The Residential Special Act was supposed to generate huge growth in residential development, mainly by cutting through red tape. Now the hubbub surrounding its introduction seems to have exceeded the real impact of the act. Should it now be plainly admitted that the special act has not lived up to the hope placed in it?
The Act on Facilitation of Preparation and Execution of Residential Developments and Accompanying Projects of 5 July 2018, known as the “Residential Special Act,” entered into force on 22 August 2018. The aim of the act was facilitate, deformalise and expedite residential developments and accompanying projects.
Before the act entered into force, development and construction on residential sites in Poland was carried out based on a planning decision (decision on construction conditions) or the local zoning plan. The Residential Special Act introduced several new legal instruments, creating an alternative track enabling implementation of residential and accompanying projects.
First and foremost, under the special act, the investor can seek issuance of a resolution by the relevant commune council on location of the project even contrary to the commune’s zoning plan, and in certain instances contrary to the commune’s spatial development study.
For these reasons, from the beginning the act has stirred a lot of emotion and outrage on the part of communes, who regarded the act as a top-down attempt to interfere in their zoning policy and planning authority. Communes also did not wish to be accused of pursuing exclusively the interests of developers, at the expense of the local community.
But despite its aims, the act sets quite high formal requirements for investors. Moreover, communes have been equipped with tools allowing them to heighten the criteria for issuing resolutions in certain instances, which the communes have eagerly exploited, for example by specifying shorter distances from transit stops, schools, and sports and recreation areas.
Consequently, the statutory solutions have not fully lived up the hopes placed in them. Obtaining a resolution on location of a development proved not much simpler or faster than obtaining a planning decision, or amendment or invalidation of a local zoning plan. To the contrary, obtaining a resolution is often a more bureaucratic endeavour even than obtaining a building permit.
The data on the operation of the special act in 2018–2019 have been released (figures for 2020 are still being collected). From August through December 2018, in 20 cities studied, not a single resolution on location of a development was issued, but in 2019 the situation looked much better. According to data from the Ministry of Development, Labour and Technology, in 2019 450 applications for resolutions were filed and 265 resolutions were issued:
- 173 resolutions on location of residential developments (58% approval rate)
- 28 resolutions on location of accompanying projects (40% approval rate)
- 64 resolutions on location of residential developments as well as accompanying projects (82% approval rate).
Interpretations of the act and best practice in applying it have also developed.
The main reasons cited for denial of an application for a resolution on location of a development have been:
- Failure to meet the formal requirements for the application or the enclosures
- Failure to meet the urban planning standards provided for by the act or heightened by the local commune
- Inconsistency with the commune’s spatial development study.
It seems too early to categorically assess the functioning of the special act or achievement of the aims set by the act, particularly as there is notable improvement in the numbers of resolutions issued on location of development projects.
Undoubtedly, application of the act has been harmed by allowing for introduction of resolutions contrary to local zoning plans, negative PR surrounding the act, and the rigorous expectations of investors applying for a resolution on siting of projects.
Therefore, investors planning a residential project should first seek agreement with the commune, mainly through adoption or amendment of the local zoning plan. If it proves difficult to adopt or amend the local zoning plan, then another solution should be sought in consultation with the commune (issuance of a planning decision or a resolution on location of the project).
After all, investors and communes appear to share the common aim of increasing the available supply of housing.
Michał Gliński, attorney-at-law, Real Estate practice, Wardyński & Partners