Buying a House in Poland
- Property purchase in Poland
- Buying Apartment
- Buying a House
- Buying Land
- Property Due Diligence
- Polish Property Registers
- Mortgage in Poland
- Property Purchase and Tax
- Buying Property by Foreigner
- Property lease
- Property Development in Poland
House in Poland
Living in a house with a garden and a garage is the dream of many people around the world. The same can be said about people living in Poland, where the demand for houses has continued to drive the surge of supply. What is more, in the wake of the COVID-19 pandemic, work organization and lifestyle of many Poles have changed, which prompted many residents of crowded agglomerations to move to the suburbs or smaller towns. This has led to increased interest in buying a house in Poland, both in the primary and the secondary markets.
Foreign buyers should note that, unlike in the case of buying apartment, the purchase of a house by a natural person or a business entity from outside the European Economic Area and Switzerland will in most cases require the permit of the minister of internal affairs (property purchase permit).
Read more: Permit to buy a property in Poland.
House (residential building) from the perspective of the Polish law
A house (a residential building) is not a standalone property. In accordance with the Polish law, a residential building generally is a part of the land lot it stands on. In practice, this means that a land lot and a building / house attached to it constitute a single property and cannot be bought separately. In the case where a building is erected on a land lot on which perpetual usufruct right is established, the title to the building, while being separate from the title to the land, is still attached to it. This means that the title to the building must share the legal fate of the perpetual usufruct right to the land and can be transferred to a third party (e.g. following a sale) or encumbered with a limited real right (e.g. a mortgage) only if the perpetual usufruct right to land is transferred or encumbered, as well.
Buying a house in the primary market and the secondary market
Houses offered by developers in the primary market are purchased on the basis of a development contract executed as a notarial act while the house itself is still under construction.
Regardless whether you buy a house in the primary market from a person who is not a developer or in the secondary market, you and the seller will need to enter into a sale agreement in the form of a notarial act.
Buying a house – the required elements of the agreement
An agreement to sell a house should include at least the following:
- the exact designation of the land lot and the house, including the location and the area as stated in the land and buildings register, the number of the land and mortgage register,
- the sale price and the due payment date,
- provisions binding the seller to hand over the immovable property to the buyer on a specific date.
In practice, house sale agreements include as well:
- parties’ representations (warranties) relating to the technical condition of the house, the legal status of the house, including the entries in the land and mortgage register and the existence of third-party rights and claims that have not been disclosed in the land and mortgage register (or the absence thereof),
- provisions related to access to a public road – if a land lot with a house has direct access to a public road, the seller’s warranty confirming as much will usually be sufficient. In the case where a public road can be accessed through an internal road owned by the seller or a third party, the buyer must buy a share in the co-ownership of the lot constituting the internal road or have an appropriate servitude established to their benefit,
- provisions related to the transfer to the buyer of author’s economic rights to the building design,
- provisions related to the transfer to the buyer of rights under the implied and express warranties granted by the contractor who handled the construction works,
- price payment terms – e.g. the price is to be placed in a notarial deposit, paid directly using a wire transfer upon the signing of the agreement, paid with funds from a mortgage loan,
- provisions on the repayment of a loan secured with a mortgage established on the property with a part of the sale price,
- parties’ statements on submission to enforcement in respect of the obligation to hand over the property and pay the price – thanks to these provisions, the parties will be able to initiate a simplified debt enforcement procedure in the event that the other party fails to fulfill its obligation in time.
Researching the legal status of the property before buying a house
Before buying a land lot with a house, you should ask the seller to hand over documents confirming the current legal status of the property in question. Some of the documents are required by law, while others are not necessary to execute a sale agreement, however, a buyer should be able to review them. These are the key documents that a buyer should obtain prior the execution of the house purchase agreement:
- a copy of the land and mortgage register – it is a public document confirming the current legal status of a property, containing key information, such as the details of the owner, the details of disclosed third-party rights and claims relating to the apartment (e.g. the right of habitation, the right of usufruct, lifetime interest in a property);
- extracts from the land and building register (extract from the land register, extract from building register (rejestr budynków) or records (kartoteka budynków) – these public documents confirm the location and the area of a land lot, the location, number and the area of a building, the number of rooms, the permitted use of the building;
- a certificate confirming the existence of a revitalization area or a special revitalization zone (or the absence thereof) in respect of the area where the land with lot with the house is located – this certificate shows if the house is encumbered with the right of preemption held by the municipality (gmina) where the property is located. The preemption right may be created to the benefit of the municipality if a given address is covered by a revitalization area or a special revitalization zone;
- if a land lot with a house was acquired by the seller by way of inheritance or gift, the seller will need a written consent for the disposal of the property acquired by inheritance or gift issued by the tax office head or a certificate issued by the tax office head confirming that the acquisition of the property by way of inheritance or gift is exempt from the inheritance and gift tax or the due tax was paid or the statute of limitation on the obligation to pay the tax expired;
- a certificate confirming that nobody is registered as a resident of the house – although the mere fact that a person is registered as a resident of a house is not a title authorizing them to use that house, the risk that an apartment is occupied by anyone other than the seller is lower if such a certificate is obtained;
- if the land and mortgage register mentions any mortgages, e.g., ones established as a security for a bank loan taken out by the seller, it is necessary to obtain the mortgagee’s statement confirming the current balance of the debt before executing the sale agreement.
- On that basis, the parties will agree in the sale agreement that a portion of the price equal to the outstanding mortgage loan will be paid by the buyer directly to the account of the mortgagee (the bank) as a repayment of the seller’s debt secured with the mortgage.
- In the case where the mortgagee is not a bank or a public institution, but a different entity, it is also advisable to examine the documents establishing the mortgage, in addition to the mortgagee’s statement.
- This way, the buyer can verify whether the payment of the sum specified in the statement will be sufficient to satisfy the entire debt secured with the mortgage. Once the mortgagee receives the payment, they are required to issue a document that is necessary to have the mortgage stricken off of the land and mortgage register.
- If there are any doubts as to whether the mortgagee will provide the document after receiving the payment, the buyer should make sure that the document required to have the mortgage stricken off is deposited with a civil-law notary before the execution of the sale agreement.
- It will be handed over to the buyer upon presentation of proof to the notary that the balance of the mortgage loan was repaid;
- a certificate confirming whether or not the building is listed in the heritage register (rejestr zabytków) – some construction works, including renovation, may require an additional permit from a historic conservation officer in the case of old, historic buildings listed in the heritage register;
- a certificate confirming whether or not any proceedings are pending with respect to the building in connection with illegal construction or proceedings which may lead to a demolition order – this certificate may be especially important in the case of an old building with incomplete documentation regarding the construction process;
- an energy performance certificate – the law requires the owner of the building to have an energy performance certificate issued for the building. An energy performance certificate remains valid for 10 years from the issue date. When the building is sold, the seller has the obligation to hand over the document to the buyer. Otherwise, the buyer may send a written notice to the seller within 14 days from the execution of the agreement, requesting the seller to comply with this obligation within 2 months from receiving the notice. In the case where the energy performance certificate is not provided within 2 months from the receipt of the notice, the buyer can, no later than 12 months from the execution of the agreement, have the energy performance certificate drawn up at the seller’s expense.
Buying a house – taxes
If you buy an house from the primary market with an area of up to 300 m2, you will pay VAT at the rate of 8%. In the case of bigger houses with an area of more than 300 m2, the transaction is taxed at 23%. VAT is included in the price paid to the seller, who is usually a developer or a construction business selling a land lot with a ready-to-move-in residential building.
Generally, you will not pay VAT, if you buy a house from the secondary market. Instead, you will be required to pay the tax on civil-law transactions at 2% of the price of the property. This tax is collected by a civil-law notary upon the execution of the sale agreement.
You can read more about taxation of property purchase transactions in Poland – Property Purchase Tax.