Some aspects of alternative and affordable housing in Poland

1. Some aspects of alternative and affordable housing in Poland Jarosław BYDŁOSZ, Piotr PARZYCH, Poland Department of GeomaticsFaculty of Mining Surveying and Environmental EngineeringJoint FIG Commission 3 and Commission 7 WorkshopSofia, Bulgaria, 14-17 November 2010

2. IDEA BEHIND THE ESTABLISHMENT OF HOUSING ASSOCIATIONS (TBS) • Buying property with the title of ownership usually involves considerable expenses. • Given the financial potential of an average Pole, they are forced to take out a loan to make such investment. • People who are not creditworthy or unwilling to undertake so much usually choose to rent a flat from private persons.

3. IDEA BEHIND THE ESTABLISHMENT OF HOUSING ASSOCIATIONS • An Act on some forms of supporting house building was passed on 26 October 1995. • It defines the rules of how the National Housing Fund and Housing Associations should function. • A system of building rentable flats was introduced in Poland under the Act. • The purpose of the Act was to make possible the building of flats which would be affordable to so called „middle-class” people possessing no other flats. • The flats were to be built with the participation of the state which granted loans on preferential terms, being half cheaper than the commercial loans.

4. TERMS ON WHICH HOUSING ASSOCIATIONS FUNCTION • The main legal act which establishes housing associations (TBS) and regulates their functioning is the Act of 16 October 1995 on some forms of supporting house building. • Of course, the functioning of housing associations is strictly related to the possibility of being granted loans by the National Housing Fund which was launched by the National Economy Bank (BGK).

5. TERMS ON WHICH HOUSING ASSOCIATIONS FUNCTION • A commune gives its own land for a building to be built, which reduces the cost of the whole investment. • The commune creates conditions for the development of rentable-house building on its area and in this way it increases the housing resources and at the same time satisfies people’s housing needs. • An additional advantage of such actions is that the commune’s financial input in the building of new flats is limited and amounts usually to 30%, which, as opposed to council flats, makes it possible to save considerable capital.

6. TERMS ON WHICH A LOAN IS GRANTED • The whole process of building or renovating flats by housing associations has been made possible only by the launching of the National Housing Fund administered by the National Economy Bank. Under the Act on some forms of supporting house building, the Fund is above all composed of: • budgetary resources specified in the budget act, • interest on granted loans, • interest on the Fund capital deposited in banks, • income from the Fund capital being invested in securities issued by the State Treasury or the National Bank of Poland.

7. NATIONAL HOUSING FUND • The National Housing Fund was liquidated in 2009 • The National Economy Bank (BGK) is supposed to grant preferential loans there

8. TERMS ON WHICH A LOAN IS GRANTED • Using the capital gains, the Fund (presently BGK bank) may allot money to: • granting loans, on preferential terms, to housing associations and housing cooperatives for the building of residential premises, • granting loans, on preferential terms, to communes for the development of public technical infrastructure which accompanies the house building carried out in accordance with the Act.

9. ACTIVITIES OF HOUSING ASSOCIATIONS • The most important thing as far as the activities of housing associations are concerned is that they are non-profit. • They are the only example of a commercial law company whose aim is not to generate profit to be shared among partners. • Any income received by a housing association conducting its activities is allocated entirely to the building or purchase of rentable flats and their maintenance.

10. ACTIVITIES OF HOUSING ASSOCIATIONS • The main activity of housing associations is the construction of residential buildings and their use by leasing. • They also may: • purchase residential buildings, • renovate and modernise buildings which are for lease purposes, • manage their residential and non-residential buildings under contracts for services, • rent business rooms located in their buildings.

11. TRANSFORMATION OF RIGHTS TO RESIDENTIAL PREMISES FROM HOUSING ASSOCIATIONS’ RESOURCES AND EVALUATION OF RESIDENTIAL PREMISES • Residential premises from the resources of housing associations are premises with no title of separate ownership. • The legislator has not specified in any way what will happen to the tenants and the residential premises they live in after the loan granted by the National Housing Fund is paid up. • The Ministry of Infrastructure is currently preparing a new bill on housing associations. • The bill provides for the possibility of purchasing flats with the title of ownership even before the loan from the National Housing Fund is paid up. However, the situation of the tenants who live in housing associations’ residential premises varies, which is why it will be difficult to define uniform and cohesive rules for all those who want to buy premises with the title of ownership.

12. CONCLUSIONS • The institution, which are the housing associations, despite its great contribution to the development of house building in Poland, seems to be undervalued and left alone. • The Act which set up housing association companies has not been amended in any significant manner with regard to the housing association idea since 2004. • The associations, although they are commercial law companies, exist on a non-profit basis, which means that their shareholders have no income for themselves from the company, except that they receive salary under the employment agreement.

13. CONCLUSIONS • While building rentable flats with the use of loans granted by the National Economy Bank on preferential terms, the associations not only gave the communes the opportunity to perform housing policy tasks but they also gave ordinary citizens a chance to have their own flat. • There is only one problem: “your own flat” is not fully your own. • Despite the agreement to participate, that is, although a person living in the residential premises from the housing association resources shared the construction costs of the residential premises and although they paid up the loan taken out by the housing association while paying the rent for the flat, such person is still not the rightful owner of the residential premises. • As regards housing associations, no solutions are provided for in this matternow. • Some legal regulations are being prepared by central government, but it is not known when (or if) they become a law

14. CONCLUSIONS • The current situation of a world economic crisis will force state authorities to restructure the system of financing the alternative forms of house building and to change legal regulations, with the latter being directly connected to the former. • The problem of regulating the ownership of property which was built that way should also be solved as soon as possible.

15. THANK YOU VERY MUCH