Updated: 23.11.2023
Introduction
Are you considering buying property in Poland? The Polish real estate market is experiencing significant growth, driven by robust demand for housing and investment properties. However, the process of purchasing property in Poland involves various formalities and legal regulations. In this comprehensive guide, we will provide you with all the key information you need to navigate the property purchase process in Poland.
Real Estate Market in Poland
The Polish real estate market has been thriving in recent years, with a steady increase in the number of transactions. Both Polish citizens and EU legal entities and citizens are free to buy properties in Poland, including lands, houses, and apartments. Non-EU legal entities and citizens may require a permit from the Ministry of Internal Affairs, except for the purchase of apartments. To find properties for sale, you can explore popular property search websites like Otodom.pl and Morizon.pl.
Key Facts about Buying Property in Poland
Property Prices
As of August 2022, the average prices of properties in Poland are as follows:
- Apartment (Warsaw: PLN 12,000/m²; Krakow: PLN 10,000/m²)
- House (Warsaw: PLN 8,500/m²; Krakow: PLN 7,000/m²)
- Land (Mazovia: PLN 50,000/ha; Greater Poland: PLN 70,000/ha)
Broker Commission and Purchase Taxes
The standard broker commission in Poland is usually between 2.0% and 3.0%, although higher percentages may be encountered in the market. Property purchase taxes include VAT (23%) for new properties and undeveloped real estate, or a transaction tax (2%).
Notary Fees and Registration Fee
Notarial fees for the purchase of a house or apartment in Poland vary based on the property's value. For properties priced between PLN 1,000,000 and PLN 2,000,000, the fees are PLN 4,770 plus 0.2% above PLN 1,000,000. For properties above PLN 2,000,000, the fees are PLN 6,770 plus 0.25% above PLN 2,000,000 (up to a maximum of PLN 10,000). The registration fee for the Land and Mortgage Register is PLN 200.
Real Estate and Residence in Poland
While owning real estate in Poland does not automatically grant residency, it may be considered as one of the criteria when evaluating temporary or permanent residence.
Property Conveyancing Stages
The usual stages of property conveyancing in Poland include:
- Property reservation
- Due diligence/real estate legal status research
- Preliminary Contract (regular or notarial form)
- Contract with financing bank
- Final Purchase Contract (notarial form)
- Registration of Purchase in basic databases (Land and Mortgage Registry, Property Tax Registry)
Purchase Price and Payment Methods
The purchase price of the property should be based on market value and can be agreed upon in any official currency, such as PLN, EUR, USD, etc. Payment methods commonly used in Poland include checks, bank transfers, notarial deposits, and escrow accounts.
Electronic Land Registry
To access the electronic land registry in Poland, visit https://ekw.ms.gov.pl/eukw_ogol/menu.do.
Types of Property Transactions
The most common property transactions in Poland include:
- Buying an apartment
- Buying a house
- Buying land, including agricultural land
- Buying a commercial property
- Sale & Leaseback
- Buying a real estate company
Property Purchase Process in Poland - Stages
Buying property in Poland is not as simple as signing an agreement in a civil-notary's office. It involves several stages:
Stage 1 - Researching Property Legal Status
Before executing a property transaction, it is crucial to research the legal status of the property. This research includes verifying the seller's title, checking for any third-party claims or rights, examining planning regulations and historic conservation protection, and ensuring compliance with building and construction laws.
Stage 2 - Preliminary and Final Property Purchase Agreement
In most cases, property transactions in Poland involve both a preliminary and a final purchase agreement. The preliminary agreement outlines the essential provisions of the final agreement and sets the conditions for its execution. The final agreement is a notarial deed that includes detailed information about the property, sale price, payment terms, and the date of handover.
Stage 3 - Post-Closing Actions
After the purchase is completed, several post-closing actions must be taken:
- Handover of the property: The seller is responsible for handing over the property to the buyer, including an on-site inspection and signing a handover certificate.
- Handover of documents: The seller must provide the buyer with necessary property documents, such as a maintenance logbook, energy performance certificate, and lease agreements.
- Registration in the land and mortgage register: The buyer should apply to the court or a Polish notary to be entered as the owner of the property in the land and mortgage register.
- Reporting for tax purposes: The buyer must report the purchase of the property for real estate tax purposes within 14 days of the transaction.
- Contracts with utility suppliers: The new owner is generally required to sign new contracts with utility suppliers.
- Notifying leaseholders and housing community: If the property is leased or part of a larger complex, the buyer must notify the leaseholders and the housing community about the change of ownership.
- Property insurance: While not mandatory, it is recommended to take out insurance against fire and other damages and third-party liability.
Please note that these are just the usual stages, and additional obligations may arise based on the specific circumstances of the transaction.
Buying Property in Poland - Agreements
When buying property in Poland, various types of agreements may be involved. These include:
1. Property Reservation Agreement
A reservation agreement is typically executed when the property is sold through a real estate agency. It ensures that the seller commits not to sell the property to another person for a specified period. The agreement includes details such as the property designation, sale price, reservation period, and reservation fee.
2. Development Agreement
A development agreement is specific to residential properties. It involves a developer undertaking to build a property and transfer its title to the buyer. This agreement requires a notarial act and is subject to legislation that protects the buyer's interests. The agreement covers aspects such as property specifications, construction timeline, price, payment terms, and rights related to rescission.
3. Preliminary Property Purchase Agreement
A preliminary agreement is executed when the closing of the transaction cannot happen immediately. It sets out the essential terms of the final purchase agreement, including the property designation, sale price, and the date of executing the final agreement. It may also include conditions that need to be fulfilled before the execution of the final agreement. Earnest money is often paid by the buyer to secure the agreement.
4. Final Property Purchase Agreement
The final purchase agreement is a notarial deed that finalizes the property transaction. It includes detailed information about the property, sale price, payment terms, and the date of handover. Upon signing the final agreement, the title to the property is transferred to the buyer.
What Properties and Entitlements Can be Purchased?
Foreigners can purchase the following types of properties in Poland:
- Lands
- Lands along with buildings (as one joint property)
- Buildings
- Apartments
The entitlements that can be purchased include:
- Ownership: This is the broadest property entitlement, including the right of possession, usage, and disposal.
- Perpetual Usufruct: Similar to ownership, perpetual usufruct grants the right to possess, use, and dispose of the property for a specified period (usually 99 years).
- Share in the Building with Assigned Apartment: In certain cases, the entitlement to an apartment can be derived from ownership shares in the land or building that comprises multiple apartments.
- Cooperative Member's Ownership Right in an Apartment: This right is similar to ownership but formally belongs to the cooperative that owns the property.
- Cooperative Housing Tenancy Right: This right is similar to a lease and includes the right of possession and usage but does not grant the right of disposal.
Ensure to consider the specifics and implications of each type of entitlement before making a purchase decision.
In conclusion, buying property in Poland can be a rewarding investment. By understanding the process, legal regulations, and market conditions, you can navigate the property purchase journey with confidence. Remember to conduct thorough due diligence, consult experts when needed, and ensure compliance with all necessary requirements. Happy property hunting!
