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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

As a consequence of lenient mortgage lending criteria applied nowadays by banks, more and more Poles can afford to buy their own dwelling. According to AMRON-SARFiN Report 2/2021, the number of loans granted in the second quarter of 2021 increased by 17.21% compared to the previous quarter. Before implementing a plan to purchase a dwelling, it is good to know all details related to legal aspects of the transaction, including types of contracts and rights they ensure for the contracting parties. In June 2021, an amendment to the Act on the Protection of Rights of Buyers of Housing Unit or Detached Houses and the Developer Guarantee Fund was announced, which provides the legal basis for agreements with developers. The amended Act will enter into force July 1, 2022.

There are several types of contracts signed by a purchaser and a developer, depending on the stage, at which the contract is concluded: a reservation agreement, a developer agreement, a preliminary agreement and an ownership transfer agreement. How do they differ and what should we pay special attention to?

Reservation agreement

According to Article 29.1 of the Act of May 20, 2021 on the Protection of Rights of Buyer of Housing Unit or Detached House and the Developer Guarantee Fund, ‘a reservation agreement is an agreement between a developer or an entrepreneur other than a developer (…) and a person interested in the sale offer (…), the subject of which is an obligation to temporarily exclude from the sale offer a dwelling or a detached house selected by the reserving party.’ A reservation contract is most often concluded at the initial stage of a project, when the booker is planning to buy an estate, but, for example, is not 100% sure, is looking for other offers or has not yet received a credit decision. In practice, the agreement requires the developer to exclude the property from sale and is often followed by a developer agreement. In order for a reservation agreement to be valid, in addition to the standard elements, it is required to include:

• the price of the dwelling or detached house;
• the amount of the reservation fee;
• the period during which the subject of the agreement is excluded from sale;
• the location of the dwelling in the building (in case of a flat);
• the usable area and the layout of the rooms.

As regards the reservation fee, the previous legislation did not regulate either the amount of the fee or the conditions for its reimbursement in the event of termination of the contract. Accordingly, the developer may have drafted an agreement that would disadvantage the booker, for example, despite a negative credit decision that is beyond the booker’s control, the booker will not receive a fee refund. The amendment to the Act clearly regulates that the reservation fee cannot exceed 1% of the price of the dwelling and in case of conclusion of the developer agreement it is credited towards the purchase price of the property. The new regulations also specifies the cases, in which the reservation fee is refunded to the reserving party:

• failure to obtain a positive credit decision or a promise to grant a credit;
• the developer – without informing the reserving party – made changes to the information prospectus or its attachments;
• if the sale agreement was preceded by the reservation agreement, and the developer or the entrepreneur failed to remove the defects reported in the acceptance protocol, as a result of which the buyer did not sign the sale agreement (double fee to be reimbursed)
• if the developer or the entrepreneur fails to comply with the terms and conditions of the reservation agreement (double fee to be returned).

A reservation agreement does not oblige the booker to buy the property, but it gives the possibility of excluding the property from sale for a certain period of time, during which the booker has time to arrange the formalities related to obtaining a loan. Signing a reservation agreement is not mandatory, but it is usually the first step in the process of buying a property from a developer and precedes the conclusion of a developer agreement.

Developer agreement vs. preliminary agreement

Both the developer agreement and the preliminary agreement constitute a mutual obligation of the developer and the buyer to sign an agreement on the transfer of ownership rights to the estate in the future. This means that at the time the contract is signed, the buyer does not yet have rights to the estate. The difference between a development agreement and a preliminary agreement is the condition of the property. A developer agreement regulates the process of acquisition of an estate in the situation when the investment has not yet been released for use, for example, dwellings have not been separated. In order to formally complete the construction work by a developer, the construction supervision authorities must conduct an inspection. This is necessary for obtaining an occupancy permit for the building – only after that it is possible to conclude a preliminary agreement or an ownership transfer agreement with the buyer. The construction supervision authorities may refuse to issue an occupancy permit when, for example, the investment does not conform to the construction design or does not meet technical, fire or sanitary standards.In such case, the developer is fined with a penalty fee, the amount of which is regulated by the Act of 7 July 1994 – Construction Law. In addition, the construction supervision may order the suspension of construction works, demolition or impose an obligation to bring the building into conformity with the law and the design. For a potential buyer, this means an extended waiting period before being able to live in the estate.

The developer agreement contains more detailed information than the preliminary agreement and its scope is regulated by the Act of 20 May 2021 on the Protection of Rights of Buyer of Dwelling or Detached House and the Developer Guarantee Fund. It includes:

• information regarding the location of the detached house or the location of the dwelling unit in the building and a detailed description of the property;
• the purchase price of the rights to the real estate;
• the date of transfer of the ownership rights to the property to the purchaser;
• information regarding the housing trust account, into which payments are to be made by the purchaser;
• the number of the building permit and the date of commencement and completion of construction works;
• definition of the conditions for withdrawal from the contract and the stipulated amount of interest and contractual penalties;
• buyer’s declaration of acceptance of the information prospectus, which must be prepared by the developer before signing the developer agreement;
• information about the conclusion of a reservation agreement and a reservation fee or about the lack of such an agreement.

In case of a developer agreement, legal regulations impose an obligation on a developer to accept buyer’s payments into a housing trust account. The money accumulated on this account is intended to secure the buyer in case the developer does not complete the construction, for example, in connection with bankruptcy, thanks to which the buyer may recover all or a significant part of the funds paid. In case of a preliminary agreement, the buyer may pay an advance or deposit, which is regulated by the provisions of the Civil Code. In addition to specification of the parties, the subject of the agreement and the price, the preliminary agreement may also include the date of signing an agreement transferring the ownership rights to the real estate to the buyer. A preliminary agreement may be drawn up in form of a notarial deed, but also in an ordinary written form, whereas a developer agreement may be concluded in the form of a notarial deed under pain of nullity. A developer agreement cannot be replaced by a preliminary agreement. A preliminary agreement may be concluded only when the real estate has been approved for use by the construction supervision authorities. Otherwise, it is unlawful to attempt to conclude it. On the other hand, when construction work is still in progress, it is obligatory to conclude a developer agreement. Therefore, both of these agreements are concluded before signing the ownership transfer agreement – the developer agreement when the property is under construction and the preliminary agreement after the construction work is completed. In the situation when the purchaser, at the stage of construction of the real estate, has already entered into a developer agreement, a preliminary agreement is not necessary, because in accordance with the Act, the developer agreement constitutes a mutual obligation of the developer and the purchaser to sign the ownership transfer agreement. If the buyer decides to purchase the property when it has already been released for use, the transfer of ownership agreement may be signed right away, but it also may be preceded by a preliminary agreement. Such a situation would occur, for example, when a buyer applies for a loan and the bank requires a preliminary agreement.

Ownership transfer agreement

An ownership transfer agreement is the final step in the process of purchasing a property on the primary market. It may be concluded only after the technical acceptance of a dwelling, during which the buyer verifies whether the dwelling meets construction standards and has been constructed in accordance with the developer’s agreement, if such has been previously concluded. A protocol is drawn up during the technical acceptance. An ownership transfer agreement, unlike a preliminary agreement, must be drawn up in the form of a notarial deed under pain of nullity.

Summary

The purpose of amending the existing Act is to protect a buyer of a dwelling, who has a number of relate to a reservation agreement or a developer agreement. In turn, both a preliminary agreement and an ownership transfer agreement are governed by the provisions of the Civil Code. The above agreements, despite their differences, are interrelated. Purchasing a property from a developer solely on the basis of a transfer agreement, without entering into any preceding agreements, possible in theory. However, given the high demand for primary market properties, it often proves insufficient.

Daria Łaskowska
Maintenance and Development Specialist

According to the latest estimates of the Central Statistical Office (CSO), the rate of economic growth expressed in Gross Domestic Product (GDP) in the second quarter of 2021 was the highest in the Polish history. It reached as much as 11.1%, so we managed to make up for the pandemic losses. This was not the only record that our country has achieved recently, but unfortunately in this case there is no reason for optimism. Inflation is rising alarmingly and its recent rate is at the highest level for 20 years. In 2021, inflation ranged from 2.4% in February to 5.5% in August year-on-year. In addition, Poland is the second EU Member State after Estonia with the highest inflation.

CHART 1. YEAR-ON-YEAR CHANGES IN CONSUMER PRICE INDEX IN POLAND IN 2000 – 2021

source: Central Statistical Office

The inflation rate is influenced by many different factors. In the current economic situation, a significant increase in prices is caused mainly by the excessive money supply, which is called “the print of the zloty”. The most reliable measure of this phenomenon is the M3 index published by the National Bank of Poland. During the pandemic, the value of money supply at its peak reached PLN 1 746.22 billion (data for June 2020), which meant an increase of as much as 18.1% in annual terms. From March 2020, when the COVID-19 lockdown was introduced, until April 2021 the percentage increase in the amount of money in Poland was double-digit comparing to the previous year. Additionally, a decline in the rate of currency circulation of about 17% was observed. This means that money has been changing its owner more and more slowly, and this also has a strong impact on inflation.

In recent years, practically everything in Poland has become more expensive, including ‘basic necessities’ such as food, electricity and fuel. Considering the topic of this article, the most important question is how much the Poles’ expenditures on real estate market amount to nowadays and how this is affected by the increase in prices of other assets and products.

The most popular subject of trade on the real estate market are dwellings, the average transaction prices of which in 2019 have exceeded the peak achieved during the market boom in 2008 and still continue to grow. The chart 2 presents quarterly dynamics of changes in housing units prices in Warsaw from the beginning of 2006 until the second quarter of 2021, when the average price reached as much as PLN 10 224. The upward trend continues in all major cities in Poland.

CHART 2. AVERAGE TRANSACTION PRICES PER 1 SQM OF A HOUSING UNIT IN WARSAW IN 2006 – 2021

source: AMRON-SARFiN

Analysis of rent rates has shown that the pandemic has contributed to slight drops, to the satisfaction on tenants and to the disadvantage of property owners. The comparison of data from the second quarter of 2020 and 2021 indicated that on the largest housing markets in Poland, the price decreases amounted from 6% to nearly 14%. In Warsaw, the average rental price decreased by 11% in the same period. The price reductions were mainly related to remote working and studying, which enabled tenants to move out of the big city and thus save on housing costs. However, the rental market seems likely to rebound and there probably will be a return to the pre-pandemic situation, provided that the government’s COVID-19 restrictions will not be as stringent as they were a year ago.

Dwellings are not the only type of property that is getting more and more expensive every year. Prices of single-family houses are characterized by even higher growths. According to the Bankier.pl portal, in the first quarter of 2021 the yearly increases ranged from 12.6% in Warsaw to 24.9% in Gdansk. Two-digit increases were also recorded in case of building plots. The increases occurred basically in all voivodships, with the highest ones in the Voivodeship of Podlassia and the Voivodeship of Lower Silesia . In the first half of 2021, average prices there have risen by 32% and 28% respectively as compared to the same period last year. In the Voivodeship of Mazovia, the increase amounted to 22%. The records on the real estate market are fuelled, among others, by high prices of building materials, which have doubled in the last year. This causes uncertainty mainly among consumers, whose earlier cost estimates for building a house or apartment renovation are highly underestimated and it is not known whether to postpone the investment and wait for declines in prices or spend more now but complete the planned undertaking. This uncertainty also applies to developers who explain the high prices on the primary market with the rising costs of materials and construction professionals.

It would seem that galloping property prices must cause lower demand on the housing market. However, this is not happening and in recent months the construction sector has achieved historically best results. Many investors admit that they are spending the savings gathered over the years right now due to high inflation and the lack of another, profitable alternatives to invest money. Investment in real estate is considered by Poles as safe and secure. Most believe that they will never lose money on a real estate investment and that prices will continue to rise or at least not fall for a long time. Such optimism can lead to a loss, but due to the lack of adequate financial knowledge to invest in the stock market or due to the inability to start a business, choosing real estate is a reasonable solution, provided that it is not financed by a large loan.

In a pessimistic scenario of constantly growing inflation, it may be necessary to raise the reference rate of the National Bank of Poland, which currently stands at only 0.1%. Such a low level translates to cheap mortgage loans, but it should be remembered that with a variable interest rate, the instalment will most likely increase. The question is by how much? It may come as a surprise for those borrowers, who are not aware of the risk, but for example with a loan amount of PLN 300 000 for 30 years, an instalment of PLN 1 150 and the standard bank margin of 2.15%, an interest rate rise by only 1 point percentage will increase the monthly instalment by about PLN 160. Such a remedy against the growing inflation is very likely to be introduced and it may significantly affect the wealth of Poles, just like loans denominated to Swiss Franc. Today hardly anyone remembers that 10 years ago interest rates fluctuated around 5%. Perhaps more expensive loans will temper the optimism on the real estate market. On the other hand, there are government’s announcements on a new housing programme that will enable Poles to take a mortgage loan without any own contribution. Unfortunately, this may result in higher loan margins for loans taken by the programme’s beneficiaries and this may lead to problems with future loan repayments.

CHART 3. REFERENCE RATE OF THE NATIONAL BANK OF POLAND IN 1998 – 2021

source: National Bank of Poland

The most disturbing fact is that representatives of the Polish government, including the current President of the National Bank of Poland and Chairman of the Monetary Policy Council, Adam Glapiński, do not seem to care about the increase in inflation. They explain that we are catching up with Europe and Poles’ earnings are also growing. However, it is not happening as fast as the price increase. In times of high inflation and low interest rates, citizens withdraw savings from unprofitable deposits and often invest money on the real estate market. It is undeniable that there is a correlation between the inflation rates and property prices but borrowers must be aware that they will most likely pay higher mortgage payments in the future.

Ewelina Staruch
Real Estate Market Analyst

Record low interest rates, which have been maintained for several years, and loosening of the banks’ requirements regarding down-payment have a strong impact on high demand on the housing market, which translates into economic growth. Since 2016, more and more housing loans have been granted each year. A slowdown of the upward trend could be observed only in 2020. According to the data presented in the AMRON-SARFiN Report, the number of housing loans granted in 2020 amounted to 204 170, which was lower by 3.13% than the number recorded in 2019. The value of newly issued mortgage loans in the indicated period amounted to PLN 60.671 billion, which is an increase by 9.29% as compared to the previous year. Data presented by Central Statistical Office (GUS) are comparable, where the number and value of dwellings sold annually have been gradually increasing since 2015.

CHART 1. Number and value of new housing loans granted from 2015 to 2020

source: self-study based on the SARFiN System data

CHART 2. NUMBER AND VALUE OF DWELLINGS SOLD IN TOTAL MARKET TRANSACTIONS FROM 2015 TO 2019

source: self-study based on data of Central Statistical Office

As stated in the Ministry of the Interior and Administration (MSWiA) Report on execution of the act on real estate acquisition by foreigners in 2020, last year foreigners purchased more than 7 400 dwellings with a total area of almost 442 000 sqm. This was a significant decrease compared to 2019, when foreigners purchased more than 8 400 flats with an area of nearly 511 000 sqm. In comparison, in 2018 the Ministry of the Interior and Administration registered the acquisition by foreigners of 7 043 dwellings with a total area of over 426 000 sqm. The number of flats sold to foreigners in 2020 is lower by 12.41% compared to 2019, but still higher by 5.55% compared to 2018. The percentage of dwellings purchased by foreigners in relation to the total number of flats sold in 2017 was 2.68%, in 2018 it accounted for 3.46%, and in 2019 – 4.07%. Despite an apparent slowdown in property sales among foreign nationals in 2020, caused by the pandemic and the associated restrictions that have extended the application process for permit to buy a flat, as well as limited migration to Poland, interest of foreign buyers in Polish apartments remains strong.

CHART 3. NUMBER OF ENTRIES TO REGISTERS REGARDING DWELLINGS PURCHASED BY FOREIGNERS ON THE BASIS OF PERMITS AND WITHOUT OBLIGATION TO OBTAIN THE PERMISSION AND THE TOTAL AREA OF PURCHASED DWELLINGS FROM 2011 TO 2020

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2011 – 2020

TABLE 1. PERCENTAGE OF DWELLINGS ACQUIRED BY FOREIGNERS ON THE BASIS OF PERMITS AND WITHOUT OBLIGATION TO OBTAIN THE PERMISSION IN TOTAL NUMBER OF DWELLINGS SOLD UNDER MARKET TRANSACTIONS IN 2015 – 2019

2015	2016	2017	2018	2019
2.50%	2.83%	2.68%	3.46%	4.07%

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2015 – 2019 and data of Central Statistical Office

In case of commercial premises, the situation is similar. The upward trend observed since 2013 slowed down only in 2020, when foreigners purchased over 2 000 commercial premises (less by 19.4% compared to 2019), in which almost 2 500 properties were sold. The total area of commercial premises purchased in 2020 amounted to 271 000 sqm.

CHART 4. NUMBER OF ENTRIES TO REGISTERS REGARDING COMMERCIAL PREMISES PURCHASED BY FOREIGNERS ON THE BA-SIS OF PERMITS AND WITHOUT OBLIGATION TO OBTAIN THE PERMISSION AND THE TOTAL AREA OF PURCHASED DWELLINGS FROM 2011 TO 2020

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2011 – 2020

For years, the number and area of dwellings purchased by French, German, British and Italian nationals have remained stable and represented a significant share of transactions among foreigners. A notable increase in interest in housing in Poland can be observed among the citizens of Belarus, Russia, China and Belgium. However, it is the citizens of Ukraine who, constantly for the past 5 years, have been leading among foreigners in the purchase of apartments – in 2020 they purchased 3 200 apartments, which accounted for 36% of all transactions. Such a result was influenced by the growing number of Ukrainians living permanently in Poland and binding their future with Poland.

Despite a slight decline in 2020 compared to the previous year (by 2.7%), caused by restrictions on migration to Poland due to the COVID-19 pandemic and a slowdown in housing acquisition processes, 2020 was the second year in a row, when Ukrainian nationals purchased more than 3 times as many apartments as Germans. Moreover, the total floor area of residential units bought by Belarusians over the past 10 years has increased five times and their share in the structure of buyers in 2020 was equal to 5.5%.

Similarly, in case of the Chinese, who in the previous year purchased dwellings with a total area three times larger (10 584 sqm) than in 2011 (2 708 sqm). Demand for apartments in Poland among Belgians and Indian nationals is also noticeable. Belgians purchased 8 477 sqm of flats last year, which was an increase by 65% compared to 2019, whereas Indian nationals purchased 5 526 sqm in 2020, i.e. more by 45% compared to 2019.

TABLE 2. TOTAL AREA OF DWELLINGS (IN SQM) PURCHASED BY FOREIGNERS ON THE BASIS OF PERMITS AND WITHOUT OBLI-GATION TO OBTAIN THE PERMISSION (BY THE COUNTRY OF PURCHASER’S ORIGIN) – SELECTED COUNTRIES IN 2011 – 2020

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	TOTAL
Austria	6 671	6 640	3 801	4 752	5 999	6 569	8 314	9 193	7 265	7 124	53 016
Belgium	1 630	3 790	2 834	3 855	3 223	3 152	3 093	5 244	5 150	8 477	35 026
Belarus	4 672	7 099	7 036	6 805	8 806	11 590	13 469	20 350	26 826	24 442	119 324
China	2 708	2 269	3 119	4 875	5 285	5 994	8 480	9 380	11 021	10 584	58 739
Cyprus	6 434	6 443	5 884	12 598	8 631	7 402	4 580	4 661	24 779	8 268	76 803
Czech Republic	1 868	791	1 557	2 665	2 417	3 642	2 148	5 329	3 168	3 197	24 123
France	10 051	10 311	11 382	15 395	11 678	13 976	15 381	16 885	18 248	14 878	117 823
Spain	11 325	19 621	5 541	4 083	2 721	7 465	6 078	6 289	9 147	5 590	46 914
Holland	5 403	11 054	8 335	6 181	9 773	4 385	6 172	6 895	6 976	7 520	56 236
India	1 142	1 145	801	970	1 500	2 471	2 400	3 547	3 792	5 526	21 006
Ireland	8 162	3 333	5 085	3 334	2 429	1 797	1 863	2 679	5 127	3 385	25 700
Israel	4 582	35 193	3 447	6 770	5 731	14 349	5 726	14 240	16 310	6 174	72 747
Luxemburg	692	11 882	1 271	2 319	1 865	1 201	10 318	1 451	1 946	1 429	21 800
Germany	34 107	36 804	36 889	32 485	36 164	43 081	40 179	64 349	55 485	46 821	355 452
Russia	6 644	8 864	7 777	6 685	8 467	8 806	9 417	12 558	15 330	14 100	83 140
Slovakia	1 611	2 246	1 511	2 595	1 963	2 770	2 085	3 359	5 862	2 597	22 741
Sweden	7 063	5 795	5 639	6 337	7 021	8 003	9 346	8 996	10 052	6 237	61 631
Turkey	1 057	1 286	773	1 075	1 909	2 753	3 102	5 983	4 059	5 576	25 231
Ukraine	12 597	17 109	18 665	24 558	35 372	64 118	71 264	110 370	162 483	158 027	644 858
USA	6 308	4 917	9 080	6 017	6 668	6 596	5 714	7 174	8 218	4 789	54 256
Great Britain	17 766	13 506	18 576	15 068	15 254	17 857	17 398	23 884	22 297	17 937	148 270
Vietnam	7 498	3 739	2 951	3 438	3 398	3 382	3 799	7 856	3 932	5 554	34 310
Italy	10 017	7 041	10 205	9 841	10 455	11 939	11 602	16 750	18 275	14 151	103 219
other countries	32 165	31 245	33 124	33 195	32 841	41 654	42 627	58 818	65 243	59 258	821 057
TOTAL	202 175	252 122	205 283	215 895	229 569	294 952	304 555	426 242	510 989	441 641	3 083 422

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2011 – 2020

According to the data presented by the MSWiA, for years the largest area of dwellings have been purchased by foreigners in the Voivodeship of Mazovia – in 2020, there were 137 000 sqm, which accounted for 31.08% of the total area of residential properties bought by foreigners. The Voivodeship of Lower Silesia was on the second place, where dwellings with a total area of 68 000 sqm were purchased (15.35%). The Voivodeship of Lesser Poland was third  flats with a total area of 65 000 sqm were sold there (14.63%). Slight decreases were recorded every year in the Voivodeship of Pomerania and the Voivodeship of Silesia. Other provinces were much less popular, although their share remained stable.

TABLE 3. STRUCTURE OF THE TOTAL AREA OF DWELLINGS ACQUIRED BY FOREIGNERS ON THE BASIS OF A PERMIT AND WITHOUT THE OBLIGATION TO OBTAIN A PERMIT DUE TO THE VOIVODESHIP, WHERE THE REAL ESTATE IS LOCATED IN THE YEARS 2015 – 2020

voivodeship	2015	2016	2017	2018	2019	2020
The Voivodeship of Lower Silesia	10.94%	13.70%	13.37%	14.84%	14.33%	15.35%
The Voivodeship of Cuiavia and Pomerania	1.85%	2.54%	2.58%	2.05%	2.56%	2.50%
The Voivodeship of Lublin	1.75%	1.81%	1.49%	1.76%	1.76%	1.49%
The Voivodeship of Lubusz	1.34%	1.49%	1.64%	2.02%	2.33%	2.74%
The Voivodeship of Lodz	3.07%	2.34%	2.93%	2.84%	3.52%	4.85%
The Voivodeship of Lesser Poland	12.62%	15.29%	15.98%	14.38%	14.26%	14.63%
The Voivodeship of Masovia	37.63%	35.92%	35.11%	35.88%	34.52%	31.08%
The Voivodeship of Opole	1.38%	1.43%	1.60%	1.28%	1.66%	1.67%
The Voivodeship of Sub-Carpathia	1.33%	1.31%	0.94%	1.05%	1.05%	0.93%
The Voivodeship of Podlassia	1.13%	1.21%	0.93%	1.02%	0.85%	1.10%
The Voivodeship of Pomerania	7.24%	5.82%	5.12%	5.22%	5.15%	4.17%
he Voivodeship of Silesia	6.92%	6.76%	6.50%	6.30%	6.24%	5.59%
The Voivodeship of Kielce	0.40%	0.31%	0.47%	0.39%	0.34%	0.54%
The Voivodeship of Varmia and Masuria	1.41%	1.04%	1.42%	1.46%	1.28%	1.33%
The Voivodeship of Greater Poland	5.60%	4.06%	4.32%	4.27%	5.36%	6.91%
The Voivodeship of Western Pomerania	5.40%	4.98%	5.61%	5.24%	4.82%	5.13%
TOTAL	100%	100%	100%	100%	100%	100%

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2015 – 2020

Among the cities, where dwellings were the most willingly bought by foreigners, Warsaw was the most popular. In 2020, foreigners purchased 1 704 flats in the capital of Poland, accounting for 22.92% of all purchased premises, which meant an increase by 2.31 pp compared to 2019 and as much as 5.25 pp compared to 2018. The second place was continuously occupied by Kraków, where in 2020 977 dwellings were purchased by foreigners, accounting for 13.14% of all sale transactions. Third place was taken by Wroclaw, where the number of apartments purchased by foreigners amounted to 787, which constituted as much as 10.59% of all transactions. Growing interest among foreign buyers in dwellings located in Lodz can be observed – the share of transactions on the Lodz residential market in 2020 has tripled since 2015 – from 99 to 323 premises, while compared to 2019 the increase in the number of flats purchased by foreigners accounted for 23.28%. The greatest decrease in activity was recorded in Gdansk – by 43% compared to the previous year.

TABLE 4. NUMBER OF ENTRIES TO REGISTERS REGARDING DWELLINGS PURCHASED BY FOREIGNERS ON THE BASIS OF PERMITS AND WITHOUT OBLIGATION TO OBTAIN THE PERMISSION ACCORDING TO CITY IN WHICH DWELLING IS SITUATED IN 2015 – 2020

City	2015	2016	2017	2018	2019	2020
Gdansk	2.74%	2.84%	2.72%	2.64%	2.90%	1.86%
Gdynia	1.09%	1.03%	0.81%	0.92%	0.68%	0.51%
Gorzow Wielkopolski	0.51%	0.30%	0.48%	0.70%	0.55%	0.96%
Cracow	12.60%	14.97%	15.24%	13.76%	13.68%	13.14%
Lodz	2.64%	2.13%	2.53%	2.24%	3.09%	4.34%
Poznan	3.94%	2.65%	2.70%	2.73%	2.63%	2.78%
Szczecin	1.86%	1.48%	1.82%	1.66%	1.37%	1.21%
Swinoujscie	0.93%	0.90%	1.04%	0.85%	0.87%	0.94%
Warsaw	26.80%	27.02%	25.16%	28.17%	25.23%	22.92%
Wroclaw	7.35%	10.52%	9.93%	10.85%	9.31%	10.59%
Zakopane	0.27%	0.28%	0.29%	0.09%	0.09%	0.03%
other	39.26%	35.86%	37.29%	35.40%	39.60%	40.72%
TOTAL	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%

source: self-study based on the report of Ministry of the Interior and Administration (MSWiA) on execution of the act on real estate acquisition by foreigners in 2015 – 2020

In the last five years, significant changes have been observed on the market of residential and commercial premises purchased by foreigners. The growing number of foreign nationals in Poland will determine the growing number of residential property transactions concluded by foreigners. Furthermore, the prices of dwellings on the Polish market, despite the growth in recent years, are still lower than in Western European countries, which makes them an attractive capital investment for investors. According to data from the SARFiN System, a total of 124 185 housing loans were granted in the first half of 2021 and amounted for PLN 40.079 billion and if current trends continue, record results are expected by the end of this year. The publication of the MSWiA Report on real estate acquisition by foreigners in 2021 will verify if the expected record increase in dwellings’ sales will also apply to foreigners and to what extent this market segment will be affected by the COVID-19 pandemic in 2021.

Marta Polkowska
SARFiN System Data Administrator
Senior Maintenance and Development Specialist