November 07, 2019

Revolution or taking potshots?

Revolution or taking potshots?

A string of seemingly revolutionary changes to legal regulations concerning real estate came into force last year. Have they had a significant impact on the market, were they really necessary, or have they proved to be legislative flops? This will be assessed by the participants in the second edition of the FLEX Real Estate and Construction Law Forum, a conference organized by Nowy Adres S.A. on 25 and 26 November at the Radisson Collection Hotel in Warsaw.

Lex developer – the controversy refuses to die down

The most controversial new law, the act on facilitating the preparation and execution of housing investments, dubbed „lex developer” by the media, has only been in force since 22 September last year, but it has already been the cause of many conflicts. In a nutshell, the act allows developers to carry out investments incompatible with local land use plans provided that an approval from local authorities is granted. The idea the authors had in mind was to increase the supply of new apartments this way and to stop price increases – both in the primary residential market and the rental market. As yet, developers haven't rushed to take advantage of the new law, and those who have tried were met with a backlash from local communities (because e.g. they wanted to build a high-rise among detached houses or an apartment block at a park area). Therefore, can we consider „lex developer” a legislative flop?

Do apartment buyers need even more legal protection?

The Office of Competition and Consumer Protection (UOKiK) is still working on an amendment to the act on protecting the rights of buyers of housing units or single-family houses. It wants to create a special Developer Guarantee Fund, modelled on the Tourist Guarantee Fund, which all developers would support. In the event of a developer company going bankrupt during investment execution or a consumer withdrawing from an agreement due to the developer's failure to perform its obligations, this fund would cover all the losses incurred by consumers. According to UOKiK's assumptions, a developer will pay a contribution to the fund for each buyer's payment – depending on what type of account is held: for closed accounts contributions will be a maximum of 1 percent of an apartment's value, for open accounts up to 5 percent. In reality, they are expected to be much lower: they will be set by the minister in charge of construction, land use and development and housing in agreement with the minister in charge of financial institutions – depending on the market situation. Developers, in turn, believe that the act in its present shape ensures adequate protection of buyers and the introduction of such a fund – which they consider unnecessary – would only cause further apartment price increases.

The conversion act for immediate correction

On 1 January 2019, the act on conversion of perpetual usufruct rights for lands developed for housing purposes into ownership rights for these lands came into force. Thanks to the new regulations, 2.5 million of perpetual users have become owners of lands under their apartments. But the act requires urgent amendment. That's because of the paperwork which has paralyzed offices across Poland. City offices first have to send special certificates to all the interested (they have time until the end of 2019 to do it). Only in the next step can residents apply to make a one-time conversion payment and receive a rebate on this account (in some cities amounting to as much as 98 percent!). It quickly became clear that meeting the deadline was unrealistic – in the first quarter offices sent out only a tiny fraction of hundreds of thousands of necessary notices. For residents not to lose the possibility of benefitting from a rebate, it is necessary to statutorily extend the deadline for sending certificates as soon as possible.

FLEX is here to dispel your doubts

These are only some of the topics that will be addressed during the second edition of the „FLEX Real Estate and Construction Law Forum” conference, which will be held on 25 and 26 November at the Radisson Collection Hotel in Warsaw. Last year's premiere edition was met with an enthusiastic response and showed how much the real estate market needed a conference dedicated exclusively to real estate-related legal issues. Just like a year ago, over two days, major market players – lawyers, developers, advisors, analysts, representatives of local authorities, industry organizations and banks financing real estate investments – will discuss not only the current situation in the market, but also possible future scenarios. As usual with conferences by this organizer, you will be able to broaden your participation in the event by arranging meetings with other participants using the unique Match Maker platform. The solution makes it possible to establish new business contacts, which is often as beneficial as the knowledge acquired at the conference.

The conference's substantive partner is the law firm Kucharski & Partners. Honorary patronage over the event has been assumed by the Polish Association of Developers and the Warsaw Chamber of Civil Law Notaries. The media patrons are KRN, Krakowski Rynek Nieruchomoƛci and the portal EuropaProperty.

More info about conference: www.flexforum.pl.

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