Construction will be the biggest challenge for the new Ministry of Development, Jadwiga Emilewicz, who was handed the development portfolio in the new government, has said. Ms. Emilewicz headed the Ministry of Enterprise and Technology in the previous government. The new Ministry of Development was created largely from that ministry, but its remit has been broadened to include two new areas: construction, urban planning & development and housing, tourism.
Acceleration of Mieszkanie Plus scheme?
In the construction sphere, the implementation of the Mieszkanie Plus scheme will be the most important task, of course, Ms. Emilewicz said. In her opinion, the biggest challenges as far as Mieszkanie Plus is concerned are the following: selecting appropriate locations (including geolocation to optimise costs); increased role of state entities in areas where private developers do not want to invest or where cooperatives are weaker; speeding up the construction of low-cost rental housing and social housing; and cooperation with third parties, i.e. private property developers. The minister said in an interview with PAP: “This is a model, already implemented in some countries, in which a commercial developer, when building commercial real estate, is obliged to make some of the flats he releases on the market in an affordable system. I think that such a dialogue will succeed to run with our developers. “
According to Minister Emilewicz: “Mieszkanie Plus scheme is addressed to people without creditworthiness, but this cannot mean that housing projects will be implemented in a lower standard. The challenge still remains how to make the location of these projects adequate, that is, that such investments are carried out where the demand for them is greatest. Therefore, the developer representing the State Treasury should appear in places where private developers do not want to invest or where cooperatives are weaker. Here I would see a greater role for state-owned entities.”
Return to the idea of REITs
Ms. Emilewicz also said that the ministry would resume work to introduce real estate investment trusts (REITs) into the Polish legal system, noting that it was something that the sector was keenly waiting for. (The previous government drafted a legislative proposal under which REIT-type entities, called FINNs – having the legal structure of joint-stock companies and listed on the stock market – would be offered preferential terms to invest in rental housing in Poland. But the bill got stuck after the first reading in Parliament.)
The last draft then included tax incentives:
- applying a CIT rate of 8.5% on the income obtained by companies for the rental of residential real estate
- deferment of the CIT payment deadline – this would involve deferring the tax obligation on income generated by REIT, including from the rental of residential real estate and their sale – until the dividend is paid to the shareholders
- exemption from income tax on income of subsidiaries obtained from the rental and sale of residential real estate.