Polish Ministry of Development seeks to restore perpetual usufruct rights for residential land while clarifying property rights under apartment buildings.
Ministry’s Proposal
The Polish Ministry of Development and Technology wants to restore the possibility of establishing perpetual usufruct rights to residential land. The ministry is also attempting to regulate the legal status of land, primarily under Warsaw apartment blocks. A bill to regulate rights to land built upon by housing cooperatives and to amend the Act on Real Estate Management and other acts has been submitted to the Government Legislation Center.
Current Ban
Currently, there is a ban on establishing perpetual usufruct for residential purposes. The development ministry proposes to abandon this ban, thus partially reversing the seven-year-old reform aimed at gradually eliminating this right. This reform then enfranchised nearly 2.5 million residents of apartment blocks and single-family homes.
Who Benefits
Housing cooperatives and Social Housing Initiatives will benefit from the return of perpetual usufruct rights. The lifting of the ban is intended to facilitate their implementation of social housing investments, which are not profit-oriented but aim to meet real housing needs.
Financial Conditions
For land granted in perpetual usufruct for apartments, social construction, and housing investments for students and doctoral students, preferential financial conditions have been proposed. The annual fee for perpetual usufruct is to be 0.3% of the land value, with the initial fee not exceeding 10% of its price.
Historical Context
The Ministry of Development also wants to regulate the legal situation of land under apartment blocks. The unclear legal status of these properties is a legacy of the PRL era. The problem did not arise from nowhere; it originated in the times of the Polish People’s Republic and grew over the years.
Supreme Court Rulings
The then authorities (national councils), which issued permits for building apartment blocks, did not pay special attention to formalities and made many mistakes in this regard. Now, after years, this is taking its toll on cooperatives and their residents. The case law of the Supreme Court also played a role in this. Until the end of 2012, it was permissible to convert tenant rights to an apartment into ownership rights in buildings standing on land with an unregulated legal status.
New Regulations
The situation changed in 2013, following a resolution of the same court (III CZP 104/12). At that time, seven Supreme Court judges ruled that ownership right to an apartment in a building situated on land that the cooperative neither owns nor holds in perpetual usufruct has only the character of an expectation, i.e., a promise of that right. As a result, it became impermissible to establish a land register to disclose it.
Implementation Details
The project provides that housing cooperatives will be able to demand the establishment of perpetual usufruct right to the land and the free transfer of ownership of the buildings if these buildings were constructed on land belonging to the State Treasury or a local government. The provisions are to apply for only one year. For establishing the right of perpetual usufruct, the cooperative will pay the city hall an initial annual fee of 15-25% of the market value, and then will have to pay annual fees of 1% of the property value.
