Tax & Legal Highlights for Real Estate – June 2021
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1. The new Act on protection of rights of buyers of a flat or single-family house and the Development Guarantee Fund
On 8 June the President signed the Act of 20 May 2021 on protection of rights of buyers of a flat or single-family house and the Development Guarantee Fund. The Act shall enter into force 12 months from the date of its announcement, except for: 1) provisions relating to the establishment of the Development Guarantee Fund, biding after 30 days from the date of announcement; 2) changes in the Act on certain forms of support for housing construction and changes in the Act on the protection of rights of the buyer of a flat or a single-family house, entering into force on the day following the date of announcement.
This Act will replace the previously binding Act of 16 September and it modifies the existing institutions and introduces some new solutions. Among these new solutions one can find that the Act covers all agreements under which the developer may undertake to establish rights under the developer agreement, i.e. such agreements which include the developer’s obligation to build a flat or a single-family house and the establishment of a separate ownership right and the transfer of ownership of a flat or a single-family house. In the current legal status, the statutory protection of buyers concerned only binding agreements, for which the decision on the occupancy permit for a flat had not been issued, and in the case of a single-family house – no notification of construction completion was submitted. According to the project promoters, this limited the ability to protect buyers under contracts concluded with the developer after the completion of construction, i.e. after obtaining an occupancy permit. The new regulations also include statutory protection for new flats and single-family houses that were built as a result of the reconstruction. Binding agreements concluded with the developer in relation to commercial premises, which are not intended for business activity, but are located within the same development project or investment as the purchased apartment or single-family house, i.e. parking lots, garages, bicycle boxes, rooms for recreational purposes, etc., will be protected by the Act.
Based on the Act the Development Guarantee Fund (DGF) will be established, which will constitute a separate account in the Insurance Guarantee Fund. DGF will be financed mainly from contributions paid by developers. The Act stipulates that the buyer of an apartment may only pay into an escrow account. The developer will be able to choose whether to offer open or closed accounts to its clients. However, at the same time, it will have to pay contributions to the newly created DFG on each payment. Its amount will be determined by the minister relevant for the construction matters, except that its maximum height cannot exceed:
- 1 percent in the case of an open housing escrow account (OMRP);
- 1 percent in the case of a closed housing escrow account (ZMRP).
2. Amendment to the Act of 13 September 1996 on maintaining tidiness and order within communes and certain other acts
On 15 June 2021the Council of Ministers adopted a draft amendment to the Act of 19 July 2019 changing the Act on maintaining tidiness and order within communes and certain other acts. The main purpose of the proposed changes is to reduce the cost of waste management.
The draft sets the maximum amount of fee for the municipal waste management calculated based on the method “on the amount of water consumed”. It will be 7.8 percent of disposable income per one person per household, i.e. about 150 PLN. Such a method has been in force in Warsaw since 1 April 2021. Setting a maximum rate will allow to avoid disproportionately charging residents for municipal waste management.
The government wants to introduce the possibility of individual billing of residents for waste segregation. At present, residents of multi-apartment buildings are collectively responsible for waste segregation, as waste declarations are submitted to the municipality by the owner or manager of the property, e.g. the management board of a housing cooperative, and not by the apartment owner.
Another amendment is to grant municipal councils the right to differentiate the fee rate depending on the usable floor area of the residential unit, amount of water consumed from a given property or residential unit, number of residents of the property, number of persons or amount of water consumed in a household, collection of waste from rural or urban areas and type of development.
Local government officials point out however that the draft amendment to the Act was not sufficiently consulted with local governments.
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