1. DEVELOPMENT OF THE HOUSING MARKET IN POLAND AND POTENTIAL FOR RENTALS Grzegorz Panek University of Silesia, Katowice POLAND

2. Historical evolution of the housing situation and policies

3. Aging resources and unit scarcity 2008 – proportion of houses constructed before 1989 to overall number of houses (residential) – 84,8% In mid 90’s nearly 30% of municipal units in the cities still came from before 1918

4. Wars and crises Landlords’ position has always been tough: 1919 – government freezes rents at 1914 rates. 1944 – same formula applied (pre-war rents)

5. Landlords ousted gradually Ladnlords’ empty pocket Public authorities and institutions could claim title to premises reconditioned from their own funds where private owners failed to comply with the duty to renovate tenements at their own expense

6. Social ownership Special protection referring to assets held by the state, cooperatives and other NGO’s – art. 126 1 PCC. Private ownership and construction of lease persisted (unlike e.g. in Czechoslovakia or DDR), however, private stock submitted to the system of administrative allocations and regulated rent (with scarce public support for repairs)

7. Housing deficit is nothing new Shortly before the WW II statistical unit was occupied by 4.83 persons, statistical room by 2,56 individuals Comparable data from England, Holland or Denmark – the number of occupiers already exceeded the number of rooms.

8. Outset of transformations 1988 –housing deficit: 1,295,000 By 1995 the shortfall increases to 1.4 million 33.6% of all households lived in substandard conditions 1995 – basic utilities (running water, gas, sewage – 84% of urban and 56% of rural stock.

9. Supply and demand First years ot transformation - market still framed by supply of residential units, depending on budgetary funds allocated to new investments 1992/93 – awaited reorientation of the housing policy – demand starts to shape the market Fall in investments (limited cash-flow, no real mortgage market)

10. Mid 90’s –getting out from under 1995 – 1/5 of Polish families could not afford a separate dwelling (ownership or rental)

11. Tenancy – new opportunities It was easier to intervene in the tenancy market than develop a sound mortgage market 1994 – Residential Tenancies and Housing benefits Act (to bring back the meaning to ownership and preserve tenant rights) Preserved regulated rent, contractual lease; housing benefits

12. Privatization 1988 – 32% urban residential units in the hands of private individuals 1994 – 45% Currently – 65% Privatization of the municipal and cooperative stock (sale of units to their tenants)

13. Cooperatives Huge investor in the 70’s (for individuals, and state employers), 80’s slowdown (still 50% of all investments) 90’s still a major investor (1898 -1/3 of the construction market with faltering developer sector) Turn of the centuries – cooperatives still hold 1/3 of the housing stock (13% by now)

14. Developers Appeared in mid 90’s Promising beginnings – 1998 – 11% of the primary housing market (3.7 in 1996 and 6.9 in 1997) At the turn of the century circa 400 developers operating in Poland Early 2000’s – real boom

15. Municipal stock shrinking 1997 worst year in terms of investment - statistical municipality constructed 1 unit (not house) 1998 – slightly better – 4% of the building market Municipalities inclined to streamline management of the existing stock, though rheir aging resources need replacement. Successive privatization – by 2000 there have been 66.4 thousand condominiums in Poland

16. Public task rentals Art. 4(2) TPA 2001 – municipalities required to assure social and replacement units, and cater to the needs of low income households within the legislative framework General municipal stock – lease for unspecified period (2010 – 1 month to 18 years depending on locality) Social and replacement premises – only temporary, though contract may be prolonged – incomes below threshold enacted by municipality

17. Social units Long waiting lists – not only income criteria, but also court awards in eviction judgments: pregnant women, minors, disabled, incapacitated/interdicted, bedridden, pensioners, (registered) unemployed; Other groups of evicted tenants – at court’s discretion

18. TBS – Social Building Associations Introduced in 1995; companies limited by shares or cooperatives formed by juridical persons, municipal participation By definition low income households (statements every 2 years), but thresholds not particularly low and 30% tenant participation in construction costs allowed. Active investor 79 thousand units by now (municipalities 1.06 million, but TBS houses are brand new) 2009 - Liquidation of the National Housing Fund

19. Tenancy contracts Legislative Duality: PCC and Tenants Protection Act TPA: abusive contract provisions, unexpected forfeiture of tenure, excessive rent increase (from rent control to rent increase control), sidewalk eviction Private ladlords insecure – termination only for reasons set out in the TPA 2009 – occasional lease

20. Rental investments RoI: 5.5 (Warsaw: 4.5, Katowice 6.5) Developers unwilling to rent units. They prefair certain income from mortgage loans.

21. Effects of crisis 2008/2009 – slowdown after previous construction boom. Demand fell. Differences in bank requirements concerning mortgage credit immense. Bank pocztowy – PLN 300,000 (EUR 71,5000) – earnings over PLN 3,852 (EUR 917) SGB Bank – same amount for earnings of PLN 2,000 (EUR 476) Own participation – sometimes as much as EUR 15,000

22. New hopes 2010 – annual growth in house prices – 4.2% (EU as a whole 0.7%) 2009 – same figure: -0.9%