In today's article from the series entitled "Tuesday Mornings for the Construction Industry" on property divisions, we discuss a topic that often only appears after the division procedure is completed, namely the betterment levy.
For many property owners, plot division is primarily associated with the costs of preparing documentation, surveying, and the decision approving the division itself. However, in some cases, an additional cost may arise after the division, in the form of a betterment fee – regulated in Article 98a of the Real Estate Management Act ("UGN").
The betterment levy is linked to the increase in property value resulting from the division. In simple terms, if the property has increased in value as a result of the division, the municipality may demand a portion of this benefit from the owner. Therefore, the issue is not the mere fact of the division, but whether the division has resulted in an increase in the land's value.
Apart from the Real Estate Management Act itself, which provides for the right to charge a fee, if the value of the property increases as a result of the division of real estate made at the request of the owner by the commune head, mayor or city president, a resolution of the municipal/city council on this matter is also important for determining this fee.
This is important: the authority does not always have to establish such a fee. This is a municipal right, not an automatic consequence of any division, for which certain conditions must be met.
First, the division must occur at the request of the owner or designated perpetual user. If the division occurs ex officio or under other special procedures, a separate assessment must be made as to whether the provisions on the betterment fee apply.
Second, the property must increase in value. Merely approving the division is not sufficient. A comparison of the property's value before and after the division is necessary. This is based on an appraisal report prepared by a real estate appraiser.
Third, the municipal council must first establish the percentage rate of the betterment levy by resolution. In the case of a levy related to the division of real estate, the rate cannot exceed 30% of the difference in the property's value. Therefore, if the division increases the land's value, the municipality may only establish the levy within the limits of the rate adopted in the resolution.
For example, an owner owned a single large plot of land that was valued at PLN 100,000 before subdivision. After subdividing it into several smaller plots, their total value increased to PLN 120,000. The difference is PLN 20,000. If the municipality applies a 30% rate, the potential betterment levy could be PLN 6,000. If the rate is 10%, the levy could be PLN 2,000. Therefore, if an owner subdivides a large plot into several smaller building plots, the increase in value can be significant. In this case, the betterment levy could become a real cost of the project.
In practice, two issues are of paramount importance: whether there has actually been an increase in value, and what the applicable rate is in a given municipality. The owner should review the municipal council's resolution before the division begins. This allows for a better assessment of the economic impact of the entire division process.
Importantly, the initiation of proceedings to establish the betterment levy for property division can occur within three years of the date on which the decision approving the division of the property becomes final or the division ruling becomes legally binding. Therefore, the fact that the levy was not assessed immediately does not always mean that the matter is closed.
This doesn't mean, however, that every decision regarding the fee should be accepted—on the contrary, it's always worth conducting an analysis, which a law firm can perform. In practice, it's worth checking, among other things, whether the appropriate municipal council resolution was in force on the date the division decision became final, whether the deadline for issuing the decision was met, whether the valuation report accurately compares the property's value before and after the division, and whether the appraiser correctly assessed the property's characteristics and the comparable market.
In summary, the betterment levy doesn't appear in every subdivision, but it can significantly impact the economic viability of the entire subdivision process. If the subdivision increases the property's value and a relevant resolution is in effect in the municipality, the owner should be aware of the possibility of being charged a fee. Therefore, it's worth considering it at the subdivision planning stage, not just after the official decision.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of July 26, 2026.
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