In this year's final article in our series, "Tuesday Mornings for the Construction Industry," we decided to summarize and highlight several issues that impacted the real estate market in the past year. To summarize it in one word, we could use the word "waiting." The real estate market awaited the implementation of many solutions announced by the new government at the beginning of the year, most of which, however, were never implemented.
However, we'll start with a positive note. One of the first significant decisions for the real estate market was the postponement of the entry into force of changes to the regulation on technical requirements for buildings and their location, introduced under the slogan "stop patodeveloperce." The regulation, signed by the previous minister in his final days in office, could have significantly hindered the implementation of many residential investments. Extending this deadline by another four months allowed for the completion of construction projects for complex and large-scale investments. The regulation's initial vacatio legis period was clearly too short for investors to adapt their already-initiated design processes to the changes being introduced.
It is worth remembering that from 1 January 2024, all new buildings put into use for which it is mandatory to keep a building log book will be required to keep this book in digital form.
This year, further steps were taken in the reform of spatial planning. A key milestone was the entry into force on March 27, 2024, of the Regulation of the Minister of Development and Technology of February 20, 2024, on the Specification of the Application Form for Establishing the Location of a Public-Purpose Investment or Development Conditions. The amendment to spatial planning introduced the obligation to ensure compliance of the conditions and detailed principles of land development and development, specified in the decision establishing the location of a public-purpose investment or development conditions, with the general plan.
The government's significant step in the right direction was the change in the real estate tax, which followed a ruling by the Constitutional Tribunal, which found the definition of "structure" in the Local Taxes and Fees Act unconstitutional. Consequently, an amendment was passed, adding new definitions of key real estate tax terms, such as "building," "structure," "construction object," and "construction works." Previously, in this regard, it was necessary to refer to definitions arising from the Building Code, which often raised serious interpretational questions in tax matters. Under the amendment, to determine whether a given structure is a structure, it will be necessary to refer to an annex to the act, which will contain a closed list of such structures. The beneficial changes for owners of parking spaces in residential buildings where garages were separate units should also be welcomed. Previously, such units were subject to a higher property tax rate. The amendment coming into force on 1 January 2025 will equalise the rates in this respect with garages that do not constitute separate premises.
Furthermore, due to the flooding that occurred in part of the territory of the Republic of Poland, the Act of October 1, 2024, amending the Act on Special Solutions Related to Flood Relief and Certain Other Acts, entered into force. Among the many solutions aimed at supporting affected individuals, this Act introduced, among other things, the possibility of support for affected individuals who are borrowers within the meaning of the Act of October 9, 2015, on Support for Borrowers who have taken out a housing loan and are in a difficult financial situation, whose single-family home or apartment covered by the housing loan (within the meaning of the Act on Support for Borrowers) was damaged or destroyed as a result of the flood, and who lost, even temporarily, the ability to use that home or part thereof or the apartment, or who completely lost their source of income as a result of the flood, and who were employed or conducted business activities within the area of the commune or locality indicated in the regulations issued pursuant to Article 1, Section 2 of the Special Flood Act.
In turn, pursuant to the newly introduced Article 27a, municipalities identified as affected by flooding have the right of first refusal to purchase residential premises or single-family residential buildings located within the municipality during the period specified in these regulations. Residential premises and single-family residential buildings acquired by the municipality will become part of the municipality's housing stock. This is worth remembering when purchasing real estate in flood-affected areas.
It is worth noting that on November 28, 2024, Parliament adopted an amendment to the Renewable Energy Sources Act. This is an important and necessary amendment, as it aims to facilitate the development of prosumer energy and accelerate the investment process for renewable energy sources by shortening the deadlines for issuing permits and decisions. Finally, the act includes a provision stating that renewable energy activities are in the overriding public interest. These changes are highly desirable and beneficial, as the energy transition is a reality, and renewable energy sources are a tool for ensuring energy independence and mitigating climate change.
Positive government action can also be observed in the broader agriculture sector, which is de facto closely linked to real estate. A positive change was the adoption of amendments to the Civil Code and the Consumer Credit Act in March 2024. The new regulations removed restrictions on granting loans to farmers, giving them greater opportunities to expand their farms. Equally important, these changes continue to enable farmers to benefit from ARiMR aid programs.
July 2, 2024, was undoubtedly a turning point for residential developers. That's when the provisions of the Act of May 20, 2021, on the Protection of the Rights of Purchasers of Residential Units or Single-Family Homes and on the Developer Guarantee Fund, came into full force. July 1, 2024, marked the end of the transitional period during which developers could build and sell residential units under the existing rules. As of July 2, 2024, the sale of apartments under ongoing development projects will be conducted in accordance with the new Development Act.
The lack of government action has in many cases negatively affected the real estate market.
The biggest market disruption was undoubtedly caused by the announcements regarding the so-called 0% mortgage, including a change in the terms under which it was to be granted. This was supposed to be one of the key programs proposed by the government and a remedy for the existing housing affordability problems for young people looking to buy their first apartment. In late December, the government announced that this project would not be continued for now.
Despite numerous attempts and announcements, the new government has not amended the Act of 5 July 2018 on Facilitating the Preparation and Implementation of Housing Investments and Associated Investments, which requires a minimum number of parking spaces of at least 1.5 times the number of apartments planned for the housing investment. This change is anticipated by the market, which has only a year left before it can potentially use the procedure for obtaining resolutions on the location of housing investments. The lack of changes prevents many developers from implementing development projects under the aforementioned special act. The minimum number of parking spaces remains highly controversial in the community, as such stringent standards prevent the implementation of many investments, discouraging developers from using this planning instrument.
The government should listen to the voices of the community and analyze the above regulations, which could significantly increase the number of investments implemented.
Another problem, particularly for developers implementing investments in Warsaw, is the obligation to prepare local zoning plans for areas covered by airport master plans, despite several announcements of changes to aviation law in this regard. The obligation to prepare a local zoning plan blocks developers' ability to obtain decisions on development conditions for investments, including residential ones, and consequently limits the number of potential investments and the supply of apartments. Considering that the Warsaw Chopin Airport Master Plan covers over a quarter of the capital city (with a local zoning plan only being prepared for half of the area), current regulations block the possibility of commencing any investments in as much as one-eighth of the capital city of Warsaw. This does not improve the situation for potential apartment buyers, as the lack of land for investment could lead to further price increases. In this regard, it appears that an amendment to the Aviation Law is imminent, and we await its adoption by the Senate and subsequent signing by the President.
In turn, we will summarize what the real estate market in Poland may have in store for 2025 in a week.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 31, 2024.
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