This is the end of an era on the Polish real estate market. The rules are changing now

August 31 was the last day of application of the special housing act. Proceedings commenced before this date will not expire, but from September 1, it will not be possible to launch new investments in this mode.

Its role is to be taken over primarily by an integrated investment plan. The change will not stop construction works overnight, but it may determine how quickly cities will release more land for housing.

Eight years of a unique path

The special housing act, commonly known as the “lex developer”, entered into force in August 2018. Its most important solution was that the commune council could determine the location of a housing investment also when the applicable local plan did not provide for residential development in a given place. However, the investment had to meet the requirements of the Act and local urban planning standards, and the final decision rested with the local government.

Therefore, it was not an automatic building permit or the right to bypass the commune. The investor submitted an application with a concept, residents could submit comments, and the commune council adopted a resolution on determining the location or refused to determine it. Only later did the investor move on to further stages of the construction process.

The special act was controversial from the very beginning. Its opponents saw it as an opportunity to bypass local plans, especially where they were outdated or excluded a residential function. Supporters, however, pointed out that without this path it would be much more difficult to transform former industrial, office and post-industrial areas into new parts of the city.

Up to 100 thousand apartments, but this is the industry’s estimate

According to the Polish Association of Developer Companies, the number of apartments built on the basis of the special act may reach 100,000. For comparison, developers in recent years have started construction of approximately 120-130 thousand sq m in Poland. apartments per year. The industry estimate therefore indicates that this was not a marginal solution, although this number should not be treated as a complete official statistics of all completed investments.

– The importance of “lex developer” is best seen not on the scale of a single construction, but in the total potential of the areas that could be restored to the city. The special act did not create apartments itself, but it made it possible to start a conversation about the investment where the usual planning path was closed or very long – comments Jarosław Jędrzyński, expert of the RynekPierwotny.pl portal.

Once initiated proceedings are not lost

The expiration of the act on September 1 does not mean the deletion of all projects prepared on its basis. Transitional provisions allow proceedings initiated before that date to continue. The commune council will therefore be able to adopt a location resolution also after August 31, if the matter has been effectively initiated earlier.

The mere expiration of the Act does not eliminate investments that have already obtained a location resolution and are at subsequent stages of preparation or implementation. The limit applies primarily to new proceedings: from September 1, another project will no longer be able to be launched under the special act procedure.

– The expiry of the special purpose act does not invalidate resolutions or permits issued under existing regulations and does not suspend ongoing investments. However, from September 1, new procedures in this special formula cannot be initiated. Therefore, we will see the impact of the change on supply with a delay, not overnight, emphasizes Jarosław Jędrzyński.

ZPI is intended to replace the special act

The basic successor of the “lex developer” is to be an integrated investment plan, i.e. ZPI. It is a special form of local plan adopted by the commune council at the request of the investor. Unlike the special purpose act, it is not limited only to residential investments.

The investor presents the ZPI project, and the commune head, mayor or city president conducts negotiations with him regarding the plan and the urban planning agreement. In the agreement, the investor undertakes to implement a complementary investment, e.g. a road, technical infrastructure, school, kindergarten or recreational facility. It may also cover certain costs incurred by the municipality. The project is subject to opinions, arrangements and social consultations, and finally it is voted on by the commune council.

Therefore, ZPI retains the most important idea of ​​the special act: the investor does not receive the right to develop unilaterally, but proposes a comprehensive solution to the commune, which may include both apartments and the infrastructure needed by their future residents.

This is not “lex developer” under a new name

However, the differences are important. The resolution adopted on the basis of the special act had the nature of a decision for a specific investment. ZPI is an act of local law and, after entering into force, replaces the previous local plan or part of it in the covered area.

Negotiations between the commune and the investor are also more extensive. They can improve the quality of investments and increase the developer’s share in infrastructure financing, but at the same time they increase the importance of the office’s experience and clear rules for conducting negotiations. Municipal councils may specify in resolutions the principles of preparing urban planning agreements, but the practice in individual cities is still developing.

The special act provided for the adoption of a location resolution generally within 60 days from the publication of a complete application, and in justified cases within 90 days. In the case of ZPI, there is a deadline for the final decision of the municipal council, but prior negotiations, arrangements and consultations do not have one, simple deadline for the entire procedure. For the investor, not only the content of the regulations will be important, but also the efficiency of a specific local government.

The risk will show up in future supply

The change may be most important in large cities, where some attractive areas are still intended for industrial, warehouse or service purposes, which no longer correspond to the way the area is developing. A classic change of the local plan may take a long time, but obtaining a decision on development conditions will not always be possible or sufficient for a large housing estate.

If the ZPI procedures are efficient and predictable, the expiry of the special purpose act will primarily be a change of instrument. However, if negotiations are prolonged and the requirements of individual municipalities are difficult to estimate, some projects may be postponed. The cost of preparing a complex plan and infrastructure may also reward the largest developers with capital and planning teams.

This does not necessarily limit the number of apartments delivered in the coming quarters, because the current production results from decisions made earlier. The potential bottleneck would become apparent later: first in the number of projects ready to start, then in construction starts, and only finally in the offer and deliveries.

A double change in spatial planning

The expiration of the “lex developer” coincides with the cut-off date of the planning reform. On August 31 at the latest, the existing studies of conditions, which replace the general plans of municipalities, expire. This does not mean that existing local plans lose their validity, but it increases the importance of how far individual communes have gone in preparing new documents.

For the market, this is not just one technical correction, but a broader change in the way land is allocated for development. Developers, landowners and local governments will have to learn how to operate general plans and use ZPI more frequently.

The real test began on September 1

The special act expires after eight years, but its projects will remain on the market for a long time. Therefore, the assessment of the change should not be reduced to the question whether “lex developer” was good or bad. What is more important is whether the new tools will enable equally effective transformation of degraded and unused areas, while providing municipalities with infrastructure and control over spatial order.

– If ZPI starts operating on a larger scale, we will have to sort out the current path. If it remains an instrument used sporadically, today’s expiration of the special act may translate into a smaller supply of new projects after a few years. This will not be decided by the act itself, but by the practice of local governments – sums up the expert from the RynekPierwotny.pl portal.

Jarosław Jędrzyński, expert of the RynekPierwotny.pl portal