Polish real estate developers highlight legal reforms needed for faster housing development
A survey conducted by the real estate website dompress.pl asked development companies which legislative areas should be simplified to accelerate housing construction and which regulatory changes would most benefit the sector and boost investment activity.
Karol Dzięcioł, member of the management board of Develia
In view of the complex and time-consuming administrative procedures, especially with regard to obtaining building permits and adapting projects to local spatial development plans, simplifying and speeding up proceedings could significantly improve the implementation of investments. It is crucial to shorten the time needed to obtain individual decisions, including environmental decisions, zoning decisions and building permits, and to speed up consultations between public administration bodies.
The amendment to the Act on Spatial Planning and Development may also have an impact on improving the functioning of the real estate market. The introduction of integrated investment plans may in many cases unlock the investment potential of land, although this is likely to entail higher costs for developers. In the longer term, the so-called supply act may also contribute to improving land availability. We welcome the attempt to make the parking space requirements more realistic and to transfer greater powers in this area to municipalities.
Damian Tomasik, President of the Management Board of Alter Investment
In response to the government's deregulation initiative, from the perspective of the residential construction market, it would be crucial to simplify several areas of legislation that currently slow down the investment process and generate unnecessary costs, such as planning procedures (local zoning plans and building permits). The current spatial planning system is time-consuming and inflexible. Simplifying and speeding up the procedures for adopting local spatial development plans and making the deadlines for obtaining building permits more realistic would be crucial. The possibility of phasing plans and using digital tools in their creation would significantly improve the dynamics of investment.
The process of obtaining building permits also needs to be reformed. Many investments are delayed due to a long and unpredictable administrative process. Introducing the principle of ‘tacit consent’ in situations where authorities fail to meet statutory deadlines and digitising the entire process could significantly improve efficiency.
Another important change would be to reduce the number of required approvals and opinions. Currently, investors are required to obtain a number of opinions, which often duplicate each other or are of marginal importance for the security of the investment. Limiting these obligations to key authorities and introducing a single administrative position (one-stop shop) could shorten project preparation by many months.
Simplifications should also be introduced with regard to the conversion of agricultural and forest land for residential purposes. Overly restrictive regulations on the de-agriculturalisation of land, even within city limits, are hindering urban development. The introduction of clear criteria for the automatic conversion of land, especially within agglomerations, would be a breakthrough.
In summary, we need deregulation that will make the investment path more realistic and faster by eliminating unnecessary bureaucratic barriers. As a member of Corporate Connection, we are actively involved in deregulation, which does not mean giving up control, but focusing on what really affects the quality and safety of construction, rather than on procedures that are an end in themselves.
Joanna Chojecka, Sales and Marketing Director for Warsaw and Wrocław at Robyg Group
Deregulation in residential construction is one of the key areas that can significantly accelerate the development of the sector and improve the availability of housing. Current regulations are often too complex, time-consuming and inflexible, leading to delays, increased costs and a reduction in the supply of new investments. Key areas for change include simplifying building permit procedures, reforming zoning decisions, digitising the investment process, reducing mandatory consultations and speeding up environmental procedures.
Currently, the process of obtaining a permit is lengthy and requires numerous attachments and opinions. These procedures should certainly be accelerated and simplified. A reform of zoning conditions (so-called ‘wuzetek’) could also be introduced. The lack of a local plan means that a zoning decision must be obtained, which significantly lengthens the investment process and creates a risk of discretionary decisions. Deadlines for issuing decisions (e.g. 30 days) and standardisation of the rules for issuing them could be introduced.
In addition, Rafał Brzoska's SprawdzaMY initiative has already proposed interesting solutions, such as the digitisation of land and mortgage registers. This would mean faster access and less bureaucracy. This would significantly reduce the waiting time for entries, which currently takes many months. Thanks to the digitisation of the process, bank customers will be able to finalise their property purchases and obtain mortgages more quickly, while banks will optimise their collateral management. Digital document circulation will reduce the number of errors, relieve the burden on the courts and reduce archiving costs.
It is also important to reduce bridge insurance for customers. Bridge insurance is additional security required by the bank until the mortgage is entered in the land and mortgage register. During this period, the customer incurs higher costs, most often in the form of an increased loan margin. Although this is an element of almost every mortgage agreement, there are effective ways to reduce this burden. Such solutions can be implemented by the government by introducing electronic entries in land and mortgage registers and speeding up court proceedings. On the other hand, banks have a number of options to prepare attractive offers for their customers.
Magda Kwiatkowska-Świstak, legal advisor, Ronson Development
The government's announcements of deregulation in the economy are a step in the right direction. The housing construction sector has been struggling for years with numerous administrative and regulatory barriers that significantly delay the investment process and generate additional costs.
One of the most pressing issues requiring legislative intervention is the lack of regulations governing the takeover of roads built by developers by municipalities. Currently, investors incur huge costs for the construction of road infrastructure, yet they are often refused takeover by local authorities. Clear regulations are needed to oblige municipalities to take over roads that meet specific technical standards, with a specific mandatory deadline for acceptance, e.g. within six months of the submission of the application. This requires systemic regulation of the rules for financing accompanying infrastructure, roads, pavements, lighting and water and sewage networks.
It is worth considering the introduction of an infrastructure fund co-financed by municipalities and investors, which would allow costs to be distributed more proportionally and fairly. This would eliminate discretionary and arbitrary decisions by officials, ensure greater predictability of costs, faster procedures and maintain the financial liquidity of investors, especially smaller ones.
Another barrier is the lengthy administrative procedures involved in obtaining building permits. In the largest cities, the waiting time is already 2-3 years, which significantly increases investment costs and discourages investors. The statutory deadlines for decision-making authorities should be shortened, but officials should also be made genuinely accountable for exceeding these deadlines. Currently, sanctions are illusory and investors have no effective tools to enforce the efficiency of proceedings.
Another major problem is the delay in making entries in land and mortgage registers, especially in large cities. Entries that are important for the implementation of investments, such as the entry of ownership rights or the division or consolidation of real estate, currently take up to a year. This often blocks further stages of investment and the transfer of premises to buyers.
After the 2023 amendment introducing general plans, many investors will find themselves in limbo because municipalities will not be able to adopt them in time, and decisions on development conditions are impossible to obtain in many places during this transition period. In practice, this means a block on investments. Transitional provisions should therefore be introduced to guarantee the possibility of obtaining a development permit for a specified period, regardless of the adoption of the general plan.
In the case of larger investments, the environmental procedure, which can take longer than the design of the building itself, is a problem for investors. It is therefore necessary to allow combined environmental and construction proceedings for investments meeting certain criteria, e.g. within city limits, in areas with infrastructure, and to introduce a ‘fast track’ for investments of local importance with a simplified environmental impact assessment and a maximum deadline for issuing decisions.
If the government really wants to stimulate the housing market, it is necessary to combine deregulation with bold procedural and infrastructural reforms. Simply reducing the number of documents is not enough. We need efficient administration, predictable deadlines and clear rules for cooperation between developers and municipalities.
Photo: Do Wilgi, Matexi Polska
