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Buying Property in Poland: A Comprehensive Guide

If you're considering purchasing property in Poland, you've come to the right place. The Polish real estate market has been experiencing significant growth in recent years, making it an attractive option for both residential and...

If you're considering purchasing property in Poland, you've come to the right place. The Polish real estate market has been experiencing significant growth in recent years, making it an attractive option for both residential and investment purposes. However, buying property in Poland involves navigating through various legal regulations and understanding the local market. In this article, we'll provide you with essential information to make your property purchase in Poland a smooth and successful experience.

Real Estate Market in Poland

For several years now, the Polish real estate market has seen a steady and high growth in the number of transactions. This growth is mainly driven by robust demand for properties for housing and investment purposes. Buying property in Poland involves many formalities and requires knowledge of numerous legal regulations and the local market. As a result, there has been increased demand for legal services relating to real estate transactions.

Buying Property in Poland - Key Facts

Can foreigners buy property in Poland?

  • EU legal entities and citizens are free to buy properties in Poland, including lands, houses, and apartments, just like any Polish citizen.
  • Non-EU legal entities and citizens may be required to obtain a permit from the Ministry of Internal Affairs. However, the purchase of an apartment usually does not require a permit.

Property search websites

If you are looking for properties in Poland, you can visit the following websites:

Medium prices of properties in Poland (08.2022)

  • Apartment (Warsaw - PLN 12,000 / m²; Krakow - PLN 10,000 / m²)
  • House (Warsaw - PLN 8,500 / m²; Krakow - PLN 7,000 / m²)
  • Land (Mazovia - PLN 50,000 / ha; Greater Poland - PLN 70,000 / ha)

Standard broker commission in Poland

The majority of brokers charge 2.0% - 3.0% commission. However, it is possible to encounter commissions ranging from 4.0% - 6.0% in the market.

Property purchase taxes

  • VAT - 23%: This mainly applies to new properties and undeveloped real estate.
  • Transaction Tax - 2%

Notary fees

Notarial fees depend on several factors. For the purchase of a house or an apartment, the following table applies:

  • PLN 1,000,000 - PLN 2,000,000: PLN 4,770 + 0.2% above PLN 1,000,000
  • Above PLN 2,000,000: PLN 6,770 + 0.25% above PLN 2,000,000, with a maximum of PLN 10,000

Land and Mortgage Register - registration fee

The registration fee for the Land and Mortgage Register is PLN 200.

Real Estate and Residence in Poland

Ownership of real estate in Poland does not entitle you to residency in Poland. However, it may be considered as one of the criteria when evaluating temporary or permanent residence.

Usual stages of property conveyancing

  1. Property reservation
  2. Due diligence/real estate legal status research
  3. Preliminary Contract (regular or notarial form)
  4. Contract with financing bank
  5. Final Purchase Contract (notarial form)
  6. Registration of Purchase in basic databases (Land and Mortgage Registry, Property Tax Registry)

Purchase price

The purchase price should be of market value and can be agreed upon in any official currency, such as PLN, EUR, or USD.

Usual payment methods

  • Checks are commonly used in Poland.
  • Price payment is usually made via bank transfer, notarial deposit, or an escrow account.

Electronic land registry

You can access the electronic land registry here.

Types of Property Transactions

The most common property transactions in Poland include:

  • Buying an apartment
  • Buying a house
  • Buying land, including agricultural land
  • Buying a commercial property
  • Sale & Leaseback
  • Buying a real estate company

Property Purchase Process in Poland - Stages

Buying a property is almost never as simple as signing an agreement in a civil-notary's office. Usually, before the transaction is executed, the buyer conducts research to eliminate potential risks (property due diligence) and negotiates the commercial and legal terms of the transaction. There are also a number of obligations (tax, reporting, and contractual) that must be fulfilled after the execution of the transaction. Let's explore the stages of buying a property in Poland:

Stage 1 - Researching property legal status prior to the transaction

Before executing a transaction to buy a property, it is crucial to research the property's legal status. This research should include:

  • Verification of the seller's title to the property
  • Identification of limited real rights and other third-party claims and rights
  • Evaluation of planning regulations, historic conservation protection, and compliance with building and construction laws

The scope of the research depends on the type and value of the transaction. For simple transactions concerning apartments, the research can be limited to the elimination of basic risks through the verification of documents and publicly available property registers. In the case of commercial real estate, a detailed due diligence process is usually conducted, covering legal, commercial, valuation, and technical aspects.

Stage 2 - Preliminary property purchase agreement and the final property purchase agreement

In most cases, the execution of the final property sale agreement is preceded by the execution of a preliminary sale agreement. This preliminary agreement sets out the essential provisions of the final agreement, including the property designation, description, price, and conditions that need to be fulfilled before the final agreement can be executed. The final agreement is executed once the agreed conditions, such as obtaining consents or financing, are fulfilled.

Stage 3 - Post-closing actions - obligations after the purchase of a property

After the sale agreement is executed, several obligations need to be fulfilled:

  • Handover of the property: The seller is required to hand over the property to the buyer, usually involving an on-site inspection and the signing of a handover certificate.
  • Handover of documents: The seller should provide the buyer with necessary property-related documents, such as a maintenance logbook, energy performance certificate, or lease agreements.
  • Filing an application for an entry in the land and mortgage register: The buyer should apply to the court to be entered as the owner of the property in the land and mortgage register.
  • Reporting the transaction for real estate tax purposes: The buyer is required to report the purchase of the property for real estate tax purposes to the proper administrative authorities within 14 days of the transaction.
  • Executing contracts with utility suppliers: The buyer needs to sign new contracts with utility suppliers, as the existing contracts are not automatically transferred.
  • Notifying leaseholders and the housing community: If the property is leased or part of a larger complex, the buyer needs to notify leaseholders and the housing community about the change of ownership.
  • Property insurance: While not mandatory, it is recommended to take out insurance against fire and other random events as well as third-party liability.

These are just some of the obligations buyers may need to fulfill, depending on the type and circumstances of the transaction.

Buying Property in Poland - Agreements

When buying property in Poland, you will need to execute various agreements, depending on the circumstances. Here are the most common ones:

1. Property reservation agreement

A reservation agreement is typically executed when a property is sold through a real estate agent. It ensures that the seller will not sell the property to another person for a specified period. The agreement includes the property designation, sale price, period of reservation, and a reservation fee if applicable.

2. Development agreement

A development agreement is a contract related to residential properties. Under this agreement, a developer undertakes to erect a building and transfer the title to the property to the buyer. This agreement requires the form of a notarial act and is subject to specific legal regulations protecting the buyer's rights.

3. Preliminary property purchase agreement

A preliminary agreement sets out the essential terms of the final property purchase agreement. It includes details such as the property designation, sale price, and conditions that need to be fulfilled before the final agreement can be executed. A preliminary agreement can be enforced through court proceedings if one party defaults on their obligations.

4. Final property purchase agreement

The final property purchase agreement is a notarial deed that transfers the title to the property from the seller to the buyer. It includes a detailed description of the property, sale price, payment terms, and conditions of the property handover.

What properties and entitlements can be purchased?

Foreigners can purchase different types of properties in Poland, including lands, buildings, and apartments. The entitlements to these properties may vary:

  • Ownership: Buying the right of ownership to a property in Poland provides broad entitlements, including possession, usage, and disposal.
  • Perpetual usufruct: Perpetual usufruct is similar to ownership, where the lands are formally owned by the Polish State or State entities. The perpetual usufructor has substantial rights, including possession, usage, and disposal of the property.
  • Share in the building with an assigned apartment: In exceptional situations, the right to an apartment may be derived from an individual's share in the land or building. This type of ownership is co-ownership of the building rather than separate ownership of the apartment.
  • Cooperative member's ownership right in an apartment: This right is similar to ownership, where cooperative members have possession, usage, and disposal rights to their apartments.
  • Cooperative housing tenancy right: This right is similar to a lease, providing possession and usage rights but not the right of disposal.

This comprehensive guide provides you with the necessary information and steps to navigate the property purchase process in Poland successfully. Whether you're looking for a residential property or considering an investment opportunity, understanding the legal regulations and following the correct procedures is crucial. With this knowledge in hand, you can confidently embark on your journey to buy property in Poland.