Buying Property in Poland as a Foreigner

The real estate market in Poland has been experiencing steady and robust growth in recent years, driven by high demand for housing and investment properties. When considering purchasing property in Poland, it is essential to be well-informed about the various aspects of the process, including legal regulations and the local market. This knowledge is crucial, and it often leads to an increased demand for legal services related to real estate transactions.

Property Purchase by Foreigners in Poland

One of the first questions that often arises for foreign buyers is, “Can a foreigner buy property in Poland?” The answer depends on the nationality and legal entity of the buyer:

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

Property Search and Pricing

Before diving into the property purchase process, it’s essential to find the right property. You can explore listings on popular property search websites like Otodom and Morizon. To get an idea of property prices in Poland, here are some approximate figures as of August 2022:

• Apartment (Warsaw): PLN 12,000 per square meter; (Krakow): PLN 10,000 per square meter.
• House (Warsaw): PLN 8,500 per square meter; (Krakow): PLN 7,000 per square meter.
• Land (Mazovia): PLN 50,000 per hectare; (Greater Poland): PLN 70,000 per hectare.

Broker Commission and Property Purchase Taxes

When working with a real estate broker in Poland, it’s essential to understand the commission structure. While the majority of brokers charge between 2.0% to 3.0%, it’s possible to encounter commissions ranging from 4.0% to 6.0% in the market.

Property purchase also involves various taxes and fees:

• VAT (Value Added Tax): 23%, primarily applicable to new properties and undeveloped real estate.
• Transaction Tax: 2%.
• Notary Fees: The fees for a notarial deed depend on the property’s purchase price. For properties between PLN 1,000,000 and PLN 2,000,000, expect PLN 4,770 plus 0.2% above PLN 1,000,000. For properties above PLN 2,000,000, it’s PLN 6,770 plus 0.25% above PLN 2,000,000, with a maximum of PLN 10,000.

Property Ownership and Residency in Poland

Owning real estate in Poland does not automatically grant you residency in the country. However, it may be considered one of the criteria when evaluating temporary or permanent residence.

Property Purchase Process in Poland – Key Stages

The property purchase process in Poland typically involves several key stages:

Stage 1 – Researching Property Legal Status Prior to Transaction:

• Verify the seller’s title to the property.
• Check for any limited real rights or third-party claims and rights.
• Assess compliance with planning regulations, historic conservation protection, and construction laws.
• Determine if you need special permits, depending on the property type and value.

Stage 2 – Preliminary Property Purchase Agreement and the Final Property Purchase Agreement:

• In most cases, a preliminary sale agreement is signed before the final sale agreement.
• The preliminary agreement outlines essential provisions, conditions, and obligations to ensure the final sale agreement’s execution.

Stage 3 – Post-Closing Actions – Obligations After the Purchase:

• Property handover, including inspection and signing a handover certificate.
• Transfer of necessary property documents.
• Application for entry in the land and mortgage register.
• Reporting the transaction for real estate tax purposes.
• Executing contracts with utility suppliers.
• Notifying leaseholders and housing communities about the property’s change in ownership.
• Property insurance, though not mandatory, is recommended for protection.

Property Purchase Agreements in Poland

When purchasing property in Poland, various types of agreements may come into play:

1. Property Reservation Agreement: This agreement is typically used in the case of property sales through a real estate agency. It outlines the property details, sale price, reservation period, and reservation fee. Notarial form is not required for this agreement.
2. Development Agreement: This type of agreement is related to residential properties, where a developer undertakes to build and transfer the title to a property. The terms and conditions are regulated by legislation to protect the buyer.
3. Preliminary Property Purchase Agreement: This agreement is executed when the final transaction cannot occur immediately. It includes essential terms of the final purchase agreement and conditions to be fulfilled.
4. Final Property Purchase Agreement: This agreement, which must be in notarial deed form, transfers the property title to the buyer.

Types of Properties and Entitlements for Purchase

Foreigners can purchase various types of properties in Poland, and the entitlements include:

• Ownership: The broadest property entitlement that includes right of possession, usage, and disposal.
• Perpetual Usufruct: Similar to ownership but subject to an annual usufruct fee.
• Share in the Building with Assigned Apartment: Uncommon and complicated ownership, often not suitable for foreigners.
• Cooperative Member’s Ownership Right in an Apartment: Transferable, inheritable, and enforceable.
• Cooperative Housing Tenancy Right: Similar to lease but without the right of disposal.

Understanding the nuances of property types and entitlements is vital for foreign buyers in Poland. It’s recommended to consult with a legal expert and conduct thorough due diligence to ensure a smooth and secure property purchase.

In summary, buying property in Poland as a foreigner is indeed possible, but it involves a series of legal, financial, and administrative steps. Being well-informed about the process and engaging professional assistance will help you navigate the Polish real estate market and make a successful property purchase.