Recently, due to the change of situation in most western European countries, Eastern and Central Europe has become more popular among foreign buyers of estate.
Poland is probably one of the most attractive destinations for buying square meters, for a number of reasons. The beauty of local nature intertwines with European comfort and high standards of security. The Polish estate market is on the stage of stabilization, and commercial facilities have a good index of profitableness. Stanislav Voskoyants, from the Private House Brokers agency, will tell us more about the advantages of Polish estate.
Changes in prices, profitableness
In the course of the last three years Poland sees a moderate increase in prices for residential properties, at around 1-2% yearly, which shows that the market is slowly stabilizing. With commercial estate the growth amounts in around 4% each year. Residential houses offer a profit of 4-7% and commercial from 8 to 12%, when bought and then let for rent.
The main markets
The most expensive market in Poland is the capital - Warsaw, where the rent prices are higher by 10-15% than in other popular cities like Cracow or Wroclaw.
Cracow is currently in the phase of active development. Many foreign companies open branches here. This is why the demand for office facilities, as well as apartments and houses is very high.
When talking about the number of investments, Wroclaw is on the third place. The properties there cost 10-15% less than in Cracow, but are rented for a similar price range. This makes investments in the residential estate of Wroclaw more beneficial.
The most popular are one- and two-room apartments with average prices, located in good regions not far away from large office buildings or universities, as well as luxury apartments in the center of the city or other prestigious places (by the river, close to parks).
Prices for first and secondary constructions in Poland are almost the same, so new buildings sell at a higher pace. Keep in mind though, that when buying a new building, usually it requires finalizing of the details, getting furniture and all the equipment. This adds a cost of around €230 - €460 for every square meter.
Investments in commercial estate in Poland
Before the purchase, the location of the facility must be assessed. One should also become familiar with the market, the place’s history – who bought it and sold it for what price, who rented, were there times when the place was vacant, etc.
The geography of sales
The latest tendency is the increase of purchasers from Poland itself. Many of them make use of mortgage for that purpose.
From the data of the Ministry of Interior Affairs, contracts with foreigners were 17% of the sales, which is equal to 3 754 properties.
The citizens of Germany are among the most active foreigners in Poland. In 2015, Germans bought a total of 35 000 square meters of residential area. The number of deals fixed with Ukrainians grows with every year. In the last two years, contracts with Ukrainians increased by 90%. For Ukrainians it is easier to adapt and organize themselves in Poland, than in any other European country. Poles themselves mostly perceive the inflow of working force from abroad positively. And we are not speaking only of jobs not requiring high qualifications. For example, a huge number of IT specialists migrate from Ukraine to Poland, along with their families.
The British stand on the third place when it comes to buying property in Poland. Last year they purchased a total of 15 thousand square meters. After them follow the French, Italians, Russians and Cypriots.
Warsaw remains the most popular city. In 2015, more than 1000 apartments were actualized (27% from the general volume of deals closed with foreigners in Poland). Following are Cracow (473 apartments), Wroclaw (276), Poznan (148) and Gdansk (103).
The procedure of purchase for foreigners
The procedure of buying estate for foreigners can take from 1 day to 2-4 months. In the first case, one contract is written and the whole sum is paid to the seller. But, according to the law, one may not enter the country with more than €10 000 per person, which means usually the sale is divided into two stages.
At first, a precursory contract is made, and a down payment of 10% from the value is paid. In 3 months, the parties sign the final contract, when the buyer transfers the remaining sum of the money.
In Poland, purchase of certain estate requires the permission of the Ministry of Interior Affairs (this rule applies to houses, lots bigger than 6 ha, apartments and garages located in the country border regions). The permission is granted within 2-4 months.
Taxes and fees
When buying an apartment from the secondary market, a tax of 2% is collected. Primary class buildings do not fall under this condition.
The maximum amount of notarial tax is regulated by the value of the contract:
- less than €690 - €23;
- from €690 to €2 300 - €23 + 3% from the value over €690;
- from €2 300 to €6 900 – €71,3 + 2% from the value over €2 300;
- from €6 900 to €13 800 - €163 + 1% from the value over €6 900;
- from €13 800 to €230 000 - €253 + 0,4% from the value over €13 800;
- from €230 000 to €460 000 - €1 907 + 0,2% from the value over €230 000;
- over €460 000 - €1 543 + 0,25% from the value over €460 000, but no more than € 2 300.
Foreigners will be also required to pay for the services of a professional translator who will assist during the agreement.
The annual estate tax is very low. For instance, in Cracow it is €0,17 for one square meter of residential property and €0,05 for one square meter of commercial property.
Tax for renting business
Investors buying property in Poland with the purpose of letting it for rent may follow one of two tax options:
- 18% and 32% from profit, according to the tax scale. Renovation costs, exploitation and utilization of the property, costs of notarial or broker services, as well as the tax due when the estate comes from secondary market (2% of the value) – these all are subtracted from this value.
- A fixed rate without additional tax returns – 8,5% from the profit. This scheme is chosen by most investors, if the number of the apartments they own is not more than 3-5.
Permanent residency in Poland connected with estate purchase
In order to receive permanent residency, one has to fall under any of the following conditions – studies, employment, one’s own entrepreneurship. The possession of a property is not considered a sufficient reason, but in practice, estate purchase in Poland is often the starting point for moving to Poland. In other words, there are several ways to receive permanent residency after buying property, but which will be most convenient will depend on each specific case.
Text – Alena Eliseeva, ee24