In today's article, we will discuss the basic assumptions of the Act of 1 October 2021 on guaranteed housing loans (" Act "), which entered into force on 27 May 2022. What is a guaranteed housing loan and who and under what conditions can apply for it from a bank (" GKM ").
This is another bill that aims to improve housing needs, in this case by eliminating the barrier of lack of own funds, which constitute the required down payment by banks. Receiving support in the form of a guarantee issued by Bank Gospodarstwa Krajowego (BGK) will ultimately replace the down payment currently required to obtain a loan. However, considering the requirements placed on potential borrowers and the funds allocated for the project, the scale and effectiveness of the Act in its current form will be minimal, as experts point out.
The next part will be devoted to the conditions under which support from the Government Housing Fund will be granted.
According to the definition contained in the Act, a guaranteed housing loan is a loan secured by a mortgage, including a loan whose contract provides for mortgage security after the construction of a single-family home is completed, which is covered by the guarantee or is repaid in part . A guaranteed housing loan, as defined in this way, is intended to serve as a substitute for a down payment for individuals who do not have sufficient savings to obtain a loan.
At the outset, it should be noted that GKM may be granted only to a natural person who meets the conditions specified in Article 3, paragraph 1 of the Act, i.e. a natural person running a household:
(i) within the territory of Poland or
(ii) outside its territory, if:
a. he/she has Polish citizenship or
b. he/she does not have Polish citizenship and runs a household together with a person who has such citizenship, and the guaranteed housing loan is granted to him/her jointly with that person.
Another condition on which the granting of GKM is dependent is that none of the persons belonging to the borrower’s household:
i. was not the owner of a residential premises or a single-family house and, in the period of five years preceding the submission of the application for this loan, did not transfer such right by way of a gift to a person classified in tax group I or II, referred to in art. 14 section 3 item 1 or 2 of the Act of 28 July 1983 on inheritance and gift tax,
ii. did not have cooperative rights concerning the residential premises or a single-family house,
iii. did not have another guaranteed housing loan granted to her.
After meeting all the above-mentioned conditions, the borrower may apply for a guaranteed housing loan to cover all or part of the expenses:
1) incurred in connection with the construction of a single-family house, including its finishing, and the acquisition of ownership rights to a land property or part thereof for the purpose of building that house on it;
2) incurred in connection with the acquisition of ownership rights to a residential premises or a single-family house, including its finishing;
3) constituting a construction contribution.
It's also worth mentioning that the legislature has introduced restrictions on the granting of guarantees by relating them to the price per square meter of the purchased property. Consequently, a GKM may be granted if the price of the residential unit or the construction contribution, calculated per square meter of usable floor area of the residential unit, does not exceed the amount equal to the product of the average conversion rate of the replacement cost per square meter of usable floor area of residential buildings (e.g., for the Capital City of Warsaw, this rate is currently PLN 7,894.77) and:
i. a coefficient of 1.3 – if the loan is granted to cover expenses incurred in connection with the acquisition of ownership rights to a residential premises of which the borrower is the first purchaser and which is acquired from the entity that built the premises as part of its business activity – most often a developer, or
ii. a coefficient of 1.2 – if the acquisition is made on the secondary market.
The legislature also limited the guaranteed portion of a mortgage loan to PLN 100,000 . However, considering the prices of properties in larger towns and increasingly high interest rates, this seems too small an amount that, in practice, will not cover the entire down payment with such a guarantee.
At the same time, it's worth noting the limit on state budget funds transferred to the Government Housing Fund for the implementation of tasks arising from the Act. In 2022, this amount is only PLN 100 million. Again, considering that this amount is intended to cover guarantee payments and family repayments, it is negligible and unable to significantly improve the overall situation of borrowers. However, this problem may be temporary, as, according to the plans contained in the Act, this amount will increase each year, reaching PLN 2.15 billion in 2032.
According to information available on the website of Bank Gospodarstwa Krajowego, as of June 13, 2022, an agreement enabling the securing of loans with a guarantee was signed by Bank Pekao SA and PKO Bank Polski SA. Currently, BGK is in talks with another 11 banks that have expressed interest in signing an agreement enabling the granting of loans with a guarantee and the implementation of family repayments.
Taking the above into account, this Act should be considered a regulation that takes a direction that can actually improve the situation of buyers on the housing market in Poland, however, a detailed analysis of the content of the Act leads to the conclusion that they need decisive changes in terms of, for example, the amount of the maximum guarantee or the coefficients determining the maximum price of the property, as they are currently unrealistic compared to the current situation on the housing market in Poland.
In just a week, we will prepare another article for you in the series on easements, discussing the issue of their entry and deletion from the land and mortgage register.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of June 13, 2022.
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