Real Estate Buying Guide for Poland
Kasha, Sunday, 10 November 2013
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
It is possible for foreigners to purchase property in Poland, however, based on their citizenship and the type of purchased property, foreigners may need to obtain special permissions from the Polish government. EU and EFTA country citizens do not need any special permission to buy property in Poland nor do the foreigners who buy apartments/condos for their own residential purposes. The exceptions to this rule are agricultural and forested lands and property located at the country’s borders.
All other foreigners must obtain a special permission from the Ministry of the Interior. Such permissions are typically property-specific, they may be conditional on fulfillment of certain requirements and are only valid for two years, within which the purchase must take place. Foreigners who purchase property without receiving proper permits may have the sale invalidated and revoked by the Polish government.
There are a number of exceptions to the permit rule as well as some practical and legal ways of circumventing it. Foreigners outside of the EU and EFTA region may incorporate in one of the EU/EFTA countries and purchase property through such entity, which would effectively give them the same treatment as an EU/EFTA citizen when purchasing property in Poland.
Buying property in Poland is not exceedingly complex, however for a foreigner who does not know the language or does not have much knowledge about the Polish market, it may be advisable to hire a real estate agent to help him in the process of finding and buying the best property. It may be also advantageous to hire a financial specialist who will research the best home loan offers and help the foreigner to apply for a bank loan.
Most Polish banks will offer home loans to foreigners but they will differ widely in terms of the requirements for the loan application as well as the loan terms. The offered terms will likely be less attractive than those offered to Polish customers, including lower loan-to-value ratios, shorter repayment periods and potentially higher interest rates. Nevertheless, the terms should still be relatively attractive taking into consideration the current low interest rates in the market.
If the property is found and the financing is secured, the process is relatively simple. In Poland, property sales are conducted through an act of sale prepared and overseen by a notary, who also makes sure that all related administrative obligations, including registering the mortgage and updating entries in the national Mortgage and Land Registry are fulfilled.
The documents necessary for preparing property sales contract in Poland comprise valid IDs of the involved parties, notary act proving the property ownership, excerpt from the Mortgage and Land Registry detailing the legal status of the property, a bank letter confirming award of a loan and a certificate of no tax and utility payment arrears on the property.
The transaction costs connected to the purchase of property are usually wholly borne by the buyer but they are relatively moderate, reaching between 4.5 and 6.5% of the property purchase price, depending on whether the property is bought in the primary of the secondary market. These transaction costs comprise the notary fees, administrative fees, the real estate agent’s commission and in the case of purchasing from the secondary market also a civil law transactions tax. The homeowners’ taxes include the real estate tax and the perpetual lease of the land tax.
Foreigners are increasingly interested in buying property in Poland and they are buying significantly more apartments than in the previous years. The nationalities most heavily active in the Polish real estate market include Germans, Spaniards, Ukrainians, Britons and the Irish. 40% of properties are bought in the Mazowieckie voivodship, followed by Malopolskie, Pomorskie and Dolnoslaskie voivodships. Typically, foreigners look for real estate in large cities such as Warsaw, Cracow, Wroclaw, Gdansk, Poznan and Lodz where it is the easiest to buy, sell and rent property.
For those considering purchasing real estate in Poland, it is advisable to finalize their purchase still this year or as soon as possible. There are three good reasons to do so: 1) varied and attractive offer; 2) low prices, which are expected to start picking up in the next year; 3) attractive interest rates and loan terms.
This article is part of a series of 6 articles about buying property in Poland. The other articles in the series cover the following topics:
It is possible for foreigners to purchase property in Poland, however, based on their citizenship and the type of purchased property, foreigners may need to obtain special permissions from the Polish government. EU and EFTA country citizens do not need any special permission to buy property in Poland nor do the foreigners who buy apartments/condos for their own residential purposes. The exceptions to this rule are agricultural and forested lands and property located at the country’s borders.
All other foreigners must obtain a special permission from the Ministry of the Interior. Such permissions are typically property-specific, they may be conditional on fulfillment of certain requirements and are only valid for two years, within which the purchase must take place. Foreigners who purchase property without receiving proper permits may have the sale invalidated and revoked by the Polish government.
There are a number of exceptions to the permit rule as well as some practical and legal ways of circumventing it. Foreigners outside of the EU and EFTA region may incorporate in one of the EU/EFTA countries and purchase property through such entity, which would effectively give them the same treatment as an EU/EFTA citizen when purchasing property in Poland.
Buying property in Poland is not exceedingly complex, however for a foreigner who does not know the language or does not have much knowledge about the Polish market, it may be advisable to hire a real estate agent to help him in the process of finding and buying the best property. It may be also advantageous to hire a financial specialist who will research the best home loan offers and help the foreigner to apply for a bank loan.
Most Polish banks will offer home loans to foreigners but they will differ widely in terms of the requirements for the loan application as well as the loan terms. The offered terms will likely be less attractive than those offered to Polish customers, including lower loan-to-value ratios, shorter repayment periods and potentially higher interest rates. Nevertheless, the terms should still be relatively attractive taking into consideration the current low interest rates in the market.
If the property is found and the financing is secured, the process is relatively simple. In Poland, property sales are conducted through an act of sale prepared and overseen by a notary, who also makes sure that all related administrative obligations, including registering the mortgage and updating entries in the national Mortgage and Land Registry are fulfilled.
The documents necessary for preparing property sales contract in Poland comprise valid IDs of the involved parties, notary act proving the property ownership, excerpt from the Mortgage and Land Registry detailing the legal status of the property, a bank letter confirming award of a loan and a certificate of no tax and utility payment arrears on the property.
The transaction costs connected to the purchase of property are usually wholly borne by the buyer but they are relatively moderate, reaching between 4.5 and 6.5% of the property purchase price, depending on whether the property is bought in the primary of the secondary market. These transaction costs comprise the notary fees, administrative fees, the real estate agent’s commission and in the case of purchasing from the secondary market also a civil law transactions tax. The homeowners’ taxes include the real estate tax and the perpetual lease of the land tax.
Foreigners are increasingly interested in buying property in Poland and they are buying significantly more apartments than in the previous years. The nationalities most heavily active in the Polish real estate market include Germans, Spaniards, Ukrainians, Britons and the Irish. 40% of properties are bought in the Mazowieckie voivodship, followed by Malopolskie, Pomorskie and Dolnoslaskie voivodships. Typically, foreigners look for real estate in large cities such as Warsaw, Cracow, Wroclaw, Gdansk, Poznan and Lodz where it is the easiest to buy, sell and rent property.
For those considering purchasing real estate in Poland, it is advisable to finalize their purchase still this year or as soon as possible. There are three good reasons to do so: 1) varied and attractive offer; 2) low prices, which are expected to start picking up in the next year; 3) attractive interest rates and loan terms.
All types of property for sale in Poland by private sellers and estate agents. Find your villa, farmhouse or apartment in the Mazowieckie, Malopolskie, Pomorskie or Dolnoslaskie region.
Most Polish banks will offer home loans to foreigners but they will differ widely in terms of the requirements for the loan application as well as the
loan terms. The offered terms will likely be less attractive than those offered to Polish customers, including lower loan-to-value ratios, shorter
repayment periods and potentially higher interest rates. Nevertheless, taking into consideration the low cost of credit at the moment, it is a good
time
to finance property in Poland.
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