Friendly hospitality: How Ukrainians can buy real estate in Poland

Friendly hospitality: How Ukrainians can buy real estate in Poland

And what is the difference of purchasing and selling process from that in Ukraine

Friendly hospitality: How Ukrainians can buy real estate in Poland

Escaping from the war became a marathon for many Ukrainians. A lot of families still have troubles with housing in their host country, living in dormitories, gyms or other not very comfortable conditions in particular. Given this and other hardships, some of the forced migrants are willing to go back to Ukraine or have already gone there, others try to settle themselves and get a foothold in their host countries. In both cases some portion of Ukrainians consider the option of purchasing real estate. What the terms of buying immovable property in Ukraine are was examined by Mind in the article “Despite the war: housing prices are rising in Western Ukraine.” (in Ukrainian).

Barrister Yuriy Khapko, Candidate of Legal Sciences and Managing Partner at TOTUM LF, told Mind about how real estate can be purchased abroad and what terms neighbouring and loyal to Ukrainians Poland offers. 

Because of the start of intensive hostilities on 24 February 2022 in Ukraine many our citizens and businesses were made to seek shelter for themselves, their families and employees in safer places. The Republic of Poland became one of such “safe havens” for Ukrainians.

So more relevant  becomes the matter, whether to invest in estate property objects. The purpose may be any: buying a dwelling to replace the damaged/destroyed one, relocating a business, buying commercial real estate in order to raising rent income etc. Next is on how residents of Ukraine can purchase real property objects in Poland.

What civil commerce objects may foreigners buy?

The 24 March 1920 Law of the Republic of Poland, “The Law on Purchasing Real Estate by Foreigners”, is the basic act to regulate purchasing real estate objects by foreigners.

According to the Republic of Poland’s (RP) legislature, there are real estate objects such as:

  1. Plot of land –  an area of land designed for farming non-farming that comes as an individual item of property.
  2. Houses – houses, although related to the land on which they rest, are a separate real estate and can be a property of a person other than the owner of the plot.
  3. Parts of houses (apartments) –  separate from land or house real estate, owing to which it can be an independent object of property.

Who can become a real estate buyer?

Actors who can be real estate buyers are mentioned in the Article 2 of the Law, namely:

  1. Natural person who does not have Polish citizenship.
  2. Legal entity that has a registered office abroad.
  3. Institution that is not a legal entity and belongs to entities mentioned in clauses 1, 2, has its head office abroad and was founded in accordance with other countries’ legislature.
  4. Legal entity and economic institution that is not a legal entity and has its head office in the territory of the Republic of Poland and is under direct or indirect control (over 50% votes in general meeting or dominant position) of persons or institutions mentioned in clause 1-3.

What documents are necessary to register a transaction?

First and foremost, a foreigner will need a permit (Article 1 of the Law) for him to buy real estate. Such a permit is given according to the Minister of the Interior’s decision (if the Minister of National Defence has no objection) and if the Minister of Agriculture does not object, when buying agricultural real estate.

The permit is issued when there are two grounds:

  1. The purchase of real estate by a foreigner would not threaten defence, state security or public order, and would not contradict social policy as well.
  2. The purchaser would prove there are circumstances that affirm his connection to the RP.

Herewith there are restrictions:

  1. the area of the plot purchased cannot exceed 0.5 ha;
  2. if you are a legal entity and buy real estate for business purposes, you have to prove that the area of the real estate is justified by actual needs that come from your economic or agricultural activities.

To obtain the permit one needs to submit a request together with a package of supporting and necessary documents.

The stamp levy for giving permission costs 1570 PLZ (it can be paid both in cash or paperless on the account of the Taxpayer Service Centre of Warsaw).

The application with the submitted papers is normally considered during 30 calendar days since the date of the corresponding application.

What real estate can be purchased without an appropriate permit?

It should also be noted that there are cases when getting the permit to buy real estate is not obligatory. These are:

  1. Purchasing an individual dwelling (namely an apartment, not a house, for instance).
    Purchasing separate commercial premises intended for a garage or a share in such premises if this is related to meeting housing needs of the purchaser or the owner of real estate or an individual dwelling.
  2. Purchasing real estate by a foreigner who has lived is the RP for at least 5 years since the inhabitancy permit or EU Long-Term Residence Permit were issued.
  3. Purchasing by a foreigner who is a Polish citizen’s wife and has lived in the RP for at least 2 years since the inhabitance permit or  EU Long-Term Residence Permit were issued, real estate that would make the legally qualified copartnership of the couple as a result of the purchase.
  4. Purchasing real estate by a foreigner if he/she has a right for the lawful legacy according to the Polish purview from the real estate seller as of the day of the purchase, and the real estate seller has been the owner of it or user at will for at least 5 years.
  5. Purchasing by a legal entity or an economic institution that is not a legal entity and has its head office in the RP, a vacant real asset whose total area within the RP does not exceed 0.4 ha within cities. 

But the exceptions mentioned above do not include real assets located in the frontier and agricultural lands over 1 ha in area.

Permit is the main document a foreign purchaser needs to get. All the rest papers are related to the very real estate object and have to be provided by the seller.

What costs fall on the purchaser?

  • Agency commission. It is usually paid by the purchaser to the agency when buying real estate. Market standards are 2-3% of the cost of the real estate. 
  • Civil agreement tax. This tax makes 2% of the real estate cost and is paid when transferring used houses and lands (these are the ones that have been owned by the seller for over 2 years). Such a real estate is not liable to the VAT.
  • Fee for registration of the purchaser as the new owner in the land and mortgage book is 200 zlotys.
  • Notarial levy reaches 0.25% to 3% of the real estate cost, but no less than 100 zlotys and no more than 10,000 zlotys.

What is the procedure of registering the transaction?

The agreement for the purchase of real estate has to be registered as a notarial act (contract). The notarial act containing a purchase contract is laid in the Polish language. Thus, if the purchaser does not speak Polish, participation of a certified interpreter is obligatory when signing the purchase contract.

Parties may sign the contract both in one stage (instant principal purchase contract) and in two stages (interim agreement before the principal purchase contract). 

When signing an interim purchase agreement, a deposit is usually paid (5 to 20% of the real estate cost).

A record on the purchase of real estate is written to land and mortgage rolls maintained by courts of justice. The court would recognize the purchase void in case the real asset is purchased against the law.

What is the difference between purchasing real estate in Poland and in Ukraine?

  1. Getting permission to buy real estate. In Ukraine, non-residents are free to buy immovables that are in civil commerce. Thus, for their purchase from either natural persons or legal entities that are residents of Ukraine no permission or approval by government authorities and/or local self-government is needed.
  2. Costs and taxation. There are some peculiarities when buying real assets in Ukraine: for instance, the military levy (paid along with personal income tax) for individual purchasers. In Ukraine, purchasers also pay state duty and obligatory government retirement insurance levy.
  3. Registration. According to the Ukraine’s legislature, registration is done by a special person – state registrar in a special register (State Register of Real Estate Ownership Rights). In Poland, this is done by courts – they keep records in the land and mortgage book.
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