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Poland is in a very unfavourable geopolitical position. The events taking place beyond our eastern border have a direct and negative impact on the Polish economy. In mid-November 2021, the migrant crisis on the border with Belarus escalated. Unfortunately, the situation is still tense and attempts to enter Poland illegally are still being recorded. On February 24, 2022, Russia invaded Ukraine. Since then, 2.415 million war refugees have arrived to our country (as of April 1, 2022). The consequences of these tragic events affect the most important branches of the Polish economy, including the real estate market, where changes are usually slower, but are already noticeable.

SUPPLY

The previous year turned out to be record-breaking for the construction sector, as since the 1970s the largest number of apartments and single-family houses were completed, totalling more than 235 thousand. In addition, approx. 212 thousand new building permits were issued in 2021, while more than 871 thousand apartments and single-family houses were under construction at the end of the year. The pandemic or high inflation did not stop the developers. Unfortunately, the beginning of this year is not very optimistic. According to the latest data published by GUS (Polish Central Statistical Office), in March the consumer price index reached 10.9% y/y, which was by 2.4% more than in February. The prices of building materials have been rising even higher and there is no indication that this trend will reverse. From September 2021, monthly rates of price increases have exceeded 20% y/y. In February this year, a 27% increase was recorded. An additional impulse for further prices increases will certainly be the embargo on the import of raw materials from Russia and Belarus. It is not only gas, oil or coal, but also wood, cement, aluminium or steel.

CHART 1. AVERAGE DYNAMICS OF BUILDING MATERIAL PRICES FROM 2019 TO 2022 (YEAR-TO-YEAR CHANGES)

source: PBS Developer Group

Building materials account for the highest share of the overall construction cost of a residential property, but it must be remembered that transport and labour also become more expensive. Another problem is the insufficient number of blue-collar workers on construction sites. Ukrainians made up a significant part of such employees, but due to extensive military mobilization, they have left Poland. It is estimated that since the beginning of the war, about 30% of approximately 73 thousand Ukrainian construction workers left Poland. It is true that there is a huge influx of immigrants, but they are mostly women with children and they will not be able to fill the gap on the labour market. This can cause long delays in investments.

The last major factor that will affect real estate development activity this year is the reduction in bank financing of investments. Rising interest rates and the more restrictive lending criteria are the consequences of double-digit inflation caused, among others, by the war. According to the National Debt Register, the total debt of Polish development companies currently amounts to PLN 193 million. Compared to March 2020, the number of indebted entities in this sector has increased. On the other hand, their total debt has been decreasing for several months and is lower by about PLN 3 million y/y. Mortgage loans are no longer cheap and easily accessible, which can discourage many investors from starting new investments.

In these uncertain times, developers face further difficulties, such as constantly rising prices of building materials, delivery delays, less access to labour and more expensive mortgage loans. How will developers handle this year? During the COVID-19 pandemic, many experts were predicting a crisis in the industry, but it did not happen. This year, we expect problems with planning investment costs and greater delays in the construction of buildings. In January and February, a slight slowdown was visible as developers completed 6.5% fewer residential units than a year ago, according to GUS (Polish Central Statistical Office) data. Residential construction notifications also fell by 5.8%, while building permits were only 0.7% less. This allows us to make a conclusion that 2022 will probably not be a record year in terms of these three indexes.

DEMAND

Among European countries, Poland ranks as one of the last in terms of the number of apartments per one citizen. According to various estimates, in Poland there is a shortage ranging from half a million and three million apartments. This deficit may even deepen due to the settlement of refugees from Ukraine in Poland. Only some of them find temporary shelter in Polish homes or in hostels. Most are looking for a place to live on the commercial market. The best solution for the beginning seems to be renting, but offers of apartments and rooms in large cities disappear very quickly. PKO Bank Polski S.A. published a report stating that the supply of apartments for rent has fallen in some cities by more than 70%. The biggest drops in the number of offers were observed in Wroclaw, Cracow, Gdansk and Lublin. In Warsaw, this decrease amounted to over 50%. This can be a good signal for investors planning to buy premises for rent. Currently, the percentage of such transactions accounts for almost 50% in the largest cities. On the other hand, some foreigners, who decide to stay in Poland permanently, will purchase their own apartments. For years, Ukrainians have been the leaders among foreigners in buying real estate in Poland, and it will probably remain that way. According to analysts at PKO Bank Polski S.A., in the next few years the demand will increase by additional 230 thousand apartments.

The above arguments may support the idea that demand will continue to be high. In opposition, there are further increases in interest rates caused by the highest inflation in 22 years. In September of the previous year, WIBOR rate was close to zero. The decision of the Monetary Policy Council on the first interest rate increase in 9 years was made on October 6, 2021. Currently, the reference rate is 4.50% and further increases are forecasted in the near future to the level of 5-6% or even up to 8% in the pessimistic scenario. Borrowers experience more and more severe debt burdens on their household budgets and already pay instalments often higher by 1/3 than last summer. People, who think about taking out a mortgage loan, may hold back a decision in these uncertain times, hearing about the difficult situation of many Poles. Even if we are prepared to pay off an expensive mortgage loan, we may find out that the bank cannot give it to us, even if it was possible just six months ago. The creditworthiness of Poles has significantly decreased not only due to the decisions of the Monetary Policy Council, but also after the entry into force of the new version of the Recommendation S of the Polish Financial Supervision Authority.

From now on, more restrictive procedures are applied when determining the maximum mortgage loan amount, as it is necessary to take into account a possible change in the interest rate level by as much as 5 percentage points, which means that currently estimates should be made for 8.5%. The creditworthiness of bank customers may have fallen even by half from September 2021. The result is decreased interest in mortgage loans, which is clearly visible in the chart presenting the BIK index. The dynamics of sales and submitted applications has clearly decreased. The latest reading from February shows that the value of applied mortgage loans has decreased by 29.2% y/y. In case of sales, there has also been a downward trend since October.

CHART 2. BIK INDEX OF DEMAND FOR MORTGAGE LOANS (YEAR-TO-YEAR CHANGES)

source: BIK

The towns located near eastern Polish border are also worth mentioning, where the fear of war effectively stops residents and investors from purchasing apartments and single-family houses. Real estate agents operating in these areas indicate the problems of the local markets as panic among clients and much fewer transactions.

PRICES

How the probable reduction in supply and demand pressure from refugees may affect housing prices? The most realistic scenario for 2022 seems to be a slowdown in growth of transaction prices in the largest cities, among others due to lower availability of mortgage loans. In the coming months, the annual increases may not be as spectacular as in 2021 and may not exceed the level of galloping inflation. The situation on the real estate market will be created by new factors and the war is cooling down the optimistic forecasts. When it comes to renting properties, the pandemic declines have been followed by a revival, because since February increases have been higher than in the whole last year. Analysts at PKO Bank Polski S.A. showed that since the outbreak of the war, offer rent rates in newly constructed buildings have risen by 33% in Wroclaw, 26% in Krakow and 15% in Warsaw. Despite the fact that the real estate market is cyclical and some events can be predicted, it should be remembered that forecasts are uncertain and one should be cautious when estimating the risk of investment.

Ewelina Staruch
Real Estate Market Analyst

On 8 March, 2022 the Monetary Policy Council raised the reference interest rate once again. This time the rate was increased by 0.75 basis points and reached the level of 3.5%, which is the highest value since February 2013. The Monetary Policy Council has been systematically raising the main interest rate every month since October 2021, which results in another increase in instalments of variable interest rate loans. These types of loans dominate in Poland. According to the data of the European Mortgage Federation, in December 2020 variable interest rate mortgage loans in Poland constituted 100% of all granted mortgage loans, which distinguished Poland from other countries in the region. Currently, this trend has changed. According to the recommendation of the Polish Financial Supervision Authority (PFSA), from July 2021, loans with a fixed interest rate should be offered by all commercial bank. Despite this recommendation, credits with fixed interest rate have not revolutionised the Polish mortgage market yet.

CHART 1. THE NBP REFERENCE RATE LEVEL

source: self-study based on the data of the National Bank of Poland

While previous interest rates rises were aimed at stopping inflation, the latest increase is additionally related to the necessity to protect Polish currency in connection with the Russian invasion of Ukraine and its economic consequences. The Monetary Policy Council has announced that this growth was not the last reference rates rise, what could become a problem for households that contracted a loan at historically low interest rates and misjudged the risk of significant increase in instalments, or for households that took out loans despite high level of a debt service to income (DStI) ratio. DStI is the ratio of the customer’s total annual commitments (credit and non-credit financial obligations) to the total annual income of the customer. In accordance with the Recommendation S of the PFSA: In the process of assessing the creditworthiness of retail clients, the bank should draw special attention to situations when the DStI ratio is higher than 40% for clients with income not exceeding the average level of remuneration in their place of residence, and 50% for other clients. Moreover, Recommendation S indicates: The bank should identify customers, whose loans are characterized by a high DStI ratio (exceeding 30% for customers with income not exceeding the average level of remuneration in the economy or place of residence or 40% for other customers) and low income buffer and analyse their situation and resilience to increase in interest rates at least once a year, especially in the environment of low interest rates. According to the data published by the PFSA, at the end of 2020, the median of the DStI distribution was within the range from 20% to 30%.

CHART 2. DISTRIBUTION OF PLN AND FOREIGN CURRENCY HOUSING LOANS IN TERMS OF DSTI LEVEL BY GROSS CARRYING AMOUNT AT THE END OF 2020 (PLN BILLION)

source: Information on the situation of the banking sector in 2020, the Polish Financial Supervision Authority, Department of Commercial and Specialist Banking, Banking Sector Analysis Team, Warsaw, July 2021.

The above-mentioned increases in interest rates, as well as rising inflation, contribute to the deterioration of the financial situation of Poles. The consumer inflation forecast by the National Bank of Poland in 2022 will amount to 10.8% and its peak at the level of 12.1% is foreseen to occur in the third quarter of this year, while according to the projection from November 2021, the consumer inflation forecast for 2022 was expected to be equal to 5.8%. As a result of all factors described above plus lower remunerations resulting from taxation changes related to the Polish Deal and the constant increases in gas and fossil fuel prices, some households’ budgets will run out.

In these circumstances, the Fund for Mortgage Borrowers Support established by the Act of October 9, 2015 on supporting mortgage borrowers who took out a housing loan and are in a difficult financial situation (Journal of Laws of 2021, item 1516, 1535), may turn out to be helpful for some borrowers.

The purpose of the Fund is: (…) to provide repayable support for credit recipients who found themselves in difficult financial situation and who are obliged to repay mortgage instalments that are significantly burdening the household budget . In addition the Fund’s goal is: to ensure a repayable loan to cover the remaining part of the debt after the sale of the real estate3. As part of the offered support, natural persons can obtain a maximum of PLN 72 000 in the form of an interest-free loan, which is a very advantageous option due to the current inflation. Beneficiaries will be eligible for assistance for a period of maximum 36 months. The amount of the monthly support is determined individually depending on the principal and interest instalment, however, the monthly support cannot exceed PLN 2 000. If the beneficiary decides to sell the credited real estate and the funds obtained from the transaction do not cover the remaining loan amount, the borrower may apply for a loan in the amount not exceeding PLN 72 000 to repay the debt. Monthly instalment support and the loan is provided through Bank Gospodarstwa Krajowego (BGK). The Fund’s resources are endowed from lenders’ contributions, in proportion to the size of portfolio of mortgage loans with delay in repayments of principal or interest exceeding 90 days, as well as from support returns and incomes from investing the Fund’s free resources. To obtain support, an appropriate application must be submitted to the bank where the loan is repaid. Importantly, borrowers with loans in both Polish and foreign currencies can count on support.

Pursuant to the Act, support is granted if at least one of the conditions is fulfilled:

• at least one of the borrowers will lose the job and has a status of an unemployed person,
• monthly loan servicing costs exceed 50% of the household’s income,
• the income after deducting the instalment does not exceed:
• o in case of single person households – double of the adjusted amount referred to in Art. 8 sec. 1 point 1 of the Act of March 12, 2004 on Social Assistance (i.e. Journal of Laws of 2021, items 2268, 2270, of 2022, items 1, 66), currently PLN 1 552,
• o in case of multi-person households – double of the adjusted amount referred to in Art. 8 sec. 1 point 2 of the Act of March 12, 2004 on Social Assistance (i.e. Journal of Laws of 2021, items 2268, 2270, of 2022, items 1, 66), currently PLN 1 200 per person.

The criteria are strict, even after taking account of significant growth of interest rates. In case the premise, under which the borrower obtained the support, ceases to exist before the 36th month, the borrower is obliged to promptly inform the bank about it. On this basis, the bank suspends the payment of support. In addition, the period of transfer of funds will be shortened, if the object of credit is sold, the housing loan agreement is terminated, against the financed property acts of execution are taken or the loan is repaid.

The legislature has provided exclusion criteria for obtaining assistance:

• the borrower lost his employment on the initiative or through the action of the borrower himself,
• one of the borrowers has already received this type of support (exception: if support is no longer being disbursed and support has been disbursed for no longer than 35 months, the total support may be disbursed for up to 36 months),
• the mortgage loan agreement has been terminated prior to the application for such assistance was submitted,
• support is not allowable for the period when at least one borrower is entitled to an unemployment benefit under a contract of credit repayment insurance,
• during 6 months preceding the application for support, the borrower owned another dwelling: the borrower was an owner or had a cooperative right to a dwelling in a housing cooperative or had a claim for transfer of ownership or cooperative right to a dwelling in a housing cooperative.

The obtained support or loan to pay back the debt are repayable in 144 interest-free, equal monthly instalments. The repayment begins two years after the pay-out of the last instalment of the support or loan. Pursuant to the Article 19 sec. 3 of the Act: if a borrower repays 100 instalments without delay, the remaining part of the support instalments or loan for debt repayment is remitted. Due to this provision, the borrower may save PLN 22 000 having regard to the maximum allowable amount of support or loan.

According to the data provided by BGK: 1 161 support contracts for the total amount of PLN 31.5 million were registered until December 31, 2020. The Fund’s expenses include payments, remissions and commission remunerations. As for December 31, 2020, there were 14 728 support instalments paid out for the amount of PLN 18.9 million and the disbursed support in the amount of PLN 0.3 million was waived. The Fund received repayments of the disbursed support in the amount of PLN 1.4 million.

Considering the current economic conditions in Poland, increasing interest in the offered support in mortgage loan repayments is expected. It is worth mentioning that in case of problems with loan repayments, other options are also available, such as the so-called “repayment-free periods” when credit repayments are suspended, extension of the loan period aimed at reducing instalments, loans consolidation, and even declaration of a consumer bankruptcy. However, in the event of liquidity problems it is a good idea to start with talking with the bank.

Judyta Konopka
Project management specialist

Construction costs of apartments and houses depend on many factors, such as technology, cost of building materials, cost of work, cost of a construction project, building area or standard of an apartment or a house. From year to year, construction costs increase, which is mainly caused by rising prices of building materials, an increase in employment costs and a low supply of investment land, and hence an increase in land prices. Therefore, rising costs incurred by developers have an impact on the prices of apartments and houses. The extremely high rates per square meter of a dwelling are also affected by the demand, which is large and unsuitable to supply, both from investors and consumers, who after the outbreak of the coronavirus pandemic began to pay more attention to housing conditions.

According to the reports of the PSB Handel S.A. Group concerning changes in prices of building materials and home and garden equipment, prices in the period of January to December 2020 compared to the same period of 2019 increased by 1.4% on average. The stabilisation of prices of building materials ended at the beginning of 2021. In January 2021, the average year-to-year prices increase amounted to 1.8%, and in the following months a significant prices growth was observed. The chart below shows the average year-to-year changes in building materials prices in the period from January 2021 to January 2022.

GRAPH 1. AVERAGE CHANGES IN BUILDING MATERIALS PRICES Y/Y

source: own study based on PSB Handel S.A Group reports; no data available for August 2021

In the first half of 2021, prices grew at a moderate pace, to reach incredibly high values in the second half of 2021. In January 2022, the prices of building materials were 28% higher than in January 2021.

In the report of PSB Handel S.A. Group concerning changes in the prices of building materials and home and garden equipment, in January 2022 price increases were recorded in all 20 commodity groups, which are presented in the table below.

TABLE 1. CHANGES IN PRICES OF BUILDING MATERIALS IN JANUARY 2022 (CHANGE Y/Y)

COMMODITY GROUP	PRICES CHANGE (Y/Y)
thermal insulation	68%
oriented strand boards	54%
dry building	54%
walls, chimneys	27%
roofs, gutters	27%
house surroundings	22%
waterproofing insulations	21%
installations, heating	20%
interior finishing	18%
garden and hobby	17%
lighting, electrics	16%
ceramic tiles, bathrooms, kitchens	16%
tools	16%
joinery	15%
furnishings, household appliances	14%
construction chemicals	13%
decor	12%
automotive	10%
paints, varnishes	10%
cement, lime	6%

source: own study based on PSB Handel S.A. Group reports

Three commodity groups: thermal insulation, oriented strand boards and dry building stand out from the rest with an extraordinary scale of growth, at the level of 68%, 54% and 54%, respectively. Cement and lime prices increased by 6% in January 2022 compared to January 2021. The mentioned increase was the smallest of all commodity groups. However, due to growing costs of obtaining permits for CO2 emissions, limiting production by Polish companies and increasing import of these materials from countries outside the European Union, where CO2 emission restrictions do not apply, we can expect the increase in prices also in this group.

Confirmation of PSB Handel S.A. Group’s analyses are reports made by the Association of Façade Construction Contractors, which also underline the increase in prices of styrofoam and facade wool, belonging to thermal insulation. According to the analysis, a cubic metre of styrofoam in November 2020 cost PLN 100.00 and a square meter of facade wool with a thickness of 15 cm – PLN 30.80, while in November 2021 these prices were at the level of PLN 220.00 and PLN 58.50 respectively.

In 2021, there was also a very large increase in steel and glass prices, as well as the rising timber selling prices. In the statement of the President of the Central Statistical Office published in October 2021, the average selling price of wood for the first three quarters of 2021 was PLN 212.26 per 1 m3. In the same period in 2020 the price was PLN 196.84 per 1 m3. The increase in wood prices was a result of diminished supply of wood from the State Forests and increased demand from the construction sector, as well as from the large-scale wood-using sectors, such as furniture.

The rapid increase in prices of building materials had many causes. First of all this was due to a COVID-19 pandemic and 2020 economy lockdown, when the economy froze and orders for raw materials and building materials were significantly reduced. After reopening of the economy, the industry customers began buying up significant stock of materials to fulfil new orders. Increases in prices of construction materials were therefore a result of unfreezing the economy, increased demand and difficult imports of raw materials. Raw material troubles are being exacerbated by increases in gas, oil and electricity prices.

Prices of construction materials are rising, making it difficult for construction companies to operate. Increases will ultimately hit the retail clients. Construction companies with long contracts are forced to use their margins to cover the differences between their bids and the prevailing market prices. As a consequence, investments are becoming more expensive and the prices of flats, houses and commercial properties are rising.

Strong demand and low supply, rising land prices, high construction costs and the aforementioned increasingly expensive building materials cause the increases in property prices. According to the data in the statements of the President of the Central Statistical Office, the price of a square metre of usable floor area of a residential building in Q4 2020 was PLN 5 012, and in Q4 2021 – PLN 5 134.

According to the report of the Construction Calculators portal, costs of building a house to developer status in January 2022 were:

• approximately PLN 342 000 net – a single-storey house of 100 square metres,
• approximately PLN 410 000 net – a house with an attic of 140 square metres,
• approximately PLN 470 000 net – a house with a basement and attic of 195 square metres.

In January 2021 these costs were respectively: PLN 300 thousand net (14% increase), PLN 358 thousand net (14.5% increase) and PLN 412 thousand net (14% increase).

The latest AMRON-SARFIN Report highlights that the several increases in NBP interest rates, high and rising inflation and the political situation did not affect the stability of the housing market in Q4 2021 and housing prices in most major Polish cities continued to rise. The highest price increases in Q4 2021 compared to Q3 2021, reaching 3.34% and 3.20% respectively, were observed on the Wroclaw and Warsaw markets. The average transaction price of 1 sqm of a flat in Q4 2021in Warsaw was PLN 11 082. In the corresponding period of 2020, the price was at the level of PLN 10 081, so the annual price increase was 9.93%. This was the lowest increase in average prices among the largest Polish cities. Cracow recorded an increase of 15.85%, Wroclaw – 13.42% and Gdansk – 13.14%.

Supply problems, high logistics and energy prices, and the new economic reality of inflation exceeding 9%, as well as increases in the NBP reference rate are causing difficulties in predicting prices of raw materials, building materials and apartment and house prices in 2022. The consequences of the war in Ukraine are also undefined and will certainly affect not only the raw materials and real estate markets, but all areas of life.

Monika Kubisz
AMRON System Coordinator

On November 15, 2021, the President of the Republic of Poland signed the Guaranteed Housing Loan Act, which is a part of the “Housing without down-payment” programme that comes into force in 2022. New regulations are designed to make home financing more accessible to people who are creditworthy but have not built up savings of 10-20% of the value of the purchased property. The Act introduces a number of conditions that must be met in order to benefit from the programme.

In 2013, the Polish Financial Supervision Authority, with the amendment of Recommendation S, obliged banks to require borrowers to gather at least the minimum down-payment, and according to Recommendation 15.7, the minimum level of the recommended own contribution increased year by year: in 2014 it was 5%, in 2015 – 10%, in 2016 – 15%, and from 2017 – 20%. The above-mentioned provisions of Recommendation S tightening the requirements for granting mortgage loans by banks, established own contribution as a mandatory requirement to be met by the customer when applying for a loan, leaving, however, the possibility for banks to grant loans with a higher (max. 90%) LtV ratio provided that the part of the loan exceeding the level of 80% LtV have to be insured. Nevertheless, for many potential borrowers, raising funds in this amount is still a barrier unable to overcome. “Housing without down-payment” is intended to facilitate the purchase of the flat without capital.

The government emphasizes that this is not a social programme, and the new regulations are targeted at people with stable incomes. The programme covers the purchase of an apartment or single-family house on both the primary and secondary market, as well as the purchase of land property for construction and finishing of a detached house. New act introduces price limits of 1 sqm of property that can be credited. Depending on the location, only some apartments will qualify for the programme. The objective is to prevent leading to an even greater increase in prices on the real estate market after introducing the programme.

The guaranteed housing loan will be available to persons or households that do not have ownership title to a dwelling or single-family house, or a cooperative ownership title to any property, and have not transferred such title by donation during the five years preceding the application for the loan. Families with children are an exception: in case of two children it is possible to own an apartment or a detached house of up to 50 sqm, in case of three children the usable floor area of the property may not exceed 75 sqm, for four children it may not exceed 90 sqm, while in case of five or more children there are no restrictions as to the usable floor area. Furthermore, the programme is addressed to persons who hold Polish citizenship or are in a relationship with a person holding one. What is important, no age limits have been introduced, as applied to previous housing programmes, and there is no exclusion of past property owners from the programme.

Under the programme, the borrower may apply for Bank Gospodarstwa Krajowego (BGK) to guarantee a part of the mortgage loan amount that without this certification should be paid by the borrower as down-payment. The amount will not be financed by the State, but will be included in the loan amount. The borrower benefiting from the programme, when repaying the liability to the bank, will first pay off the amount constituting the down-payment covered by the guarantee. The main purpose of the programme is to grant a loan for the entire amount needed to purchase the property. If the borrower is unable to repay the loan, BGK will repay the loan only up to the amount of the guarantee of the down-payment in the bank that granted the loan. Pursuant to the provisions of the Act on Guarantees Issued by the State Treasury and Certain Legal Persons, upon payment, BGK enters into the rights of the guarantee beneficiary and may pursue claims related to recovery of the amount paid from the borrower.

The amount covered by the BGK guarantee may range from 10% to 20% of the real estate value, but cannot be higher than PLN 100 000. BGK will charge a one-off commission fee of 1% of the amount covered by the guarantee. Minimum lending period of the guaranteed housing loan should be at least 15 years, and the loan itself can only be granted in Polish currency. “Housing without down-payment” does not state the limit on the usable floor area of the property, for the purchase of which the loan is requested. Guaranteed housing loans will be granted on commercial terms by banks that will enter into an agreement with BGK.

As provided for Act, borrowers who receive assistance under the programme may additionally receive a subsidy to guaranteed housing loan. The condition for obtaining the so-called ‘family repayment’ is enlargement of the family during the loan agreement period. In case of a second child, the State will provide loan subsidy of PLN 20 000, while in case of a third and subsequent child – PLN 60 000.

Despite the current down-payment requirement, interest in mortgage loans has been increasing for years. This was significantly influenced by the National Bank of Poland’s Monetary Policy Council that maintained interest rates at record low levels since March 2015, subsequently reduced during the COVID-19 pandemic. According to the data presented by Credit Information Bureau, a slowdown of the upward trend on the market was observed only in 2020, when 219 300 mortgage loans amounting to PLN 63.889 billion were granted. In 2021, a record number of 271.8 loans amounting to PLN 88.737 billion were granted.

CHART 1. VALUE AND NUMBER OF NEW HOUSING LOANS ANNUALLY IN 2016-2021 ACCORDING TO CREDIT INFORMATION BUREAU

source: self-study based on the data of Credit Information Bureau

Since October 2021, the National Bank of Poland has already raised interest rates five times. The reference rate, which is the National Bank of Poland’s main rate, is currently 2.75%, and its lowest level was maintained by the Monetary Policy Council during the pandemic for a year and a half at 0.10% per annum. Further increases are possible in the near future in order to bring down rising inflation. It shall affect interest rates on loans and thus their availability and lower potential creditworthiness of borrowers.

Despite the increasing number of housing loans, access to own housing is still a problem for a large part of Polish citizens. Growing real estate prices and the spectre of rising mortgage loan interest rates may have a dampening effect on demand on the real estate market in the near future. The Guaranteed Housing Loan Act will come into force on May 27, 2022, and the solutions contained therein may be an opportunity to stimulate demand on the real estate market in the coming years.

Marta Polkowska
SARFiN System Data Administrator
Senior Maintenance and Development Specialist

The ‘green energy’ gains popularity in Poland, as it is related to considerable environmental benefits and at the same time – significant savings in energy costs compared to costs of traditionally produced energy. As the prices of electricity and coal has been constantly increasing, renewable energy appears to be more and more attractive.

Renewable energy sources are all the sources used for production of electric and heat energy, the long-term use of which does not result in significant deficit or which may be renewed in a short-time. The available renewable energy sources include:

• hydro plants that use the gravitational energy of water,
• photovoltaic power plants that use a solar radiation,
• geothermal plants that use geothermal energy from the earth,
• wind power installations that use a wind energy,
• biofuels and biomass eg. of plant origin.

Renewable energy in Poland

Coal is still the dominant source of energy in Polish electric industry, however the share of renewable sources increased from 19.74% in 2019 to 21.60% in 2020. The renewable energy sources in 2020 in Poland were mostly solid biofuels (71.61%), wind energy (10.85%) and liquid biofuels (7.79%). The total energy value of the primary energy from renewable sources in 2020 in Poland was equal to 524 113 TJ.

CHART 1. STRUCTURE OF THE ENERGY FROM RENEWABLE SOURCES IN 2020 IN POLAND IN TERMS OF SOURCES

source: stat.gov.pl

One of the objectives of the Polish Energy Policy until 2040 is the development of renewable energy sources. Until 2030, the share of renewable sources in gross final energy consumption is planned to account for at least 23%. From the other side, also more and more conscious attitude towards renewable energy of Polish society is presently observable. According to the public opinion survey ‘Poles’ attitude towards energy and energy saving’ carried out by CBOS, 22% of respondents consider installation of technology or devices using renewable energy sources. So far, the most popular solution is the installation of photovoltaic panels. According to data published by the Polish Energy Regulatory Office, number of new such installations at the end of 2020 amounted to approx. 460 thousand. The power of micro-installations increases on an annual basis – from 2019 to 2020 its value tripled.

Subsidies for renewable energy devices

As long as the energy is produced from non-renewable sources, the electricity price will be constantly increasing, as it is mostly affected by growing costs of energy production based on coal and related carbon dioxide emission fees. Use of renewable energy sources brings numerous benefits, such as energy security and independence, lowered electric bills and limited CO2 emission. Use of renewable energy sources is also supported by numerous subsidies – the list of programmes and benefits available for households in 2022 include:

Clean Air – one of the most popular programmes aimed at improving the air quality and reducing emission of the greenhouse gas by means of exchanging the heat sources and improving the energy efficiency of buildings. The programme is intended to provide a financial contribution for, among others, exchanging the old heat sources (solid fuel boilers and stoves) with new ones that meet the programme’s requirements, as well as thermal insulation of building partitions, replacements of doors and windows, installation of renewable energy sources (solar collectors and photovoltaic devices), instalment of mechanical ventilation with heat recovery systems. The programme is addressed to owners of detached houses already completed or under construction. The maximum amount of the subsidy in 2022 is equal to PLN 69 000 – the actual funding sum depends on monthly incomes per person in the household. From the moment the programme started to operate, the amount of PLN 2 336 818 070 was disbursed as subsidies under the programme.

My Electricity – the programme’s main objective is to increase an energy production from photovoltaic micro-installations. The financial support is intended to cover max. 50% of costs (not exceeding PLN 3 000) of purchase and installation of photovoltaic devices (PV) of 2-10 kW. During two previous editions, the financial support was granted to over 240 thousand of applicants and it amounted to PLN 1.159 million in total. The programme has contributed to reductions in CO2 emission by over 1 million tonnes.

My Heat – the main purpose of the programme is supporting the development of individual heating and prosumer energetics by using heat pumps in single-family houses of higher energy standard. The financial subsidy may be granted in the amount of up to 30% of costs related to purchase and installation of heat pumps, but not exceeding PLN 21 000.

My Electric Car – subsidy for purchase or leasing of electric passenger or light commercial vehicles. The maximum value of the subsidized car may not exceed PLN 225 000. In case of natural persons, the amount of the support depends on whether an applicant represents a family with the Large Family Card (financial support is up to PLN 27 000) or not (up to PLN 18 750).

Warsaw subvention – financial means obtained under the subvention may be spent on renewable energy installation and modernisation of the boiler room (exchanging a solid fuel boiler into a heat pump, a gas boiler, electric heating devices or connection to the heat network). Value of the subvention amounts to maximum PLN 40 000.

Stop Smog – programme aimed at reducing emission of atmospheric pollutants, improving the air quality and increase in energy efficiency of buildings through exchanging or decommissioning of carbon-intensive sources of heat into low greenhouse-gas emitting technologies, thermo-modernisation of single-family houses and connecting to the heating or gas network. It is addressed to less-wealthy beneficiaries. The subsidy may be not higher than 70% of the total modernisation costs and the average cost may not exceed the amount of PLN 53 000.

Thermo-modernisation tax exemption – this instrument enables the tax deduction of costs related to the detached house’s thermo-modernisation, which has started after January 1, 2019. Right to tax deduction is applicable to every tax-payer separately, which means that in case of a married couple every spouse in entitled to deduct the maximum amount of PLN 53 000 provided that the invoices documenting purchases related with the thermo-modernisation are made in the name of the spouse, who deducts those costs. If the invoice is made out in the name of both spouses, each spouse is entitled to deduction of 50% of documented costs within the limit of PLN 53 000 per person.

Thermo-modernisation bonus – a subvention for repayment of a loan taken out for the purpose of thermo-modernisation amounting to 16% of costs of thermo-modernisation works or 21% of costs of thermo-modernisation including installation of micro-renewable energy devices.

My Water – a programme aimed at increasing water retention on private properties and in the effect – in water savings. The subvention may be spent on covering of up to 80% (max. PLN 5 000) of costs of purchase and installation of equipment for the rainwater recovery, retention and recycling of grey water in individual houses.

Provincial, municipal and city subventions – the amounts and eligibility rules differ depending on a particular programme implemented by particular province, municipality or city/ town.

None of the above programmes excludes beneficiaries of the other programmes. One may profit from eg. the thermo-modernisation tax exemption and subsidy under the Clean Air programme and My Water subvention. The detailed rules on every programme are available at every particular programme’s website.

The advantages of using the renewable energy sources are indisputable, so the decision on investing in such devices should not be put off. The sooner your house is equipped with renewable energy sources, the sooner you will experience the positive aspects of that investment (eg. in case of photovoltaic devices, the investment payback period is approx. 8-10 years). In addition, it should be remembered that such an investment reduces the human impact on natural environment.

Klaudia Jastrzębska
AMRON III Development Senior Specialist, GIS Analyst

The year 2021 did not bring the end of the COVID-19 pandemic, but it did bring many other significant events. It was another period of record performance on the residential real estate market in Poland. A variety of factors contributed to the dynamic increase in residential premises over the past year. As in previous years, buyers’ interest continued to grow and developers struggled to meet the demand. The good situation on the market was also influenced by factors in its environment, including, among others, a significant increase in inflation, a dynamic increase of prices, especially of construction materials and land for development, as well as changes in the situation on the housing loan market at the end of the year.

Housing market and housing prices

For most of the year, the residential market continued the trend of dynamic growth of transaction prices. Due to the constancy of factors shaping the situation on the market, including above all low interest rates, it was difficult to expect the prices decrease or even stabilization. In Q1 2021, the dynamics of quarterly changes of residential prices was similar to that of Q4 2020. However, dynamic growth was recorded in Q2 and Q3 2021. At the end of September 2021 the average prices on the individual monitored markets increased by 8 to 14% compared to the same period a year earlier.

The price growth rate in Q3 2021 was similar to that of the end of 2019. The average transaction price in Warsaw in third quarter of the year amounted to 10 738 PLN/m2 and was higher by 5.03% in relation to the value recorded in the previous quarter and by 12.23% in relation to the same period of 2020. At the same time, price increases in the other locations monitored by the AMRON Centre ranged from 4% to almost 8%. The highest quarterly price dynamics were recorded in the Katowice Metropolitan Area. Slight decreases occurred only at the turn of 2020 and 2021 and only in 2 out of the 8 surveyed cities. The highest price decrease in that period was recorded in Poznan – by 1.45% q/q, after which in the following quarters prices in that city increased by nearly 5%. According to preliminary data from the Q4 2021, changes in demand related to the rise in interest rates implemented by NBP (Central Bank of Poland), did not significantly affect the price dynamics at the end of the year.

CHART 1. AVERAGE PRICES OF 1 SQ.M. OF FLAT IN MAJOR POLISH CITIES

source: AMRON System

The developers sector, in an attempt to make up for delays from earlier periods, in Q2 last year set another quarterly record for the number of newly constructed apartments – 47 552, thus exceeding the highest number ever recorded in Q3 2020 – 40 283. The result achieved by developers in March 2021 – 17 821 – was the highest monthly number of newly constructed apartments in the history of the real estate development sector in Poland.

In Q3 2021, developers signalling increasingly difficult access to new land for development started construction of 15.15% fewer flats than a quarter earlier. The number of dwellings, the construction of which has started, was practically at the same level as a year ago. At the same time, developers obtained 8.20% fewer building permits than in the previous quarter, although the number was 17.85% higher than a year ago. It should be noted that the second half of the year brought a clear downward trend in both the number of apartments, the construction of which has started and the number of apartments for which building permits were obtained. These drops are also visible in the data for October and December. However, it should be emphasized that despite the noted declines, the level of developers’ production remained at a high level.

On the other hand, an increase was recorded in the category of apartments completed. According to data provided by the Central Statistics Office (GUS), in the period from January to the end of October 2021, more housing units were completed than a year earlier. In the July-September period, there were 36 580 units, i.e. 18.65% more than a quarter earlier. November 2021 set a monthly record with 16 197 flats completed. Compared to October, this was an increase of as much as 34%, and compared to January – by as much as 57%. This value is similar to that of May 2020. As in the previous year, the monthly dynamics of changes in this category was very volatile – changes ranged from -24% to +34%.

CHART 2. RESULTS OF THE DEVELOPERS’ SECTOR IN 2021

source: Central Statistical Office

Situation on the housing loan market

Although June 2021 brought a slight tightening of lending policy criteria, mainly due to the implementation of the amended Recommendation S, the trend of dynamic growth of lending observed in the first quarters was not halted. The low interest rates maintained until the fourth quarter – at the level of 0.1% – encouraged people to take out relatively cheap mortgage loans and were the main factor shaping the economic situation on the housing market. It was not until the fourth quarter of 2021 that the housing loan market changed. On October 6, 2021, in order to slow down the growing inflation and drastically rising prices, the Monetary Policy Council decided to increase the NBP reference rate by 0.4 percentage points, i.e. to 0.50%, for the first time in 9 years. In the following months, the Council decided to take further steps – as of November 4 , the NBP reference rate was 1.25%, and on December 9 it was already 1.75%. However, the decisions taken towards the end of the year did not have a significant impact on mortgage financing results for the full year. Last year’s the results of the housing loans segment were the highest in the history. Banks granted in total over 200 thousand new housing loans with the highest value ever recorded. The total value of the housing loan portfolio in Poland exceeded PLN 500 billion for the first time and the number of active loan agreements increased to 2.5 million. Thus, the size of the lending activity exceeded our earlier forecasts.

However, rising interest rate levels will be a key factor shaping both the housing and mortgage markets in 2022.

Price increases not only on the real estate market

Poland’s consumer inflation rose to 8.6% year-on-year in December 2021, according to the Central Statistical Office. This is the highest reading in 21 years. The rising price level in the past year prompted many people to invest their savings in real estate.

In addition, high inflation has clearly affected the prices of construction materials and labour. Preliminary data from the Central Statistical Office indicate that in September 2021, the cost of construction and assembly production increased by 4.9% compared to the same month last year, and compared to August 2021 – by 0,7%. Compared to September 2020, the cost of building construction increased by 5.5 percentage points. According to a report published by Grupa PSB Handel S.A., prices in September 2021, compared to September 2020, increased by 21.7% on average. Increases were recorded in all groups of goods. The highest increase was recorded in the prices of OSB boards (+124.7%), drywall materials (+60.1%) and thermal insulation (+53.1%). The availability of materials was also a problem. This resulted in extended construction deadlines or their suspension by individuals. In some cases, it resulted in exceeding budget possibilities, as well as sometimes the possibility of fulfilling the declarations given in contracts with banks.

Rental market

A clear reversal of the 2020 trend was evident in the residential rental market in 2021. In Q3 2021, there was also observed a marked turnaround in the year-long downward trend in rent rates across all surveyed locations, primarily related to students returning to full-time classes. Compared to the average rent rates recorded in the second quarter of 2021, the highest increases were recorded in Warsaw and Cracow – by 8.54% and 8.22% respectively. Compared to the same periods a year earlier, rents increased the most in the same two cities – by 4.59% and 3.04%, while the least in Poznan. This might be due to the fact that in this city the quarterly changes in average rents were not as significant as in other locations. Despite the quarterly increases, rental prices in all analysed locations in Q3 2021 had not yet reached the values of the second quarter of 2020. With another wave of pandemonium rising in the fourth quarter, the government has not decided to introduce strong restrictions that could affect the rental market. According to preliminary data, it can therefore be concluded that during this period we saw further increases in rental rates in the markets of the largest Polish cities.

CHART 3. AVERAGE MONTHLY RENT RATES FOR A FLAT IN SELECTED CITIES

source: AMRON System

Polish Deal and other changes in law

When analysing the factors that may affect the real estate market in the new year, one cannot overlook the adopted government programs listed in the Polish Deal in 2021. It is difficult to estimate today the potential impact of these solutions on rental housing, as well as on mortgage lending. In the opinion of the AMRON Centre, these solutions are not conducive to housing price deceleration. For the time being, it is also difficult to estimate how the idea of guarantees for borrowers, i.e. loans without “own” contribution, will affect the situation on the real estate and mortgage market. A loan with such a guarantee will have a higher margin, and due to the lack own contribution, its amount will be higher, which will increase the amount of monthly charges. Opening up to customers with increased risk, as this programme is addressed to people who did not manage to save their own money, will necessarily be cautious. However, increased housing availability is needed and requires the necessary systemic solutions – long-term and universal.

It is also useful to mention here that in 2021, as part of the Polish Deal, the Law on Construction, Planning and Spatial Development was amended. From January 1, 2022 it gives the possibility to build a house up to 70 m2 without a building permit. It will be enough to submit a construction notification with a technical design to the relevant authority. Moreover, it will not be required to employ a construction manager and keep a construction log.

The year 2021 also marks a new development law. The changes resulting from the Act concern mainly the developers and the banking sector. Under the new legislation, banks will have a greater responsibility for proper settlement of investments and disbursement of individual tranches and funds to developers. A Developer Guarantee Fund has also been created, which comes into force on July 1, 2022. As part of the fund, developers will be required to pay an additional contribution calculated on the transaction price of an apartment. The purpose of this fund is to increase protection of purchasers of residential properties. The act also regulates the functioning of the so-called reservation contracts.

PRS sector

The passing year on the real estate market was certainly a time of growth for Private Rented Sector. At present, in Poland there are about 6 100 apartments under the already operating PRS entities and approx. 2 000 of which are in the resources of the Housing for Rent Fund. Thus, the share of the PRS sector in the rental market accounts for about 0.34%, but it is growing dynamically and it is a chance for a professional rental market to develop. Already over 24 600 units have been contracted by the funds or are under construction. Institutional rent is an alternative for people who do not want to be tied to a given place for years or with no creditworthiness. Funds invest mainly in large cities, such as Gdansk, Katowice, Cracow, Lodz, Poznan, Wroclaw and Warsaw.

Agnieszka Bartoszewska
Real Estate Market Analyst

The government plans to change the regulations on expropriation and compensation for expropriated property. Intended changes include amendments to the act on real estate management, as well as to a number of special acts (energy, road and rail). The main purpose is to resign from so-called principle of benefits in the valuation of expropriated property, determining the amount of due compensation.

According to the provisions of Chapter 5 of the act on real estate management that regulates the expropriation issues (more specifically it is the article 134), the basis for determining the value of compensation for the expropriated property is its market value. If this cannot be determined because such properties are not traded often enough, the basis for determining the amount of compensation should be its replacement value. Valuating the expropriated real estate, the appraiser should take into account its type, location, use, purpose, condition and the current prices of comparable properties. Points 3 and 4 of Article 134 are the most important in terms of planned changes, as they stipulate that the value of real estate for the purposes of compensation is determined for its current use, if the designation of the property area, consistent with the purpose of expropriation, does not increase its value. However, if the designation of the property area, consistent with the purpose of expropriation, increases its value, the value of the property for compensation purposes is determined according to the alternative use resulting from this designation. This means that, according to current regulations, the appraiser who evaluates the real estate should make a choice that takes into account purpose of the real estate that is more favourable from the point of view of its value.

Despite the fact that the current solution seems to be beneficial for the owners of expropriated real estate, it has significant disadvantages. The most important of them seems to be limitation of the amount of potential compensation for expropriation, even if it does not cover the costs of searching, purchasing and moving to a new property. The new solution states that the amount of compensation is to be based on the market value of the property (taking into account current use of the property), and the owner of the expropriated property will be additionally paid a bonus, constituting a lump sum for the costs of searching for and moving to a new property. The amount of this bonus is to be 10% of the property value, but in case of expropriation of buildings and premises, this amount will be doubled. A favourable solution included in proposed changes is also granting a civil claim for the expropriated property, if the compensation does not cover the actual damage related to the expropriation. The currently binding regulations do not provide for such possibility.

A civil claim procedure will be important especially for expropriated entrepreneurs. Planned changes provide that the mechanisms allowing for increasing the compensation are to be limited only to residential real estate. It seems that for entrepreneurs, who want to restore their businesses in other locations, receive reimbursement of the costs of moving or obtain compensation for lost profits only judicial path will remain.

The aforementioned legal changes are related to the construction project of the Central Communication Port and the resulting necessity to expropriate some of the people living in its future area. According to recently released information, the location of the CPK, which is planned to be built by 2027, has already been determined. The airport is to cover an area of ​​74 square kilometres in three municipalities – Baranow, Teresin and Wiskitki. The necessity of expropriation, total or partial, will apply to residents of 20 towns and villages located in these communes. The voluntary acquisitions programme is still ongoing, but so far relatively little part of the land has been acquired – only 10 hectares. Compulsory expropriations are to begin in the new year.

Jerzy Ptaszyński
Research and Market Service Director

More and more new technological solutions are applied in the construction industry, just as in other sectors of the economy. One of such solutions is BIM technology. Implementation of BIM already in the early stages of an investment and its consistent use during the project can allow for easy integration of all the components of the investment stage, resulting in the subsequent efficient management of the property. Property management is not just about overseeing the current condition of a property, but also planning for future goals leading to property maintenance and development. Collection and processing of data to obtain information is an important activity during rational investment planning and property management. Therefore, the use of the BIM concept is a great help both at the management stage, and above all at the investment stage.

BIM – definition

The concept of BIM is a very broad and has many meanings. The shortcut BIM is translated in several ways:

• Building Information Model – model of information about a building object;
• Building Information Modelling – modelling information about a building object;
• Building Information Management – managing information about a building object.

The key word in the above acronym expansions is information. BIM is a process or methodology for managing information about construction objects. BIM consists of the methodology and the tools used to achieve the investment objectives. The BIM methodology is based on a digital representation of a building object in detail, at various stages of the object’s “life”. Its aim is to integrate the input and output information about the object, which enables easier operation and subsequent management of it. The process integrates data from the planning, design, and construction phases to maintenance, management, and even demolition. The methodology improves the organization and management of documentation related to the construction project. BIM makes it possible to create a certain simulation of the above-mentioned processes, which makes it much easier to control the implementation of particular stages during the whole investment.

In the BIM process, a database is created about the object during construction. Based on it, it is possible to control the cost and schedule of activities related to the investment, as well as the management of the building. Such a model is a detailed source of knowledge about the building. For various investments, including real estate, BIM can also be used to estimate operating costs and benefits. It also allows certain construction decisions to be made. BIM enables efficient exchange of information between industries involved in the investment and construction process. To be able to fully effectively reap the benefits of implementing the technology, it is worth creating a plan assuming individual actions, implementation stages, taking into account the time frame. The BIM model can be created at different levels of detail, depending on the needs and the desired effect.

BIM in property management

The main task of BIM in property management is to optimize costs, to plan sustainable operation and to develop a real estate during the operation stage. BIM methodology assumes the creation of an extract copy of a building in a digital version, which is a database about the building. A 3D model created in accordance with the assumptions of the BIM methodology is not only a “drawing” of the building, but is a description of the features of the building’s elements. During the creation of such a model, information is collected about the relationships between individual building elements. The resulting database contains detailed data about e.g. the location of windows, doors, their number, surface, or about the entire power grid and others. It can also contain data about materials of the components, their properties, etc. As a result, it is possible to easily estimate costs related to the use of materials, construction and installation of subsequent elements of the building object.

The benefits of using BIM in property management include, first of all, easier flow of information. For example, the collection and storage of information about the operation of technical installations, about planned inspections of installations and similar key data, facilitates the organization of work and can have a significant impact on reducing operating costs. The software used with the BIM methodology in property management provides insight into current and historical data on the building, installations and other infrastructure elements. The insight into historical data facilitates the simulation of future events. It is possible to plan costs of energy supply, to plan actions in case of emergency. Having such data integrating different parts of the facility, one can accelerate the reactions in case of various security incidents. It is important to correctly implement BIM at the investment and construction stage to easily manage all installations, energy, and ultimately increase safety. It also makes it easier to plan various modifications, renovations and forecast as well as reduce the costs associated with them. The use of this technology in management will also enable the presentation of changes resulting from renovations or other events that cause changes in the facility.

The BIM model can be useful not only in the work of managers and managing organizations, but it can also facilitate a potential tenant in the implementation of the apartment furnishing design, which will ultimately avoid later problems with the organization of the space. It also makes it possible to determine operating costs during the lease. Having a BIM model also facilitates the implementation of others, for example, in case of a change of investor, contractor or manager, who, thanks to the use of technology, will have a holistic view of the construction investment at every stage.

The BIM model used in property management can be a continuation of the model created during the investment and construction phase. However, this is not always possible. BIM can also be implemented for an existing building. This is more difficult, it would be necessary to make an accurate inventory of the existing building and make a digital copy of it – a 3D model.

The use of BIM technology in property management, as well as at the investment stage, has many advantages. However, the disadvantages of this methodology should also be mentioned. One of the main disadvantages is that the implementation of the technology can be quite expensive, and the modelling of the property itself can be a complicated, labour-intensive, and therefore time-consuming process. As a result, the technology may be met with reluctance by users who are accustomed to paper versions of various types of documents.

BIM in the world and in Poland

All over Europe, the implementation of BIM is becoming more and more common. The use of new technology contributes to economic growth. One of the first countries that started to implement BIM technology in public projects was the United Kingdom. Several years ago, BIM was used there from the early stages of investment mainly in the private sector, and since a few years also in the public sector. Then we should mention Germany, France and Scandinavian countries, where the use of BIM technology is also quite common. Outside Europe, it is worth mentioning the USA, where with time also organizations operating in the public investment sector started to use BIM to manage construction investments.

In Poland, there are no requirements or obligation to use the BIM methodology yet, but it is worth remembering how many advantages the implementation of this technology brings. In 2020, the Ministry of Development and Technology published a manual ‘BIM Standard PL’ on the principles of implementing cubature investments so that they comply with standards and construction law. Currently, activities are carried out to popularize the use of the technology and standardize its implementation in public investments. Definitely, the interest in BIM is growing in Poland. Companies operating on the Polish construction market often develop their own standards and use BIM technology during their construction investments.

Summary

The aspects of the BIM concept presented in this article are only a part of a rather broad topic that is constantly developing and gaining popularity in our country. A number of advantages of implementing BIM causes an increase in interest in this methodology. While familiarizing oneself with the operation and possibilities offered by this technology, one should not forget about its disadvantages. Increasingly widespread use of the technology may contribute to the emergence of increasingly complex and intricate building structures.

Małgorzata Kwiatkowska
Maintenance and Development Junior Specialist

For most people, buying a flat is a moment in life that evokes a lot of emotions. However, before you move into your new dream apartment bought from the developer, a technical acceptance of a flat must be conducted. This is the last and the most important step before receiving the keys. What is a technical acceptance of a flat and why is it important? You will find out this in this article.

What is the technical acceptance of a flat?

The technical acceptance of a flat is a buyer’s verification if the developer has completed the flat according to the developer agreement, as well as the applicable regulations and standards. During a technical acceptance of a flat, a protocol is being written down, where all defects, shortcomings and contradictions with the project and standards are listed.

The rules of buying flats and houses on the primary market have changed in 2011 when the act on protecting the rights of purchasers of apartments and houses entered into force.

According to this act, the following persons are involved in a technical acceptance of a flat:

• a buyer or his/her representative (obligatory),
• developer or its representative (obligatory),
• representative of the main contractor of the building (non-obligatory),
• subcontractors, producers of e.g. windows, doors (non-obligatory),
• an expert hired by a buyer (non-obligatory, but recommended).

Alone or with a specialist?

Certainly, from the buyer’s perspective, a technical acceptance of a flat is far more difficult. One of the basic mistakes during the individual technical acceptance of a flat is the cursory inspection. It should be remembered that the independent assessment of the technical condition of the property requires prior preparation and the appropriate equipment. Being the owner of the apartment and carrying out a technical acceptance of a flat without the professional help , you can be guided by the emotions associated with the purchase. Sometimes it can be an obstacle in the correct assessment of the technical condition of a flat or house.

During a technical acceptance of a flat, you should check all rooms and areas meticulously. Moreover, do not yield to pressure from the developer’s representatives. The advantage of self-made technical acceptance of a flat is that you will get to know your future apartment in more detail.

Technical acceptance of a flat, house or commercial premises with the help of a specialist should be based on the technical knowledge and experience of the engineer. Such a person should be familiar with the construction law, applicable standards and building principles. In addition, such a specialist should have appropriate preparation and skills for professional customer support, for example in conducting talks and negotiations with the developer’s representatives. The experienced specialist will know what needs a special attention.

How to prepare for a technical acceptance of a flat?

When arranging the day of a technical acceptance of a flat, remember that the meeting should be held during the day. Daylight will enable you to see any scratches or cracks on the walls.

A the time of a technical acceptance, the flat must be cleaned. You have a right to expect that all elements of the apartment will be visible and accessible. It’s hard to check the window when you can’t see anything through it, or when the floor is covered with a pile, or the ventilation riser is not finished. In such or similar case, you are not obliged to proceed the technical acceptance.

In purpose to carry out the tasks related with the dwelling’s technical acceptance, a professional equipment will be necessary. If you are supported by a professional engineer, all needed tools will be provided.

During the acceptance proceedings, a written report is being prepared, so remember to have a pen and a writing pad with you. It is also good to have a flashlight so that you could check every nook and cranny, even the darkest one.

What to check during the technical acceptance of a flat?

First of all, remember that you should not rush when the apartment is inspected. Check all items carefully to avoid possible future problems. According to the applicable regulations, the buyer may spend as much time as he or she needs in purpose to detect all defects and non-conformities unhurriedly.

At first, check if all rooms have been built according to the design. Measure the area of each room. Usually, the contracts provide error margins, but the area of the flat should not significantly deviate from the area specified in the contract.

Then you can proceed to check the individual elements of the apartment, i.e.:

• execution of walls, plasters and floors,
• execution and installation of windows (including window panes and window sills), railings, balustrades, doors,
• plumbing and electrical installations,
• location of water and sewage connections in accordance with the technical plan,
• ventilation,
• central heating and radiator installations,
• connection to optical fibre and installations enabling to receive terrestrial and cable television, as well as radio and satellite television (each apartment in a multi-family building built after 2013 should have such elements).

The list of things and installations to be examined is quite long. Therefore, it is worth making a checklist that will enable to select already verified elements and not to miss anything. Mark any defects found, e.g. with a painter’s tape, so that you will not forget about them when writing down the protocol.

Keep in mind that not only the apartment is subject to a technical acceptance, but also the associated premises, parking space, balcony or terrace. The location and appearance of the parking space and the basement should comply with the provisions of the developer agreement and their execution should comply with the standards. On the balcony, it is worth checking if there is a suitable slope to ensure water drainage.

The most common defects

The experience of professionals who support buyers during the technical acceptances shows that it is rare to find new flats without defects. They usually have minor flaws and damage that cannot be seen at first glance but should not be underestimated.

The most common faults and defects in new apartments include:

• scratched window panes and window sills,
• scratches, abrasions and other damages,
• lack of right angles,
• low quality of wall finishing,
• unregulated windows,
• leaking radiator.

Formalities after the technical acceptance of the apartment

Remember that all noticed defects and shortcomings should be precisely described in the protocol. Only the appropriate records in the protocol give you a guarantee that the found defects will be repaired at the developer’s cost.

According to the act on protecting the rights of purchasers of apartments and houses, within 14 days (starting from the date when the protocol was singed) the developer is obliged to provide a buyer with an official notice of defects recognition or a motivated declaration of refusal to recognise the defects. Recognised defects should be removed within 30 days from the date of signing the protocol. If the developer cannot fulfil that duty in 30 days, it is required to indicate a different date and explain the reasons for the delay.

After the works are completed, another date of the technical acceptance should be arranged in purpose to verify the rectifications.

Agnieszka Bartoszewska
Real Estate Market Analyst

Cities cover only 2% of the Earth’s surface, but they have a significant impact on the climate crisis. They generate about 70% of the world’s greenhouse gas emissions and have a large potential to gradually reduce this high number. Today, more than half of humanity lives in cities. This number is constantly growing – according to UN forecasts, by 2050 68% of the world’s population will live in cities, areas that are very vulnerable to the effects of climate change. The environmental impact will also increase. City dwellers will increasingly experience the effects of global warming in the form of extreme weather events such as violent storms, heavy downpours, very strong winds or high temperatures, which will have an impact on the socio-economic situation. On one hand, cities contribute to amplifying the climate crisis, while on the other, due to their high density of population, construction and infrastructure, they are highly exposed to its effects. The application of appropriate solutions and proper management of the urban tissue, mainly in the area of energy efficiency, waste management, sustainable transport and urban greenery management, can reverse this trend. Polish city authorities face a difficult challenge – it is necessary to undertake activities limiting the development of the climate crisis and adaptive activities in order to prepare the cities to changes that are its consequences. In connection with the desire to transform cities into places more bearable to live in and closer to nature, ideas and concepts arise – one of them is the ecological city conception.

ECOLOGICAL CITY – DEFINITIONS

Due to the multidimensionality of the concept, the definition of an eco-city is not uniform. The origins of the concept and models can be found in Ebenezer Howard’s idea of a garden city, which resulted from, among other things, paying more attention to the hygiene of urban life and consisted in creating a network of cities with a central unit, characterised by a high proportion of green areas and loose buildings, interconnected by a railroad line, thanks to which the distance between the centre and satellite towns could be covered relatively quickly. The concept of the layout of the cities with the central unit guaranteed the efficient functioning of the whole establishment, and thanks to the large green areas, it provided an opportunity for city dwellers to relax close to nature.

The ecological attitude in the field of architecture and urban planning has been popular for several years and the idea of creating environmentally friendly cities, in other words those which thanks to modern technological possibilities move towards maximum energy efficiency, has been created. The definition of an eco-city has been formulated, among others, by the Ecocity Builders organization, according to which an eco-city provides a healthy environment for its residents, without using more resources than produced, reusing treated sewage and water, without producing more waste than can be absorbed, with proper segregation and utilisation, and without toxic inhabitants’ activities towards themselves and their neighbourhood. The urban greenery is also an important aspect. Currently, it is difficult to indicate a city that would meet all the requirements, however there are more and more cities that are getting closer to this definition. The idea of ZERO-E cities (zero-emission cities) aiming at zero CO2 production is discussed more and more often. An example is the planned futuristic NEOM urban complex in Saudi Arabia.

ASSUMPTIONS OF AN ECOLOGICAL CITY

There are specific principles to follow when designing an ecological city. The basic principle and goal is to provide residents with the best possible conditions for living in the city. The expression “ecological” is often used interchangeably with the word “green” – that is why it is so important when organizing urban space to make it rich in green areas. With the growing effects of climate change, eco-friendly investments in the form of squares, boulevards and parks are becoming more and more popular – plants have the function of filtering the air from the excess of carbon dioxide, and due to the fact that they provide shade, they protect residents from the heat and surface heating. In addition, during heavy downpours, the soil in which the plants are planted has a greater capacity to absorb water, which translates into increased efficiency of sewer manholes. In addition to traditionally planted plants, a new trend has emerged, so-called vertical gardens, for example on the walls of buildings.

PHOTO 1. THE HALLES D’AVIGNON SHOPPING ARCADE IN AVIGNON, DESIGNED BY PATRICK BLANC

source: Ogrodosfera.pl

One of the very important branches of eco-cities are investments in eco-transport, which favour the dominance of urban public transport, cycling and walking, with a reduction in individual transport. Solutions based on systematic restriction of individual transport in central parts of the city through provisions in local spatial development plans, obstructed parking or traffic bans, are becoming more and more popular. Public transport (especially with electric or hybrid drive using renewable energy sources), as well as cycling and walking are becoming priorities. Therefore, infrastructure related to these modes of transport should be treated as key and developed in a rational way. The shift away from car to public/ bicycle/ pedestrian transport gives a chance for changes in the emission of pollutants, as well as in shaping of public spaces. “Park and ride” zones are also an efficient solution, in other words an integrated system allowing to park a car near a bus/ tram/ metro station and to continue a journey by public transport.

Reducing the use of individual transport is also supported by another basic principle of eco-city idea – a compact city. It becomes pointless and unprofitable to move around the city by car if the pedestrian infrastructure is very well developed in central zones, distances are short, and neighbourhoods in intermediate and peripheral zones are well connected by public transport and cycling. Organizing development in a compact way also directly contributes to increased energy efficiency, because it reduces human interference with the environment and pollutant emissions. It should be emphasized that the goal is to increase the quality of life of urban residents, so minimizing built-up space should be done in a sensible manner. In addition to compact development, self-sufficiency and diversity of functions to meet basic needs should also be kept in mind. The coronavirus pandemic also had an indirect influence on the development of this concept. Residents did most of their errands close to home or online, which was associated with an increase in the importance of the immediate neighbourhood and pressure to buy or rent a larger house. In the near future, this may translate into the development of local services, resulting in a reduction in the need to travel long distances.

A frequent pro-ecological practice to maintain compactness of development is the “recycling” of brownfield or degraded land, which is most often located in the central zones of cities. Abandoned/ unused buildings are adapted for housing, services, culture or other city-forming investments. Apart from preventing urban sprawl, the advantages of such a solution are, among others, the buildings’ access to the existing urban infrastructure, developed public transport and limited expansion of the road network. This is an approach that fits in with the ‘zero waste’ trend – buildings that are not in use, but have a durable structure, should be revitalised. Demolishing and building new facilities to replace old ones leads to increased waste production, which is inconsistent with an environmentally friendly attitude. Renewable energy sources are not only popular in transport – more and more often, such solutions are used in buildings that obtain energy from natural sources and are equipped with, for example, heat pumps and photovoltaic panels. This is very important in the context of maintaining the principle of covering energy needs with renewable energy sources.

An effective system of waste segregation and disposal is also a very important determinant of an eco-city. Actions in this regard should be taken at many levels, starting with educational programs for residents and ending with a well-developed urban infrastructure. Efforts should be made to minimize the production of waste and sewage, while the waste created should be recycled while obtaining biogas and compost.

EXAMPLES OF POLISH CITIES FOLLOWING THE ECO-CITY PRINCIPLES

Many Polish cities still have environmental problems, although there are a few examples that set standards for others and become an inspiration for other local governments. In the seventh edition of the Eco-city project several cities were awarded. The project is run by the French Embassy in Poland and the UNEP/GRID-Warsaw Centre, co-organised by Teraz Środowisko (Now Environment), the main objective of which is to exchange experiences between cities and promote best solutions.

One of the examples is Słupsk, where the local authorities have enriched neglected backyards located near multi-family buildings with greenery matching the surroundings in form of lawns or trees. The spaces were also equipped with street furniture supporting social integration, LED lighting and monitoring. The introduction of changes had a positive impact in the form of the possibility to use rainwater, thanks to the installation of a rainwater reservoir. More greenery also contributed to air quality.

The city that was awarded in the project is also Gdynia, where the local government has introduced solutions to manage energy consumption in public buildings. Since 2017, the city has an InvisoLite energy consumption system that monitors around 450 buildings. The application allows for collection of information on electricity, gas and district heat consumption, what is more – it allows to detect and quickly react to losses and excessive energy consumption. Thanks to this solution, carbon dioxide emissions into the atmosphere have been reduced.

The Olsztyn municipal authorities have done a great job of expanding the public transport system. After 50 years trams returned to Olsztyn – the city restored a seven-kilometre long tram line with three branches and bought 15 trams. To ensure the comfort of the residents, the local government also built sidewalks and bike paths to allow efficient and convenient access to the bus stops. Due to the development of a sustainable transport system, air pollution and fumes emissions have been reduced in Olsztyn.

An interesting tool is the Eco-City Geoportal (www.mapa.eco-miasto.pl). It is an interactive map which shows the location of the best ecological solutions. It is a collection of good practices from Polish cities in the scope of implementing ecological changes which can be an inspiration for others.

PHOTO 2. ECO-CITY GEOPORTAL

source: www.mapa.eco-miasto.pl

SUMMARY

The negative effects of climate change contribute to the popularization of the idea of ecological cities. Progressive environmental pollution affects the quality of life in cities, so moving towards eco-cities seems to be a very rational approach. Transforming cities from their current form into ecological, referring to the “zero waste” concept, is a very time-consuming challenge, although it is necessary to plan and implement concepts according to this idea as soon as possible. In addition to the expansion and protection of green spaces, research and modern technology make it possible to apply pro-ecological solutions. Thoughtful and sensible spatial policy is also an important aspect, because it has a direct impact on the quality of life of all residents.

Karol Kacprzak
Maintenance and Development Junior Specialist