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Population aging is a demographic phenomenon characterized by an increasing proportion of elderly people in the population. It is caused by both longer life expectancy and low fertility rates. On one hand, the favourable phenomenon is that people live longer thanks to advances in medicine, better access to healthcare and improved living conditions. This means that the number of elderly people in the population is growing, indicating an improvement in quality of life and health in society. On the other hand, low fertility rates, which means an insufficient number of births, exacerbate the aging process. Social changes in recent years, such as delaying the decision to have children to later years, fewer children per family, as well as economic factors such as the rising costs of raising children and economic uncertainty, contribute to the decline in birth rates. Fewer children mean that younger generations are smaller, which in the long term leads to a decrease in the number of working-age people. This can cause several social and economic problems, such as labour market shortages, burden on pension and healthcare systems and changes in social structure.

According to data from the Statistics Poland (GUS), the current aging index accounts for 133, which means that there are 133 “grandparents” (people aged 65 and over) for every 100 “grandchildren” (children aged 0-14), with a population difference of 1.9 million in favour of the elderly.

SHARE OF PEOPLE AGED 60 AND OVER IN THE TOTAL POPULATION

source: GUS

According to the assumptions of the demographic forecast developed by the Statistics Poland, in the assumed perspective there will be a significant decrease in the number of children and adults, while the number and proportion of seniors will increase. The number of people aged 65 and over will rise – it is prognosed that by 2060 there will be over 2.5 million more people aged 65 and over than in 2022 (an increase of 34.2%). A significant increase in the number of people aged 80 and over is also expected – by 2060, their number will more than double compared to 2022.

Population aging poses numerous challenges for cities but also opens up opportunities to create more inclusive, accessible and senior-friendly urban environments. It will be crucial to adapt urban spaces to the needs of older people, as in 40 years half of Europeans will be mature and will need a place where they feel not only safe, but also welcomed.

The dominant concepts in Europe regarding population aging, according to the OECD, i.e. “active aging” and “aging in place”, are key to understanding the housing policy, services and spatial planning. Both concepts are essential for creating friendly urban spaces and implementing sustainable development strategies.

“Active aging” is a concept that promotes maximizing the health, social and cultural potential of older people, ensuring their active participation in social, economic, cultural and civic life.

“Aging in place” is a concept that assumes older people should have the opportunity to live in their homes and familiar communities as long as possible, with appropriate support and services that enable them to maintain independence and quality of life.

The concepts of “active aging” and “aging in place” are crucial for the sustainable development of cities in Europe. Integrating these concepts into urban, housing and service policies allows to create spaces that are friendly and accessible to older people while promoting their activity and social integration. This way, cities can better address the challenges associated with population aging and promote sustainable development for all residents.

Several key aspects to consider when planning cities with the needs of older people in mind include:

1. Accessibility and Mobility:

• improvement of public transportation: easily accessible transport means, such as low-floor vehicles, frequent schedules, routes adapted to seniors’ needs, bus stops with benches and shelters;
• safe pedestrian crossings: adapting road infrastructure, including traffic lights, to the needs of people with limited mobility (longer signal duration for slower movement, well-marked and well-lit crossings);
• reducing architectural barriers: even sidewalks, ramps instead of stairs, low curbs.

2. Greenery and Public Spaces:

• spatial planning: creating friendly, accessible, and green urban spaces that promote physical and social activity;
• parks and green areas: easily accessible, with seating areas and paths adapted for people with limited mobility;
• benches and rest areas: regularly placed throughout the city, especially on walking routes and in parks.

3. Safety:

• street lighting: good lighting on streets, pedestrian crossings, and public places;
• eoad safety: creating spaces designed for easy and safe travel on foot or by bike through a dense network of well-designed pedestrian crossings (thoughtful traffic organization, speed bumps, designated bike paths).

4. Housing:

• construction and adaptation of housing stock: modernizing apartments and buildings to meet the needs of older people, e.g., installing ramps, elevators, grab bars in bathrooms, as well as adapting older buildings to accessibility standards (buildings with wide corridors and doors, bathrooms adapted for people with limited mobility, step-free entrances);
• assisted living: housing options for seniors requiring care or support but wishing to maintain independence, e.g., development of senior communities (designed for older people, with access to healthcare, recreation and services);
• home safety: implementing technologies and systems that support safety, such as smart homes.

5. Services and Healthcare:

• proximity of services: planning integrated spaces in the city and surroundings that are close to residential areas (shops, pharmacies, clinics, banks, and other daily services);
• healthcare services: building and developing healthcare facilities tailored to the specific needs of older people, easy access to clinics, hospitals, preventive and rehabilitation programs;
• care services: development of local care services, such as home help, nursing, meal delivery.

6. Community and Integration:

• recreational and cultural facilities: developing infrastructure that supports physical, mental, and social activity for seniors, such as senior centres, senior clubs, theatres, libraries;
• lifelong learning: educational and training programs that enable older people to acquire new skills and develop interests;
• continued employment: providing opportunities for older people to continue working, making them feel socially useful.

7. Technology and Information:

• technological education: courses and workshops teaching seniors how to use modern technologies;
• easily accessible information: clear signage and easily accessible information about city services, events, and support options, up-to-date information at bus stops and in vehicles.

Many cities around the world are taking initiatives to create friendly environments for the aging population. These include Manchester, The Hague, Tokyo, Copenhagen and Barcelona. Many cities in Poland also have support programs for seniors aimed at improving their quality of life and ensuring safety and assistance in daily tasks. One such program is “SOS for Seniors” conducted in Lublin. This initiative aims to provide quick help in emergencies through a wristband worn on the wrist. Each wristband is equipped with a heart rate monitor, fall sensor, and GPS locator. In case of an emergency, one can press the appropriate button on the watch and a signal is sent to the care centre, which responds appropriately to the alert.

Population aging poses numerous challenges for cities, but also opens up opportunities to create more inclusive, accessible, and senior-friendly urban environments. Creating a city friendly to older residents requires the involvement and cooperation of various sectors and interest groups, including city authorities, urban planners, non-governmental organizations and the seniors themselves. It is essential to adopt a holistic and proactive approach that considers the needs of all residents, regardless of age. Only in this way can we ensure that urban spaces are safe, accessible, and conducive to active aging.

Monika Grążawska
Senior Customer Relations Specialist

High housing prices and declining rental investment profitability in Poland, along with the desire to secure capital or a potential place of emigration in politically uncertain times, are prompting more and more Poles to look for real estate abroad. Among the countries most often chosen by Polish buyers are Southern European countries – Italy, Portugal and Spain. According to Registradores de España data, last year Poles purchased 3 118 properties in Spain, slightly more than in 2022, when there were 2 973 transactions concluded. In the first quarter of this year, there were already about 800, indicating at least a maintained pace of purchases from the previous two years. Moreover, Poles have also been among the nationalities allocating increasingly larger sums to investments, with a year-on-year increase (2023/2022) of nearly 18%.

Despite rising prices and high interest rates, in 2023 the Spanish real estate market performed much better than expected. Although the number of transactions was about 10% lower than in the record year of 2022 (650 000), the result was significantly better than forecasts. This was mainly due to the sustained high level of interest from foreign buyers and investors. In recent years, foreign buyers have accounted for approx. 14% of all property buyers on the Spanish real estate market. The largest group of buyers in Spain for years has been the British, who in 2023 purchased nearly 10% of all properties bought by foreigners. Significant groups of buyers also included Germans, French and Romanians, as well as investors from outside Europe, including Moroccans, Chinese and a considerable group of investors from South America. Poles accounted for about 4-5% of purchases made by non-residents in 2023.

The Valencian Community attracts the most interest from foreign investors – in 2023, foreigners acquired 18 919 properties there, which accounted for nearly 30% of all transactions involving foreign buyers. Andalusia and Catalonia, as well as Madrid and the archipelagos – the Canary Islands and the Balearic Islands, also remain popular. The northern region of Asturias is becoming increasingly fashionable among foreign buyers, where last year, for the first time, over 700 transactions were recorded by non-Spanish buyers.

Demand forecasts for the coming years indicate its possible increase due to the expected decline in interest rates and, consequently, easier access to mortgage loans. There is also a high level of interest in Spanish real estate among foreign investors. The current price level is still attractive. In the second half of 2023, foreigners paid an average of EUR 2 715 per square meter of property, comparable to or even lower than the prices of apartments in the largest Polish cities. This amount was 6.1% higher than the average price recorded a year earlier. Despite this increase, investors are attracted by the high return on rental investment, especially short-term vacation rentals. However, the Spanish real estate market is significantly regionally diversified. Besides Madrid and the largest cities, the highest prices are usually noted in regions, where properties are attractive both to tourists and investors seeking rental returns.

On the supply side, the number of new investments is declining rapidly. In recent years, approx. 100 000 new homes were delivered annually. However, in 2023 there were only 80 000 and the forecast for 2024 is just 60 000. Spain is currently one of the European countries building the fewest homes per 1 000 inhabitants. Real estate price forecasts for 2024 predict a further 10% decline in the number of transactions, but the average purchase price is expected to rise by 1% to 3%, with new forecasts predicting a 4.1% increase in primary market prices in the first half of this year.

The rental market has also seen significant changes recently due to the Housing Law (Ley de la Vivienda) introduced in May 2023. The new regulations aimed primarily at effective rent control, particularly in high-demand areas, increasing tenant protection against eviction, and supporting landlords renting their properties at controlled rates through tax breaks and financial support programs. The law also introduced measures to reduce the number of vacant properties, including penalties for owners who do not rent their properties for extended periods. So far, the effects of the new regulations are far from the intended goals. The new rules have led to a 12% decrease in rental housing supply and nearly a 10% increase in rent levels.

Forecasts for the Spanish real estate market in 2024 and the following years seem to be quite optimistic. Stable economic growth, the prospect of falling interest rates and easier access to mortgage loans, limited property supply, and rental rates offering satisfactory returns – these factors currently create favourable conditions for foreign buyers and investors.

Purchasing real estate in Spain, despite its attractiveness, also involves certain potential risks and challenges. Spain has a complex legal and tax system, and regulations can vary by region. This is the case, for example, with the taxes due on real estate purchases, which are the largest additional cost a property buyer must bear. Their amount varies depending on the type of property, region, price or market type (primary/secondary).

On the secondary market, the basic ITP tax rate is 7% and progressive rates depending on the property value can range from 8% to 10%. In reality, tax rates range from 6% in Madrid to 10% in Catalonia or the Valencian Community. On the primary market, two taxes are due for property purchases: IVA (VAT) and AJD (documented legal acts tax). The IVA tax rate is 10%, while AJD tax rates are set locally and range from 0.5% to 1.5%.

Other significant property acquisition costs include notary fees and registration fees. The property sale deed is prepared by a notary, and notary service costs depend on the property value and usually account for up to few percent of the purchase price. The registration fee depends on the property value and usually amounts to several hundred euros. In addition to these fees, one must also consider fees for intermediaries or lawyers assisting in the transaction.

The main risks and challenges associated with acquiring real estate in Spain include ensuring proper property management after purchase and verifying the property’s legality.

Investors not residing permanently in Spain may face difficulties with managing properties remotely. Renting, maintaining the property and resolving legal and technical issues are challenges that will be difficult to meet without adequate support from local specialists. This, of course, means additional costs or risks that need to be considered when making investment decisions. A phenomenon that a potential investor should particularly pay attention to is the “okupa” – the occupation of a property, usually a vacant one, by illegal tenants without the owner’s consent. This phenomenon is mainly rooted in the limited availability of affordable housing, especially for young people, and a significant number of unoccupied properties further creates opportunities for potential “okupas.” It is estimated that across the country, as many as 150 000 properties may be illegally occupied (estimations as for 2021). Spanish law provides procedures for removing illegal tenants, but their implementation can be both costly and time-consuming, and removing unwanted tenants can be challenging.

Another significant risk to consider is the legality of the property you intend to purchase. The property may be built without a building permit or may not be intended for habitation. In some regions, the number of “illegal” properties may exceed 10%. This problem particularly affects properties located in tourist-attractive regions intended for rental. An investor seeking such properties should first vertify that the property has all the necessary documents, including a habitation permit.

Other risks associated with acquiring real estate in Spain do not significantly differ from the risks faced by buyers on other European markets. Political risk, legal risk, currency risk and risks related to property value changes are types of risks that investors encounter on every real estate market.

Therefore, both the current market situation and the rather optimistic prospects for its development in the coming years suggest that purchasing real estate in Spain could be a good idea for capital investment and achieving satisfactory returns. The Spanish real estate market offers many different opportunities, including investing in the well-developed segment of vacation properties. However, a potential buyer should conduct a thorough analysis, including not only the market situation or current price levels, but also tax issues, property maintenance costs and risks specific to the Spanish real estate market, which are practically non-existent in the Polish market.

Jerzy Ptaszyński
Research and Market Service Director

Property tax is one of the key sources of funds for local governments. It covers land, buildings and their parts, as well as structures related to running a business. In recent years, attention has been increasingly drawn to the problem of differentiating tax rates based on the type and purpose of the property. Many taxpayers wondered why their property tax rate for a garage was several times higher than their neighbour’s rate. This caused numerous controversies and protests from garage owners.

The problem was that garages attached to a residential premises (legally constituting part of this dwellings) were taxed at the rate for residential buildings, which in 2024 amounted to a maximum of PLN 1.15 per square meter of usable area. On the other hand, garages that were separate properties have so far been classified as other buildings (even if they were located in a residential building), for which the tax rate was a maximum of PLN 11.17 per square meter, i.e. ten times higher.

TABLE 1. PROPERTY TAX AMOUNT CALCULATED FOR A DWELLING AND A PARKING SPACE DEPENDING ON ITS LEGAL STATUS

	Usable area	Tax rate	Property tax
When the parking space is located in a garage that is a separate property
Dwelling	50 sqm	PLN 1.15	PLN 57.50
Parking space	25 sqm	PLN 11.17	PLN 279.25
Suma	PLN 336.75
When the parking space is attached to a residential dwelling
Dwelling	50 sqm	PLN 1.15	PLN 57.50
Parking space	25 sqm	PLN 1.15	PLN 28.75
Suma	PLN 86.25

source: own elaboration

Is that fair? A married couple who purchased a dwelling with a parking space in a multi-car garage separated as an independent non-residential unit with its own land and mortgage register, decided it was not and filed a complaint to the court. Ultimately, the Constitutional Tribunal took up the case.

Judgment of the Constitutional Tribunal

In its judgment, the Constitutional Tribunal ruled that differentiation of property tax rates for garages is inconsistent with the Constitution of the Republic of Poland, specifically with the principle of equality before the law and the principle of social justice.

The Tribunal argued that, from the point of view of tax law provisions, there are no grounds for garages in multi-apartment buildings to be treated as a non-uniform category. According to the judges, the tax rate is not determined based on the legal nature of the property right, but on the purpose for which it is used. Moreover, in the modern world, a parking space is considered a natural and even essential element of a dwelling, because it meets people’s basic housing needs. The same applies to other attached rooms, for example a basement, storage room or attic, even if they are not directly adjacent to the premises or even located in the building, but are only located within the boundaries of the land property. They are subject to taxation at rates provided for residential buildings. Additionally, regardless of whether a garage constitutes a separate property from the residential unit or is attached to it, it serves the same function.

The differentiation of tax rates for garages and other types of residential properties lacks substantive justification and leads to unfair financial burden on garage owners. Therefore, the Tribunal ordered the elimination of such differentiation and the introduction of uniform tax rates for all residential properties, including garages.

Status of work on the amendment of regulations

In response to the Commissioner for Human Rights’ intervention regarding work on the definition of a structure and clarifying the taxation rules for garages, on March 6th of this year, the Ministry of Finance assured that work in this area has already started. The aim of the legislative changes is to standardize the taxation rules for multi-car garages located in multi-apartment buildings.

It is planned that the new regulations will be published no later than the end of November of this year. However, as indicated by the Tribunal’s judgment, the unconstitutional provisions of the Act on Local Taxes and Fees will cease to apply from January 1st, 2025, so the next tax decision for 2025 will already take into account uniform rates for garages.

It is also worth noting that the Ministry of Finance does not currently plan to introduce systemic changes in property taxation (e.g., introducing a cadastral tax).

Consequences of the judgment

The judgment of the Constitutional Tribunal has significant implications for the tax system in Poland, both for garage owners and local governments. First of all, garage owners can expect a reduction in property tax rates, which in practice means lower financial burdens. This, in turn, may contribute to greater acceptance of the tax system and improved relations between residents and local authorities.

For local governments, the Tribunal’s judgment means the need to adjust local tax resolutions to new legal requirements. Municipalities will have to cease differentiation of tax rates for garages and introduce uniform rates for all residential properties. This means changing budgets and rethinking financial strategies to compensate for declines in property tax revenues.

Agnieszka Pilcicka
Senior Real Estate Market Analyst

In 2024, a series of new regulations in the field of construction law will come into force, encompassing changes resulting from provisions announced by March 14, 2024. Amendments arise from changes to the regulation on technical conditions to be met by buildings and their location, and the regulation on the detailed scope and form of the construction project. Furthermore, in February of this year, the Ministry of Economic Development and Technology announced work on further updates to legal regulations affecting construction law. The aim of these changes is to improve the quality and safety of buildings. New regulations are aligned with modern ecological standards and current social needs.

From April 1, 2024, new regulations regarding the calculation of the total area as well as covered area took effect. According to the new regulations, the covered area will be reduced by the area of external parts of the building, such as ground-level terraces and those supported by columns, cornices, balconies and loggias. With regard to the calculation of the total area of the building, a change has been introduced mandating the deduction of the area of terraces, balconies and loggias.

Starting from August 1, 2024, the amendment introduces a requirement to include an analysis of technical and material solutions regarding acoustics in the technical project for single-family residential buildings with two premises, single-family terraced buildings or semi-detached buildings and multi-family residential buildings. The acoustic analysis should contain information on the assumed level of external noise affecting the building, as well as the level of noise and sound penetrating into the premises of the building, the level of acoustic insulation of the building’s partitions, especially between premises, and the building materials used to meet the new requirements. New regulations are intended to oblige investors to provide proper sound insulation in residential properties.

At the same time, new regulations on the technical conditions to be met by buildings and their location will also come into force. The amendment increases the distance between buildings with more than 4 floors above the ground. The distance of such a building from the plot boundary must be at least 5 meters, regardless of whether the wall facing the boundary has doors or windows. Meanwhile, a balcony in such a building must be at least 3 meters away from the plot boundary. If the building faces the plot boundary with a wall without windows or doors, the new regulations allow for this distance to be reduced. In such a case, the building may be situated up to 1.5 meters from the plot boundary or directly adjacent to it, provided that the local spatial development plan allows this.

The minimum distance between the walls of a new production or warehouse building with a covered area exceeding 1000 sqm and the walls of an existing single-family or multi-family residential building will change to 30 meters. This rule also applies to a planned single-family or multi-family residential building for which a final building permit has been issued or a building notice has been filed.

Another change aims to increase privacy on balconies. If the balconies of adjacent apartments in a multi-family building are located on the same balcony slab, a full vertical partition must be installed between them. This partition should be at least 2.2 meters high and 2 meters wide (or the width of the balcony if it is smaller).

The amended regulations introduce a requirement to designate rooms with a minimum area of 15 sqm for storing bicycles or baby carriages in multi-family residential buildings. The construction of a separate outbuilding, shelter or gazebo for such purposes will be allowed.

New regulations set the minimum area of a commercial premises at 25 sqm to better meet the needs of customers and owners of service and retail spaces by providing sufficient size. However, there are several exceptions to this rule. It is permissible to designate a commercial premises with a smaller floor area if it is located on the ground floor or first floor of the building and has direct access from the outside. This change does not apply to buildings where the commercial premises will be designated before August 1, 2024, or where a building permit was issued before this date.

An organizational change has also been introduced regarding parking spaces for passenger cars used exclusively by disabled persons. For each investment, the number of parking spaces designated for disabled people, which may be located close to building windows, will constitute a maximum of 6% of the total number of parking spaces (but not less than 1).

According to the new regulations, it is mandatory to provide a playground when constructing a multi-family residential building or a complex of such buildings if the number of apartments exceeds 20. The playground should be located in a sufficiently sunny area: at least 2 hours (from 10 AM to 4PM) for areas outside the city and at least 1 hour for urban areas. At least 30% of the playground area should be biologically active. Additionally, the legislator has introduced the requirement to plan the minimum playground area in relation to the number of apartments in the multi-family residential building or complex of such buildings.

For a better living environment, the new regulations expand the scope of required green areas in each investment. On plots intended for the construction of multi-family residential buildings, at least 25% of the plot area must be arranged as a biologically active area, unless the local spatial development plan specifies a different percentage.

On February 29, 2024, the Minister of Economic Development and Technology presented another draft amendment to the Construction Law Act and certain other acts. According to government representatives, despite numerous changes to the construction law in recent years and the simplification, formalization and digitization of the investment process, there are still regulations that do not correspond to the complexity of investments.

In the latest list of legislative and program work of the Council of Ministers, planned changes include, among other things, clarifying the provisions regarding the notification of the construction and reconstruction of single-family residential buildings with a building covered area of up to 70 sqm. It is envisaged to introduce a provision enabling architectural and construction administration authority to verify whether the notification actually concerns the construction or reconstruction of such a building.

Additionally, the construction of backyard shelters and ad hoc hiding places with a floor area of up to 35 sqm, which are intended to protect residents of single-family houses in the event of, for example, a military attack or extreme weather events, will be regulated.

The proposed regulation expands the catalogue of building objects and construction works exempt from the obligation to obtain a building permit, while requiring notification. Among these are non-drainage tanks for rainwater or meltwater with a capacity of up to 15 cubic metres, small retail kiosks and street sales pavilions with a building covered area of up to 15 sqm, free-standing communication buildings and telecommunications containers, and technical installations along with masts on buildings used to generate electricity from wind energy for own needs or to feed into the grid, with a capacity of 50 kW, i.e. not exceeding the capacity of micro-installations.

To the list of investments exempt from the need to obtain a building permit and not requiring notification, it is planned to add, among others, non-drainage tanks for rainwater or meltwater with a maximum capacity of 5 cubic meters, flagpoles and masts for monitoring cameras up to 7 meters high located on the ground, and the construction of small buildings at sports fields, courts, and tracks (such as changing rooms, small stands, shelters for benches, including reserve benches).

Introduced in 2024 changes to the construction law aim to meet the growing social needs related to housing, as well as to adapt urban spaces to current living standards and improve quality of life. Further prepared regulations are intended to facilitate and accelerate the investment and construction process, as well as reduce the burden on investors and architectural and construction administration authority and building control, which is expected to improve their functioning.

Marta Polkowska
Senior Maintenance and Development Specialist
SARFiN System Data Administrator

For several months now, there has been public discussion about the government programme called “Loan for a Start”. I intentionally avoided using the adjective “new” because it’s merely a more mathematically complex version of the previous program, “Safe Loan 2%”. Similar to all the previous programmes aimed at financially supporting selected borrowers – starting with the “Family on Its Own” programme from 2007-2013, followed by the “Flat for Youth” programme from 2014-2018, and ending with the “Safe Loan 2%” – the “Loan for a Start” programme also provides state subsidies for purchasing a first housing. Successive governments imitate their predecessors, attempting to create the illusion of solving the housing problem in our country by straightforwardly distributing money to those supposedly most in need. However, I am certain that those who are truly in need are not waiting for zero-interest loans. For instance, with an average loan value of PLN 418 000 in the “Safe Loan 2%” programme, the monthly loan instalment for a 25-year repayment period amounts to nearly PLN 1 400. Instead, they likely need rental housing, where the rent payment doesn’t exceed half of that amount. The “Flat Plus” program, which supports the construction of rental apartments, could have been a response to these needs. Unfortunately, it was tainted by the populist possibility of purchasing rental apartments after 20 years of tenancy. Moreover, the assumption that the government would be the executor of this programme led to its failure.

Therefore, I was pleased to read the statement from the new, though presently former Deputy Minister of Development and Technology, Krzysztof Kukucki (former because he was elected as the mayor of Włocławek in the recent local elections). He asserted that if someone wants to buy an apartment and can afford it, it is ok do so. However, if someone doesn’t want to buy or cannot afford to buy, but still needs a place to live, it is the role of the state and local government to ensure that this need is met. I would only add to the list of rental housing providers the private “apartment owners” and institutional PRS rental companies.

After the formation of the new government, I hoped for an opportunity to develop long-term programmes that would address Poland’s housing problem. As a banking sector, we have been recommending proven solutions that have been positively verified in other countries for many years. We presented these solutions to Minister Waldemar Buda even before last year. However, the PiS government opted for an election-oriented product called “Safe Loan 2%”. It’s hard to view this product any other way. The previous government’s “Safe Loan 2%” programme did not help PiS win the elections, so I am even more surprised that the new government, despite the total criticism of the effects of the “Safe Loan 2%” (especially the dynamic increase in transaction housing prices caused by it, both on the primary and secondary markets), decided to replicate it with some modifications.

Although the Ministry of Development and Technology has initiated a consultation process, it only involved individual meetings with specific groups rather than discussing potential solutions. The purpose was to evaluate the existing programme’s parameters rather than its validity. Could such a programme, which aims to attract additional housing recipients, be disliked by developers? Certainly, it could not. Could it also be unpopular with banks, as it expands the pool of potential borrowers and increases the number of loans that can be granted, especially in the context of persistently high market interest rates? Absolutely not. Even with the complexity of numerous conditions, limits and exceptions that will require tailor-made loan applications, most borrowers will likely turn to commercial loans to finance their desired property. Furthermore, the “Loan for a Start” programme does not restrict the downpayment amount or the maximum loan amount. However, it’s essential to recognize that the absence of these restrictions might encourage moral hazard. Moreover, a logically thinking potential borrower, after observing the situation with Swiss franc loans and credit holidays, will inevitably conclude that this is ultimately a “state-subsidized” loan, and the government will surely address any potential issues. Populism is gaining ground in Poland, as evidenced by the proposal to extend credit holidays even to borrowers with fixed-rate loans (!).

I refrain from evaluating whether this trend is a consequence or a cause of the last eight years of the Law and Justice party’s rule, which is unequivocally classified as a populist party in Europe. However, support for populists in our country is among the highest in Europe. The 2023 election campaign in Poland and the first months of the new coalition government indicate a “contagion” of populist demands from PiS. Therefore, every opportunity should be used to discourage populist solutions that harm the economy and democracy.

Why did I call the “Loan for a Start” programme exceptional? Firstly, out of defiance. Secondly, due to the numerous exceptions from the incredibly rich list of parameters defining eligibility for government subsidies. Regardless of the fact that potential beneficiaries are divided into eight categories, each with a maximum allowable income limit for accessing the loan, a maximum loan amount granted under preferential conditions, and the interest rate for this preferential loan, the program exceptionally allows exceeding the income limit by deducting the corresponding subsidy amount. This deduction varies depending on the borrower’s family size.

As a fundamental requirement, similar to all previous programmes, beneficiaries must not own any property. However, here we encounter another exception. Families with at least three children are exempt from this requirement; they can benefit from preferential loans to purchase a different property. But there’s an additional condition: to retain the loan subsidies, they must sell their current property within two years.

Another exception allows raising the loan limits (the amounts covered by subsidies) if the beneficiary purchases property in a locality with significantly higher prices. Both income limits and maximum amounts for preferential loans are increased by 10% or 20%, depending on the cost of reproducing a square meter of housing.

There is no downpayment limit or limit on the amount we want to allocate for property purchase. Furthermore, if we don’t have a 20% downpayment, BGK (Bank Gospodarstwa Krajowego) can provide a guarantee for up to PLN 100 000 to cover all or part of the downpayment when purchasing a property worth PLN 1 million. Providing this guarantee would involve a one-time fee of 1% of the guarantee amount.

The program also sets a limit on the usable area of the purchased property, but this limit exceptionally does not apply to building a house. Initially, the limit is 50 square meters for singles. Each additional household member increases this limit by 25 square meters. However, here’s another exception: exceeding the limit does not disqualify the beneficiary, but it reduces the subsidy by PLN 50 per one square meter of excess, regardless of the number of family members.

Unlike the “Safe Loan 2%” programme, there is no age limit for beneficiaries in this programme, except for singles. For them, there is an “exceptional” age limit of 35 years.

The interest rate for preferential housing loans will depend on the number of children. The base rate is 1.5%. It will be applied to households with no children. Each child will reduce this preferential interest rate by 0.5 percentage point, down to 0% for large families.

Beneficiaries of this preferential interest rate will enjoy it for a maximum of 10 years, during which budget subsidies aim to reduce the cost of debt servicing. In practice, borrowers will initially agree with the bank on 5 years of preferential repayment. Halfway through the subsidy period, a new agreement will cover the next 5 years. After the subsidies end, borrowers will transition to market-based repayment terms. However, the preferential loan is structured (using decreasing instalment payments) so that after 10 years, borrowers will repay a significantly smaller debt than on the day they took out the loan.

Skutkiem tych rozmaitych limitów i ograniczeń może być rozproszenie grupy potencjalnych beneficjentów. Z kredytu „BK2%” w ponad 57% skorzystały gospodarstwa jednoosobowe, czyli single, co skutkowało tak dynamicznym wzrostem cen kawalerek. „Kredyt na Start” będzie atrakcyjny przede wszystkim dla wielodzietnych rodzin, kupujących mieszkania tam, gdzie są one relatywnie tanie, co przy ewentualnie dodatkowo posiadanych przez nie środkach własnych i sięgnięciu po uzupełniający kredyt komercyjny pozwoli rzeczywiście zrealizować ich marzenia i potrzeby mieszkaniowe. Dużo mniej atrakcyjny będzie dla singli.

The various limits and restrictions may lead to a dispersed group of potential beneficiaries. In the “Safe Loan2%” programme, over 57% of beneficiaries were single-person households, resulting in a significant increase in studio apartment prices. The “Loan for Start” programme will be particularly attractive for large families buying homes in areas where prices are relatively low. With additional personal resources and supplementary commercial loans, these families can truly realize their housing dreams and needs. At the same time, the programme will be less appealing for singles. Notably, the programme now allows couples in informal relationships to apply for a loan.

It’s unfortunate that the authors did not consider additional support for families raising children with disabilities in this pro-family programme. Such families should also receive additional preferences. A small adjustment would go a long way. I would wholeheartedly support such an idea and did not criticize populist solutions.

Another oversight in the programme is the complete omission of environmental protection aspects, such as additional preferences for properties meeting specific thermos-energetic parameters.

This programme replicates most of the flaws of the “Safe Loan 2%” programme. The introduced income limits are merely a fig leaf. Banks that participated in the “Safe Loan2%” programme verified these limits, and the result was that over 80% of “Safe Loan 2%” beneficiaries would also qualify for the loan under the “Loan for a Start” programme.

Since this program is not as attractive as “Safe Loan 2%”, interest in it may be lower. The announcement that it will last at least until 2027 and that a new application round will be launched every quarter should prevent an accumulation of applications, both at the programme’s start and at the end of each quarter. Moreover, by the end of 2023, many potential buyers who met the “Safe Loan 2%” programme requirements, have already submitted applications for preferential loans under the “Safe Loan 2%” programme. It’s worth noting that in the first month of the “Safe Loan 2%” programme’s operation (July 2023), banks received over 18 000 applications. However, the programme’s authors anticipate processing 35 000 applications by the end of 2024.

All of this suggests that the projected impact of the “loan for a Start” programme on the housing market will be significantly milder than that of “Safe Loan 2%”. Nevertheless, regardless of the fate of this programme, I still hope for discussions about systemic solutions that extend beyond the duration of a single government term.

Jacek Furga, Ph.D.
Head of AMRON Centre

Recent years have highlighted how much society relies on electricity. An additional aspect driving even greater demand for electricity is the electro-dependence of basic household appliances – from heating systems to kitchen appliances or smart systems controlling various components in buildings. All of this makes the lack of power supply impossible for normal functioning. In search of an alternative and following the rapidly growing and popularizing trend of renewable energy sources (RES), interest can be noticed not only in solar energy but also in the possibilities of obtaining thermal energy.

Geothermal energy in Poland has not yet gained as much popularity as other renewable energy sources. However, it is an option increasingly considered both in the prism of single-family housing and societal needs. Geothermal energy is the thermal energy stored in the Earth’s mantle. It is formed due to the decay of radioactive elements, during which a large amount of energy is released. In addition, the mantle and core of the Earth emit residual energy left over from the period of our planet’s formation. Large amounts of heat also come from a series of phase changes and chemical reactions, causing the temperature inside the Earth to reach several thousand Celsius degrees. As depth decreases, temperature decreases as well, representing the geothermal gradient. This is an indicator describing the change in temperature with depth. For Poland, this parameter is approximately 33°C/km (for contrast, this parameter for Iceland is even 100°C/km). The potential lying dormant in Polish geothermal energy is therefore promising, especially since the area with enhanced geothermal utilization overlaps to a significant extent with the location of agglomerations in southern, central, and western Poland.

Geothermal energy can be used to obtain heat or electricity. In Poland, there are natural sedimentary-structural basins filled with geothermal waters at various temperatures ranging from 20 to 80-90°C, and in extreme cases, over 100°C. These are therefore low-temperature deposits, which are ideal for heat extraction. High-temperature deposits, with temperatures exceeding 150°C, can be used for electricity generation. Such deposits have not been recorded in Poland, however a well is being drilled in Szaflary (in Podhale) to a depth above standard (about 7000 m). The temperature at its bottom is expected to exceed 160°C, and if water deposits occur at this depth, it will be possible to utilize thermal energy for electricity production. In November 2023, this well had a depth of 4000 m and the first water-bearing level was drilled at a temperature of 85-87°C. The year 2023 also saw the start of several drilling projects in Poland. Among other things, a research well was drilled in Wołomin near Warsaw, which met the project’s assumptions, and it will be possible to exploit the deposit for the city’s heating needs. Also, work began on drilling in Otwock. The estimated temperature of the deposit should range from 40 to 45°C, allowing for the exploitation of the deposit for the city’s heating needs and the implementation of an investment related to restoring the spa character of the city. Increased interest in extracting heat from geothermal energy largely results from public support programs. The latest program implemented in the years 2020-2025 concerns carrying out geological works and research related to the exploration and recognition of thermal water deposits for their use. The budget for achieving the program’s goal is PLN 480 million.

So far, nine geothermal heating plants operate in Poland: Bańska Niżna, Pyrzyce, Stargard Szczeciński, Mszczonów, Uniejów, Słomniki, Klikuszowa, Czarnków, Toruń. The largest geothermal heating plant in Poland is Geotermia Podhalańska (Bańska Niżna). It is located on the outskirts of the Podhale Basin, one of the most important geothermal areas in Poland. In Zakopane, at a depth of 1000 m, thermal waters’ temperature accounts to approx. 26°C, while at depths below 2000 m in the Bańska Niżna area, the water temperature reaches a maximum of 86°C. The total installed capacity at Geotermia Podhalańska is 80.8 MW, of which 40.7 MW comes from geothermal energy. However, the total share of geothermal energy in Poland is only 0.2% in the prism of all renewable energy sources. The main problem in the development of geothermal energy in Poland is location, source efficiency, and the relatively high costs associated with conducting exploratory drilling and implementation. Moreover, such investments are burdened with the risk of obtaining resources with parameters worse than predicted or not obtaining them at all, which will result in a decrease in the economic efficiency of projects or even the impossibility of their implementation. Obtaining thermal water also does not guarantee success, as it is also possible to deplete resources or worsen their parameters. An example is geothermal energy in Kleszczów, where there has been a lowering of the water level, and as a result, in the last two years, the production of geothermal energy amounted to zero.

An alternative for individual consumers is the use of ground source heat pumps, which operate on a similar principle to systems used by heating plants. In single-family buildings, ground heat exchangers, both vertical and horizontal, can be used. In the case of a horizontal installation, the pipes through which the medium circulates are laid below the frost line, i.e. at a depth of about 1.0-1.5 m below ground level. Choosing this option is burdened by the fact that the area where the pipes are located cannot be later built on or shielded in any way, as the proper functioning of the installation requires the infiltration of rainwater into the ground. Additionally, trees cannot be planted near the installation, as over time they could damage the installation elements. The second option, i.e. the vertical installation, does not require the allocation of an area with limited possibilities of use, but the construction costs are higher than in case of a horizontal installation. The vertical system requires the drilling of wells, usually several, to place the installation elements in them. This is a solution that generates higher construction costs with lower operating costs. It also does not require the allocation of a large area of ​​land, as in case of a horizontal installation.

Undoubtedly, the beneficial aspect of using geothermal energy is zero emissions in obtaining thermal energy and the natural process of replenishing the energy source. Furthermore, the installation is not burdensome for users; operating the heat pump does not require specialized training or the allocation of a separate room for operation or fuel storage, as in the case of thermal energy obtained from burning wood or coal. It is an alternative for obtaining thermal energy independent of external suppliers, as in the case of a gas installation. The amount of electricity required to operate the heat pump is so small that, with the additional use of renewable sources of electricity and energy banks, users can ensure independence for their households in crisis situations.

Agata Wróblewska
Maintenance and Development Junior Specialist

In an age of rapidly changing climate conditions, the most sensible approach is naturalistic design. Modern construction focuses on ecology, functionality, minimalism, climate change adaptation, and responsible building practices. One of modern urban and architectural solutions is blue-green infrastructure (BGI). Greenery in private, residential and public spaces may not only serve an aesthetic purpose, but also may fulfil an ecosystem function. While ornamental value is often a priority in private gardens, it’s crucial to consider the usefulness of greenery even in such projects. However, contemporary form of urban areas is mostly shaped by public spaces and property development investments, both in terms of volume and architectural design, as well as nature aspects. It is highly important to implement good practices, especially in these spaces, as they have the greatest impact on a large scale.

Retention greenery instead of lawns

Establishing a lawn as a biologically active surface is an anti-environmental and anti-economic solution. Much higher quality offers functional greenery, which is increasingly common around office buildings certified under LEED or BREEAM systems. It is essential, though, for retention greenery to become a standard also in residential areas and public spaces. Investors are slowly being persuaded to use greenery as an infrastructure element, especially thanks to the low prices of some retentive plants such as currant and willow and the low maintenance costs of naturalistic rain gardens. Small retention imitates nature in collecting, purifying and evapotranspiration rainwater. Meadow, shrub and forest swamps, which, along with bogs, are key natural resources that store large amounts of water and carbon, are models for retention greenery. In urban spaces, small retention includes reservoirs, retention parks and garden squares, wildflower meadows, bioretention basins, rain gardens, swales, and green roofs. A guarantee of a successful project using green infrastructure is cooperation of the investor with a landscape architect.

Rain gardens

Rain gardens are part of blue-green infrastructure (BGI) solutions. They serve as small-scale water retention tools, beneficial for the environment alongside large and medium-scale retention structures. They are used in public spaces, residential areas, as well as in private properties. They involve planting water-resistant flora on specially prepared permeable and water-absorbent soil, allowing them to absorb water up to 40% better than a regular lawn. Over 50% of such a garden consists of hydrophytic plants, well-adapted to wet environments, resistant to drought and flooding, which additionally purify water. Rain gardens store and utilize rainwater from surrounding impermeable surfaces. There are single rain gardens located in a small field depression or in a container, as well as larger systems of artificial wetlands periodically flooded, built – for instance – in housing estates, parks, squares or along roads. It is useful to know why to use a particular green solution, so as not to use them for trendiness and to prevent greenwashing.

Water resources in Poland, according to the Water Exploitation Index plus, are among the smallest in Europe. Our country loses significant amounts of freshwater that flows into rivers and end up in the sea. Further losses are caused by rapid climate change, exacerbating the problem of drought and storms. Rain gardens aim to retain as much water in the landscape as possible and release a larger portion directly into the atmosphere instead of into stormwater drains. The best source for such gardens is water from roofs, pavements, promenades, drives, and car parks. Among the main benefits of rain gardens are:

• protection against drought, flooding, and floods,
• improvement of microclimate and biodiversity increase,
• increase of humidity and air quality,
• soil regeneration,
• natural filtration of rainwater,
• facilitation of storm water drainage,
• lower maintenance requirements and thereby financial benefits.

The establishment of rain gardens brings positive ecological, economic and health changes, but also visual and acoustic ones by attracting birds that enjoy being in the presence of water and naturalistic greenery. Other positive effects include the prevention of unaesthetic and troublesome puddles.

Home rain garden

To improve water conditions in immediate surroundings, a rain garden can be created by anyone, even in their own backyard, either in the ground (preferably subsoil) or in a container, or even on a balcony. Furthermore, a rain garden can be infiltrative or isolated. The cost of a small home rain garden ranges from two to five thousand zloty. The area of the rain garden should be about 3% of the drainage area. Establishing a home rain garden can be commissioned to a landscape architect, but it can also be done by oneself. Substantive information on plants dedicated to such gardens is worth looking for on websites of building and gardening stores.

A CROSS SECTION THROUGH AN ISOLATED RAIN GARDEN IN A CONTAINER

source: EMSWCD, https://emswcd.org/in-your-yard/rain-gardens/stormwater-planters/

Soil and plants in rain gardens

The rain garden’s soil consists of coarse sand and porous rocks, such as limestone, gravel, stone, or volcanic rocks. Rain gardens in containers are particularly suitable for highly urbanized areas lacking green spaces. Hardened surfaces are not an obstacle to improving water conditions. Recommended hydrophytic plants for rain gardens include, among others, iris, marsh gladiolus, loosestrife, valerian, great manna grass, reed canary grass, rush, dwarf bulrush and common reed. A beautiful effect can be achieved with meadowsweet and a combination of irises with loosestrifes. Plants with increased water requirements, such as hydrangeas, ferns, and most other shade plants, are especially good on more naturally permeable soils. On sandy soils, flower meadows work best. Shrubs and trees can also serve as retention greenery. Recommended shrubs include viburnum and currant, while ideal trees for rain gardens are white willow, brittle willow, black and white poplar, black and grey alder, pink oak, and red maple. It is crucial for planted trees to be young and unaccustomed to other environmental conditions.

Local government actions for the idea of sponge city

In recent years, a positive change in green management by many local governments has been observed. Naturalistic greenery and small retention facilities are increasingly being introduced in public spaces, and such solutions used to be difficult to implement due to insufficient public knowledge of the unquantifiable benefits of their use, both ecological, aesthetic, and financial. The number of rain gardens is rapidly growing in Pomerania – an area particularly vulnerable to floods due to its specific geographical location and intensification of weather anomalies. Gdansk is the first city in Poland where territorial rain gardens were created. In 2016, the first citizen panel on flood risks was held in Gdansk. The local community have opted for natural solutions, and the municipal board has appointed a small retention specialist at the city’s municipal water company Gdanskie Wody. By 2020, several municipal rain gardens were established in the city, preventing many local flooding incidents. Throughout Tricity, positive competition between cities on water retention has begun, including through programs to subsidize small retention facilities. In Tricity a positive competition between cities on water retention has begun thanks to programs to subsidize small retention facilities, among others. In the following years, more and more cities have convinced to the idea of a sponge city. There were established a lot of green-blue infrastructure investment projects, conferences (e.g., “Green retention – how to avoid flooding and droughts in cities,” organized by incl. Gdanskie Wody), and competitions for local communities.

Weronika Przypaśniak
Junior Specialist in Research and Market Service

The world’s population growth, depletion of natural resources and air pollution require societies to rethink and change current consumption habits. Climate change is speeding toward catastrophe and the existence of linear economy, which is based on low-cost production, assuming unlimited access to large quantities of materials and unlimited waste production capacity, will not be possible any longer. The construction industry not only is responsible for significant quantities of global greenhouse gas emissions, but also produces the large amount of waste – from the beginning of building construction to later everyday maintenance. Moreover, only a tiny percentage of construction waste can be recycled back into circulation. The transition from a linear to circular economy may be a solution of these problems, because the circular economy focuses on waste prevention and environmental protection, together with a positive effect on economic growth. But this will not be possible without making any changes especially in real estate and construction industry.

From linear to circular economy

The linear economy is a model of production and consumption, which is based on the extraction of resources to make products that are used and finally end up as waste and are thrown away. This model relies on achieving economic benefits by cheap materials and energy (assuming unlimited access to them). Therefore, the linear economy does not solve social and environmental problems. What is important, most economies in the world (including the construction industry) currently follow a linear economy model.

The circular economy, unlike the linear one, relies on using existing materials and products as long as possible. Furthermore, waste is eliminated because all materials and products are prepared for reuse and recycling, so they are kept in circulation at their highest value all the time. The circular economy model follows the 3Rs principle:

• reduce,
• reuse,
• recycle.

First and foremost, the most important thing is to reduce the amount of waste using less resources to manufacture things. In the second place, we should use products as many times as possible for the same or for different purpose. Finally, if the product no longer serves its purpose, recycling comes into play. However, some types of recycling processes can be energy intensive and that is why recycle is in the third place.

There are various benefits from circular economy, such as protecting the environment, boosting economic growth, creating jobs and reducing raw material dependence on other countries.

In the future, the circular economy could replace the linear one. Both the European Union and Poland proposed various growth strategies and policy initiatives for this purpose (e.g. The European Green Deal, which aims to make the European Union’s climate neutral by 2050).

Changes and new developments

Construction accounts for more than 35% of total EU waste. It is also a big user of natural resources, which may be limited soon. Lack of housing and land scarcity is another key problem, that is particularly noticeable in the largest European cities such as Paris or London. In the future, Warsaw may be confronted with it too.

Because of these challenges, the transition from a linear to circular economy won’t be possible without considering and making some changes in the construction industry, with regard not only to the building design or building materials used in construction, but also conversion and adaptation of existing buildings. One of the 10 main goals included in the European Green Deal is building renovation, that can reduce greenhouse gas emissions and improve the property usability (what is important in land scarcity case). Modernization of existing buildings may Increase the value of the property in a long term and protect green areas in cities from building up.

Nowadays if we want to change the function of a building, it is still cheaper to demolish this building and build a new one, than do a full renovation. The implementation of circular economy will implement changes, because according to the 3Rs principle – waste production, greenhouse gas emissions and use of natural resources must be reduced.

In circular economy, durability and long lifespan of buildings are crucial. The building should be designed in a way that makes it able to adjust easily to another use without major renovation or rehabilitation work and thus, reduce materials and costs. For example, an office building can shift to housing or commercial and back again. Better anticipating the different ways in which a building can be used will be an important aspect of building design in the future.

Another important issue is construction waste prevention. In circular economy, even after demolition all materials and products should be reused (and kept in circulation). However, it means we still have to find more sustainable solutions and new materials, such as hempcrete. Another issue is creating building systems that can be easily disassembled and reassembled. Circle House, located in Lisbjerg near Aarhus in Denmark, is a good example of it. The goal of this project is that 90% of used materials can be dismantled and reused in other buildings while keeping their aesthetic and economic values intact.

Summary

Transformation towards a circular economy in real estate and construction industry will be a challenge for all, especially in Poland. Nevertheless, it will provide an opportunity to create new jobs and businesses engaged in building renovation or recycling construction materials. The clue is to raise people’s knowledge and awareness of climate changes, circularity in construction and finally, make some changes (including e.g. technology) to create the best conditions for this transformation.

Karolina Sawczuk
Junior Specialist in Research and Market Service

Once again, the topic of property tax is returning. Poles are slowly getting used to double-digit increases. This year we had to pay almost 12% more than last year, and there is no sign of improvement in the next one. On 14 July 2023 the President of the Statistics Poland has issued a statement on the consumer price index for the first six months of this year vs. the corresponding period of the last year, which showed a jump of 15% upwards. We can also expect an increase in the levy by this much, as the Minister of Finance is guided by the level of inflation when setting tax thresholds.

Property tax rates are set by municipalities

Property taxes belong to the group of so-called local taxes. It is entirely assigned to the budgets of municipalities. The Minister of Finance only determines the highest applicable rates, while the final decisions on their amount are taken – usually in the fourth quarter of the year – by councillors in the form of a resolution. Local governments are therefore not obliged to adapt the conversion rates announced by the Minister in their own region, but may vary them for particular types of property, provided that the rates will not be higher than determined in the act on local taxes and payments.

Local governments are reluctant to budge from the upper limits adopted by the supreme administrative authorities. Last time, approx. 90% of local authorities adopted tax rates only slightly lower than the maximum rate, so there is no indication that it will be different now. This is because property taxes are an important source of own revenue for local government units, which supports their economic development.

Maximum property tax rate thresholds in 2024

According to the Minister of Finance notice of 21 July 2023, the new tax rate thresholds on real estate will increase as follows:

on land:

• connected with business activities, regardless of the qualification in the land and buildings register – PLN 1.16 PLN 1.34 per sqm;
• under surface standing or running waters of lakes and artificial reservoirs – PLN 5.79 PLN 6.66 per 1 2ha of surface area;
• other, including those used for conducting paid statutory public benefit activity by public benefit organisations – PLN 0.61 PLN 0.71 per sqm;
• undeveloped land included in the revitalisation area referred to in the Act of 9 October 2015 on revitalisation and located in areas, for which the local spatial development plan provides residential, service or mixed use development, including exclusively of mixed use including only these types of development, if a period of 4 years has elapsed from the date of entry into force of this plan with respect to these lands, and during this period construction has not been completed in accordance with pursuant to the provisions of the Construction Law – PLN 3.81 PLN 4.39 per sqm;

on buildings or parts thereof:

• residential buildings – PLN 1.00 PLN 1.15 per sqm of usable area;
• those connected with business activities and from residential buildings or parts thereof occupied for business activities – PLN 28.78 PLN 33.10 per sqm of usable area;
• occupied for conducting business activity in the scope of trading in qualified seed – PLN 13.47 PLN 15.50 per sqm of usable area;
• those related to the health care services within the meaning of the provisions on medical activity, occupied by entities providing such services – PLN 5.87 PLN 6.76 per sqm of usable area;
• other, including those used for conducting paid statutory public benefit activity by public benefit organisations – PLN 9.71 PLN 11.17 per sqm of usable area;
• on structures – remains at 2% of their value determined pursuant to Article 4(1)(3) and (3)-(7).

CHART 1. MAXIMUM PROPERTY TAX RATE PER 1 SQM. OF 1 FLOOR AREA OF A FLAT OR HOUSE FROM 2000 TO 2024

source: Own elaboration based on data of the Ministry of Finance

The graph above shows the trend in property tax rates from 2000 to 2024 in relation to residential buildings. It is easy to see that the fees have been steadily increasing all the time. The exceptions were 2016 and 2017, when they remained at the same level of PLN 0.75/sqm. In 2024, house and flat owners will pay PLN 1.15 per square metre of usable area, which is historically 15 per cent more compared to the previous year.

By when must the fee be paid?

The taxpayer does not have to calculate the due tax amount on his own. We will soon receive information with the amounts of those new fees for 2024. Individuals have their payment distributed over four instalments, which they should pay by the 15th day of each last month occurring in the quarter, i.e. 15 March, 15 May, 15 September and 15 November. In a situation when the total tax amount does not exceed PLN 100, the tax is payable once within the time limit for payment of the first instalment. Other payers also have the right to pay the total tax for the entire year. Such a solution is very popular among persons, whose liabilities are not high.

Business entities are obliged to make monthly payments in instalments proportionate to the duration of their tax liability – the first instalment by the 31st of January, the others by the 15th of each month.

In case of legal persons conducting business activity as sole proprietors, the deadlines and payment methods are the same as for individuals.

Summary

Despite upcoming record-breaking increase in property tax, the due amount still remains symbolic. The owner of a single-family residential building with a usable area of 200 sqm, located on a plot of 800 sqm will pay only PLN 110 more. On the other hand, the fact that this is one of many increases weighing on our wallets is not optimistic. The cost of maintaining immovable property is increasing at a rate well ahead of inflation and households are increasingly burdened with the high prices. In addition, they will have to accept new local charges.

Joanna Woźniak
Maintenance and Development Junior Specialist

At the end of May 2023, Polish parliament completed work on the Act on state aid in saving for housing purposes. The act is in force since July 1, 2023 and introduces a new programme called First Apartment. One of the basics of this programme is a new form of credit – 2% Safe Loan, which is available in a few banks since July 3, 2023. According to BGK (pol. Bank Gospodarstwa Krajowego – the managing entity) these are currently: PKO Bank Polski S.A., Bank Pekao S.A., Alior Bank S.A., VeloBank S.A., SGB Bank S.A., Bank BPS S.A. and cooperative banks of the BPS Association, Bank Spółdzielczy Rzemiosła in Cracow and Bank Spółdzielczy in Brodnica.

2% Safe Loan – assumptions

As part of the obtained 2% Safe Loan, the borrower is guaranteed a loan with a fixed base rate of 2%. According to the assumptions, the programme provides subsidies to the loan for the first 10 years, so that the base rate in this period won’t be higher than the aforementioned 2%. In other words, the subsidy will be the difference between the fixed rate determined on the basis of the average interest rate on loans with a fixed rate at lending banks, and the interest rate on the loan at the rate of 2%. Crediting banks add their margin to the base rate.

To be able to apply for a 2% Safe Loan, borrowers must meet several conditions:

• on the date of submitting the application, the borrower must be younger than 45 years old (in case of married couples it concerns at least one of spouses),
• the programme is addressed to people who buy or build their first apartment or house (applies to both spouses in the case of married couples) – the programme cannot be used by people who already own any housing real estate,
• real estate can be purchased both on the secondary and primary market, and a loan can also be granted for the purchase of a plot and construction of a house (on this plot),
• there are no price limits per square meter of purchased real estate,
• the maximum loan amount is PLN 500 000 for a single person and PLN 600 000 for married couples or parents with a child, to use the above maximum loan amounts, borrowers must have a net income of:
  by PLN 7 – 8 thousand per month – for a single person,
  by PLN 9 – 10 thousand per month – for married couples or parents with a child,
• own contribution may not exceed PLN 200 000.

Becoming a borrower of the 2% Safe Loan, borrowers should remember about a few additional aspects so as not to lose the right to subsidies:

• the property must be inhabited within 2 years of purchase,
• the property cannot be sold earlier than after 10 years,
• during the period of receiving subsidies, it is not possible to change the way the property is used or to rent it,
• it is not possible to overpay the loan or fully repay it before the end of 3 years.

It is worth noting that in the offer of banks: PKO BP S.A., Pekao S.A. and Alior Bank S.A. borrowers may not have any own contribution (banks participate in the Loan programme without own contribution).

Therefore, having the maximum possible amounts described in the assumptions, potential borrowers can look for apartments in the price ranges of up to PLN 700 000 – 800 000. This seems to be an amount that gives a wide range of real estate choices on the market, even in the largest agglomerations. However, after launching the programme, do we really have the same pool of available apartments in the indicated price range to choose from?

Has the launch of the 2% Safe Loan affected real estate prices?

During the works on formulating the 2% Safe Loan assumptions, many experts and real estate market analysts were sceptical about this programme. It was a common opinion that the introduction of such a form of credit would increase the offer prices of real estate. Demand for housing will increase due to better availability of housing loans for a wide range of people, while the supply of real estate will not increase, which will be the main reason for the prices increase on the market. The closer the launch of the programme, the more visible was its impact on prices. It is shown by analyses of changes in offer prices available on the Internet. Since the announcement of the programme in mid-December 2022, real estate prices have been increasing month by month. The chart below shows how the average offer prices of apartments in Warsaw change nowadays.

PICTURE 1. CHANGES IN THE AVERAGE OFFER PRICES OF FLATS IN WARSAW

source: https://zametr.pl/ceny-mieszkan/warszawa (access: 25.07.2023)

In Warsaw, the increase in prices has been noticeable since December 2022. Offer prices began to increase even faster from March 2023 and currently, both on the secondary and primary markets, they average around PLN 16 000/sqm. In mid-December, the average unit price was around PLN 14 500/sqm. This is an increase of as much as 10% in just 6 months. The phenomenon is also confirmed by the analysis of the number of offers with a price change.

PICTURE 2. NUMBER OF OFFERS WITH PRICE CHANGES ON THE WARSAW REAL ESTATE MARKET

source: https://zametr.pl/ceny-mieszkan/warszawa (access: 25.07.2023)

Since December 2022, there have been less and less decreases in offer prices on advertising portals, with a simultaneous increase in the number of more expensive offers. Until recently, we could notice a significant advantage of advertisements for cheaper flats. Last year, from month to month, there were fewer and fewer offers with increasing prices. Currently, there is a much smaller number of offers with price decreases (only 520 in July), and slightly more offers with price increases than in recent months (481 in July). Both values are currently at a similar level. Such situation wasn’t experienced even once since the end of 2021. Is the situation similar on other large markets in Poland? An analysis of the situation on the housing market in Cracow and Gdansk is presented below.

PICTURE 3. CHANGES IN THE AVERAGE OFFER PRICES OF FLATS IN CRACOW

source: https://zametr.pl/ceny-mieszkan/krak%C3%B3w (access: 25.07.2023)

PICTURE 4. NUMBER OF OFFERS WITH PRICE CHANGES ON THE CRACOW REAL ESTATE MARKET

source: https://zametr.pl/ceny-mieszkan/krak%C3%B3w (access: 25.07.2023)

The two charts above show the situation on the housing market in Cracow. The impact of the announcement of 2% Safe Loan in December 2022 is reflected in both changes in average apartment prices and the number of offers with a price change. Half a year ago, the average price of an apartment in Cracow, both on the primary and secondary markets, was PLN 12 500/ sqm. Currently (July 2023), these prices have increased to PLN 14 000/ sqm on the primary market and PLN 14 500/ sqm on the secondary market. Since March 2023, the number of adverts with price increases on advertising portals exceeds the number of adverts with decreases in apartment prices. Much more often in recent months, apartments have become more expensive than cheaper.

PICTURE 5. CHANGES IN THE AVERAGE OFFER PRICES OF FLATS IN GDANSK

source: https://zametr.pl/ceny-mieszkan/gda%C5%84sk (access: 25.07.2023)

PICTURE 6. NUMBER OF OFFERS WITH PRICE CHANGES ON THE GDANSK REAL ESTATE MARKET

source: https://zametr.pl/ceny-mieszkan/gda%C5%84sk (access: 25.07.2023)

On the real estate market in Gdansk, similar tendencies as in Warsaw and Kraków can be observed, although slightly less dynamic. The average offer price of flats between December 2022 and July 2023 increased by 8% on the primary market and 5% on the secondary market. As in the two largest Polish cities, the number of offers with decreasing real estate prices is also declining in Gdansk.

The quoted data directly show that the 2% Safe Loan, the goal of which is to support the way to owning an own apartment, has significantly changed the real estate market in a way that limits the pool of apartments available on the market. In the last 6 months, prices of flats increased much faster than before the announcement of the new loan programme. When browsing real estate offers on advertising portals, it can also be noticed that the percentage of offers in the price range of PLN 700 000 – 800 000 (the maximum possible value of funds at the disposal of the borrowers of 2% Safe Loan) has increased significantly. Therefore, we can see how the market is adjusting to the new credit conditions.

Summary

2% Safe Loan is the next programme, which proves that this type of government action, theoretically supporting the creditworthiness of Poles, primarily causes an increase in demand for housing. Sellers take advantage of this phenomenon by increasing the offer prices of flats. Only the programme’s beneficiaries, i.e. borrowers of the 2% Safe Loan, will benefit from it, while for the remaining, overwhelming group of buyers (those who do not meet the conditions for obtaining such a loan), the possibility of buying their own apartment again becomes more distant.

Barbara Mariańska
Maintenance and Development Specialist