dr Jakub Baranowski | In Principle

In recent years, there has been a notable revival in the residential lease market in Poland, and thus an increase in the interest in lease property investments also among foreign investors in the private rented sector (PRS). In response, the Polish parliament has introduced a number of new provisions on lease agreements. One such change was the introduction in 2017 of the institutional lease agreement, which is designed specifically for use by businesses letting residential premises in the private rented sector.

In the newest episode of News from Poland – Business & Law, dr Jakub Baranowski from Wardyński & Partners’ Real Estate practice discusses the major changes in Polish real estate law in 2022 with entry into force of the New Developers Act. It is designed to provide consumers with greater security in acquiring residential properties by greatly expanding the applicability of the statute, adding new security instruments, and modifying the procedure for removing defects.
 

During the decade after the current Developers Act entered into force in Poland, it was repeatedly argued that its provisions were vague or diverged from the market reality, so that the act did not live up to the hopes placed in it. As a result, in the last few years, work was undertaken to introduce a new law to fill the existing gaps and, above all, provide greater protection for buyers of residential units and single-family houses.

Entry into force of the Anti-Crisis Shield, i.e. the 31 March 2020 amendments to the Anti-Crisis Act, has had a strong impact on the real estate market, especially the rental market for space at shopping centres. In addition to the widely discussed Art. 15ze, which has extinguished mutual obligations of the parties to lease agreements, the parliament has also introduced another important provision which may significantly affect the rights and obligations of not only the parties to lease agreements, but also other participants in commerce.

The rent, terms of payment and rent abatement period are all important factors for parties entering into commercial leases. Given the ongoing growth of the real estate market, the negotiated rent may fall well below market value within a couple of years. This is why long fixed-term lease agreements (which can be terminated only in situations specified in the lease agreement or when provided by law) should ensure that the rent amount remains acceptable to both parties for the duration of the lease. An indexation clause is one way to do this.