Amendment to the Law on property development soon to be presented to the Sejm

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On 16 February 2021, the Council of Ministers adopted a draft amendment to the Act on the Protection of Rights of Buyers of Residential Premises and Single-Family Houses.

In addition to the creation of a Developer Guarantee Fund, the new solutions will impose additional administrative obligations on entrepreneurs related to reservation agreements, reporting or procedures for acceptance of residential units. The Polish Association of Developers (PZFD) comments on the proposed changes.

The creation of a Developer Guarantee Fund (DFG) with a sufficiently low premium could be a move that would increase the attractiveness of the real estate market. It would provide purchasers of real estate with guarantees greater than those granted to holders of bank deposits, guaranteeing protection also for funds in excess of EUR 100,000. It is good that the Office of Competition and Consumer Protection shared the arguments put forward and made the fees more realistic. From the very beginning, the PZFD argued that the premiums should not exceed 1% of the price of a flat.

The establishment of the DFG will entail the introduction of an additional fee for its benefit, of up to 2% of the value of the flat (unconfirmed information indicates that it may be limited to 1%). The PZFD estimates that, as a consequence, flat prices could increase by several thousand zlotys. Assuming payments at the level of 1%, given the current scale of the market, the Fund would eventually receive at least PLN 0.5bn annually.

PZFD hopes that UOKiK will also modify detailed provisions, about which the industry has raised very significant objections in terms of additional administrative burdens, undermining certainty of trade and balance of parties. It is only after the draft is made public that the Association plans to comment on it in detail.

Source: PZFD

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