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Practical Information for Buying Property in Poland

Top 10 Tips

1. Property prices are much cheaper than in Western Europe but they are starting to grow.

2. You must declare all rent received as income.

3. A public notary is responsible for completing the sale.

4. An initial contract includes provision for a non-refundable deposit of up to 30%/.

5. Property registration can be quite slow in Poland.

6. Find out about agents’ commission rates.

7. Ensure all repairs are done before signing final deal.

8. There are some restrictions on purchasing agricultural land.

9. Total costs (fees and taxes) amount to about 7-8 % of the property purchase price.

10. You are likely to need the services of a Polish lawyer or one in Ireland with a good knowledge of Polish property.

The Polish Property Market

Before buying in Poland, determine your budget and if you are obtaining a mortgage from an Irish financial institution, make yourself aware of the sum available to you and any terms and conditions applying.

Poland has attracted more inward investment than any other central European country, and the residential market in Warsaw is expanding quickly. The capital has plenty going for it as a buy-to-let investment but is much less attractive than historic Krakow - which is more popular with tourists. Economically, Poland is suffering with high unemployment so non-national speculators can be unpopular for forcing up house prices.

How to Find a Property Agent

There are some agents in Ireland who assist in buying Polish property (not as many as for France, Spain or Portugal, however) and occasionally advertise on the web and in magazines and supplements in Ireland. It makes sense to contact such agents before you travel to an area to look at property. Exclusively Polish property exhibitions are not as common in Ireland as for other destinations. Most Irish buyers tend to buy as part of a new development scheme or increasingly with the advice of Polish friends or colleagues based in Ireland.

You will need to decide on the type of property for which you are looking. Is it a holiday home to be used a few weeks in the year, a more permanent residence or a rental investment? A holiday home ideally will require little maintenance.

It is also advisable to ask the seller whether he has a contract with an agent. Asking the commission from the seller seems logical, since they can judge what the agent has done to sell the house. The buyer in most cases only sees the agent once or twice and can fairly ask what the agent has done to earn the big fee they are charging.

Make sure that you make appointments with agents in Poland in advance. Give the estate agent a clear understanding of what you seek in a property. Be prepared for the types of property you are viewing i.e. wear appropriate clothing. Take a good local map and have a list of questions prepared.

The Legal Issues

• If you do not have European Union nationality and are buying a holiday home you have to apply for permission from the Polish Home Office, which must be obtained before you complete. Alternatively, as in the rest of Eastern Europe, you could buy via setting up a Polish company. There are some additional restrictions for all non Poles on buying agricultural land. Apart from this, the process is relatively simple.
• Negotiations over price and any other issues may occur with all parties present, who will then draw up a preliminary contract outlining the details and any conditions that must be met before the sale completes (e.g. repairs). You pay a non-refundable deposit (between 10 and 30%) and the date for completion is set. All the necessary checks are made and proof must be provided that there are no loans secured on the house.
• It is advisable that you use the services of a Polish lawyer or an Irish solicitor who has a good knowledge of the Polish property market.
• Before buying, carry out a full examination of the location and price of the property.
• Most important is to have the house inspected carefully, if not by oneself, then by a knowledgeable person in the area. This can be a broker or someone with relevant expertise.Any renovations or repairs of damages need to be checked. The roof should be examined by an expert or a good eye before buying.
• When you have agreed a deal with the seller, the preliminary contract is taken to the office of the local notary. Always review the contract carefully and have it translated if necessary. Prepare any questions you have in advance, don't hesitate to ask them and allow sufficient time for getting full answers.
• Amongst other details, the contract must include property details, agreed prices and payment conditions and clauses specifying what will happen should either party fail to complete the contract.
• The notary is a State official and is legally bound to act as an impartial middleman between buyer and seller. He or she checks the land register to see whether the property can be sold at all and if it can be, whether there are any restrictions on its use. The contract spells out the obligations of each party and the measures to be taken in the event of default. Once it is signed, the notary registers the change of ownership with the municipal government and enters the property in the land register. Ideally, you should look for a notary that can speak English.
• At the actual signing ceremony, the notary requires that both parties fully understand its content. The buyer may ask questions and interrupt the proceedings if a clause isn't completely understood.
• Since the reading is likely to be in Polish, the buyer has the right to have a professional interpreter present, though this will be an additional cost.
• You should bring passports and other relevant identification to the purchase ceremony.
  The notary then logs the change of title at the property registry. This is a slower process than in many of the new European member-states, and registration can take up to three months. The purchase price is transferred after the final contract is signed.

Insurance

From the signing of the final contract the buyer is responsible for the insurance of all the buildings on the property.

Taxes, Feed and Charges

Broker’s fees average around 3% and you will also have the cost of the Notary. Stamp duty is 2%. Property taxation is quite complex but as a general overview:-

VAT on new flats is 7%, there is no VAT on property more than five years old (the next expected change to VAT will be the introduction of the full 22% VAT on newly-built flats on 1 January 2008)

Private individuals must declare rent collected as income and pay income tax annually on a progressive rate scale of 19%, 30%, 40%, or they may register for a flat tax of 19% (though this does not allow for deductions)

2% of the transaction value is payable to the Treasury Office on purchase of property (stamp duty)

Property tax 1.5% of nominal property value - due to change to a percentage of the market value in the near future

On sale of property, private individuals pay no tax if they have held the property for over five years or if they re-invest into another property within two years of sale. Otherwise a private seller can be liable for 10% of the selling price (not just the capital gain). Capital gains is now charged at a flat rate of 19%
You should consult your tax advisor on these matters.

Planning Permission

Check with the local authority where you plan to build or renovate.

Regional Guide to Poland

Greater Poland
This region is made up of 109 cities and towns and is one of the most historical parts of Poland and is located in the west of the country. In the northern area of Greater Poland lies the Lake District. This beautiful area is full of post-glacial lakes and rolling hills. However, in the southern region of Greater Poland the land is much flatter.

Lesser Poland
Lesser Poland forms the southernmost part of the country and is home to the historical city of Krakow, which is regarded by most to be the cultural capital of Poland. For those who like the more natural side, there are 10 National Parks located in Lesser Poland.

Masuria & Suwalki
Masuria & Suwalki is a region in northeastern Poland famous for its lakes and forests. Masuria is much more picturesque than Suwalki due to 4000 lakes it possesses and the name Land der Tausend Seen, meaning "land of a thousand lakes." Suwalki is more urban with classicist architecture and a mixture of Lithuanian and Polish culture.

Mozovia & Podlassia
Mozovia’s biggest attraction is the city of Warsaw. With its scores of monuments, museums, theatres, galleries and shopping centers. Everything in this region has been restored to its former glory and the buildings are a patchwork of colors. Mozovia and Podlassia have the most tranquil and picturesque countryside.

Pomerania
Pomerania is the area along the Baltic Sea. The most important city in this region is Danzig. The region is covered in forests with meandering rivers and tranquil lakes dotted around. Pomerania is mainly a farming area and the coast is host to numerous fishing villages.

Silesia
Silesia is located along the Carpathian mountain range and is made up of 15 cities. Like Pomerania, Silesia is mainly a farming area. It is also well known for its ski resorts.

Sub-Carpathia
Sub-Carpathia is located at the south-eastern tip of the country. This is the region of unspoilt nature, with thick forest and wide open meadows.  The most picturesque areas are the mountainous areas in the south.

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