January has passed, but it was filled with numerous announcements of changes to the law, which will undoubtedly pose legal challenges for the development and construction industries. The beginning of the year brought, among other things, government announcements to combat "patho-developers" and a draft law that would effectively restrict institutional leasing. Today, we'll also mention a new form of housing investment: cooperatives. We invite you to read on!
To begin, let's recall that the Minister of Development and Construction, seeking to combat the phenomenon of so-called " patho-developers ," has proposed changes to the technical requirements, including increasing the minimum distance of multi-family residential buildings from the plot boundary from 4 meters to 6 meters, increasing sunlight hours from 3 to 3.5 hours, and constructing "privacy balconies" and "comfortable playgrounds." The detailed content of the bill is not yet known, but there is no doubt that the proposed changes could further increase construction costs and discourage new investments. Consequently, as the PZFD also points out, the new changes could adversely affect the availability of housing in the future.
The second major and unexpected announcement was the government's proposed changes to the rules for purchasing larger numbers of apartments, including those in the institutional rental sector. As the initiators explained, rising property prices are a real problem for potential buyers, and the proposed solutions are intended to curb price increases. This stems from the fact that the price increases are believed to be the result of mass purchases of properties for rental purposes by large, specialized entities, which limits the number of apartments available on the market that could be purchased by individuals.
What exactly does the draft law on restrictions on the acquisition of residential premises ? It proposes limiting the ability to purchase residential premises if a given entity owns at least five apartments. After exceeding the limit, an entity wishing to purchase another apartment will be able to do so at a rate of one apartment every 12 months. This legal solution will undoubtedly negatively impact the already limited demand in the housing market. Furthermore, a higher tax on civil law transactions is planned for purchases of sixth and subsequent apartments. This draft has been met with criticism not only from the market but also from government representatives, so we are awaiting the final draft and will certainly return to its analysis.
Today, we also want to draw attention to the regulations that have already been adopted regarding new solutions for individuals in the form of housing cooperatives .
A housing cooperative is a new way to build residential buildings to meet one's own housing needs. Cooperatives are regulated by the Act of November 4, 2022, "On Housing Cooperatives and the Rules for the Disposal of Real Estate Belonging to Municipal Real Estate Resources in Order to Support the Implementation of Housing Investments." The provisions of this Act will enter into force on March 1, 2023.
A cooperative is an initiative group operating as a civil partnership. This group will be able to receive a guaranteed housing loan from Bank Gospodarstwa Krajowego (BGK) and build a housing project to meet its own housing needs. This venture, in principle, cannot be profit-oriented or investment-oriented. An investment group will have to consist of at least three people, and only individuals can participate. The land on which the cooperative properties will be built will be made available from municipal resources.
In order to implement a housing cooperative investment, members of the investment group will be required to enter into a civil partnership agreement or a housing cooperative agreement (Article 5, paragraph 1, points 1 and 2 of the aforementioned Act on Cooperatives). The cooperative agreement will specify:
- subject of residential investment;
- the number of residential premises or single-family residential buildings planned as part of a housing investment, in which no separate premises have been provided;
- principles of financing housing investments;
- principles of settling housing investments;
- the way of conducting affairs and making decisions;
- principles of representation;
- rules for entering into the contract and rules for withdrawing from the contract;
- duration of the contract;
- rules for terminating the contract.
The parties to the cooperative agreement will be jointly and severally liable for the obligations incurred.
To sum up, the beginning of the year brought many announcements of changes in the law that may significantly impact the housing market.
Next week we will return to the topic of digitizing the investment and construction process and describe the principles of operation of an electronic database of construction projects.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of February 7, 2023.
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