kalińska

Audit Partner at BDO, Poznan Office

Originally Published in March 2020

Poland still lacks apartments. Compared to other countries in the European Union and even beyond, our housing infrastructure does not look impressive. Taking into account the European average (number of apartments per capita), the shortage is estimated at 2 or even 3 million apartments.

Previously introduced government programs such as “Mieszkanie dla Młodych” (“Apartment for the Young”), “Mieszkanie Plus” (“Apartment Plus”) or “Mieszkanie na Start” (“Apartment for Start”) have not brought spectacular results. Only 860 apartments were built under the “Mieszkanie Plus” program (as of August 2019), although the original plan was to build a total of 100,000 apartments.

As a country, we still have a lot of work to do. Unfortunately, there are many restrictions that hinder the implementation of housing projects. The main obstacles are the lack of available land, its rising prices, as well as the scarcity of funds (in Poland, most residential investments are still financed by bank loans).

Also the costs related to these investments are constantly increasing, which is caused not only by high land prices but also by higher costs of employers resulting from, among others, Employee Capital Programs.

We should also remember the microeconomic risks. The economic downturn is undoubtedly linked to a more critical assessment of banks’ creditworthiness and a less open approach to lending to both developers and buyers.

Undoubtedly, it is necessary to introduce new legal regulations which will stimulate the residential real estate market. Such regulations should also reduce the housing shortage.

“It is necessary to introduce new legal regulations which will stimulate the residential real estate market”

On July 2, 2019 the President of the Republic of Poland Andrzej Duda signed an amendment to the Act on the National Real Estate Stock. The purpose of the amendment was to increase the supply of land that can potentially be used by the National Property Stock by clarifying the rules for classifying and transferring the property. Centralization of the land bank is definitely a step in the right direction.

One of the most important new regulations concerning the residential real estate market is the Act of 20 July 2018 on transformation of the right of perpetual usufruct for residential purposes into ownership. As of 1 January 2019, the right of perpetual usufruct ceased to exist and almost 2.5 million Poles became owners of its land. The greatest benefits were enjoyed by owners of fats in multi-family buildings, as previously they could not transform the right of perpetual usufruct into ownership without the consent of all the residents of the building.

In 2020, further changes to the existing regulations and programs are planned. The purpose of these changes is to improve the housing situation in Poland.

The Minister of Development also informed that some changes are planned in the “Mieszkanie Plus” program. According to this declaration, private developers will be able to purchase land at reduced prices in order to build new apartments under this program. Although the details have not yet been clarified, such a change may turn out to be beneficial for the residential property market. It seems that such actions may increase the number of apartments as well as their standard. Additionally, it may also have a  positive impact on prices of newly constructed apartments.

Plans for changes in the so-called “Development Act” are also still being discussed. At the end of 2019, new information on the inclusion of the draft of these changes in the list of legislative works of the Polish Parliament appeared. Therefore, discussions between developers and the Office of Competition and Consumer Protection are expected to return. The Office of Competition and Consumer Protection has resigned from plans to liquidate the open residential trust accounts, but plans to create a Development Guarantee Fund. The amendment to the “Development Act”, which is to enter into force in 2020, will increase the developers’ obligation to protect buyer’s payments, which will probably result in higher prices of new apartments.