The housing cooperative: A new approach for implementing residential projects | In Principle

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The housing cooperative: A new approach for implementing residential projects

On the residential construction market in Poland, currently dominated by real estate developers, housing cooperatives can begin building starting 1 March 2023, when the new Housing Cooperatives Act enters into force, introducing a framework for their activities and providing incentives for such grassroots construction initiatives.

Housing cooperatives are not a new social and economic phenomenon in Poland. Apartments were built this way during the interwar period. Currently, though rarely, there are also residential projects independently carried out in this form by grassroots associations of investors. It is estimated that this approach will allow investors to save some 20–30% compared to new-build units offered by real estate developers, and also have a greater influence on the project itself, its shape and space and accompanying infrastructure.

However, members of such pioneering ventures pointed out that there is a lack of adequate regulations, and as a result there are no market mechanisms or banking products to facilitate the development process for housing cooperatives. For these reasons, the parliament decided to introduce provisions setting up an appropriate legal framework for housing cooperatives and the projects they implement, to enable broad flexibility and a low degree of formalism in such undertakings, in the Housing Cooperatives Act (Act on Housing Cooperatives and Rules for Disposal of Real Estate from Communal Real Estate Stock to Support the Implementation of Residential Projects of 4 November 2022).

The activity of housing cooperatives

Under the Housing Cooperatives Act, the object of the business of a housing cooperative is a housing project, understood as an undertaking and construction project to meet the housing needs of the members of the cooperative, their children, and persons living with them. Defined this way, a residential project is expected to lead to:

  • Acquisition of land and construction on it of a multi-family residential building with at least three separate residential units
  • Acquisition of land and construction on it of at least two single-family residential buildings with a total of at least three separate residential units or construction of at least three single-family residential buildings without separated units, or
  • Acquisition of land developed with at least one building and carrying out construction work leading to completion of at least two single-family residential buildings with a total of at least three separate residential units or construction at least three single-family residential buildings without separated units.

Land for a residential project can be acquired even before conclusion of the agreement setting forth the rules for cooperation of the housing cooperative, provided that the purchaser of the land is a member of the newly formed housing cooperative.

Minimum formal requirements

The new regulations do not grant the housing cooperative legal personality or provide for any registration requirements.

A housing cooperative consists of at least three natural persons, and the rules for their cooperation are set forth in either a housing cooperative agreement or a partnership agreement, which must be concluded in the form of a notarial deed. In addition to the details of the residential project, the method of its financing, the rules of cooperation of the members, representation of the cooperative, etc, the agreement defining the rules of cooperation of a housing cooperative must also state that the Real Estate Developers Act does not apply to the residential project.

The members of the housing cooperative are jointly and severally liable for obligations related to execution of the residential project. The expenses for the project are paid through a bank escrow account, unless the members of the cooperative establish other rules for settling the project costs.

Incentives to support housing cooperatives

To popularise grassroots housing initiatives, lawmakers have provided a number of incentives for both potential members of future housing cooperatives and local communes.

The costs of implementing a residential project are expected to be significantly reduced from the start, as members of the housing cooperative will be able to purchase the property for the project from the stock of land held by the local commune through a limited written tender. The sale price of such property can be paid in instalments over a period of 5 to 20 years, while the purchasers can obtain a discount in the form of cancellation of part of the unpaid instalments up to the equivalent of one-third of the price.

The regulations also provide alternative methods to settle the purchase price of the property from the commune. The members of a residential cooperative will be able to apply the sale price of a residential unit or single-family residential building without separate units (completed as part of the residential project) toward the price for purchasing or leasing the property payable to the commune. The Housing Cooperatives Act also amends the Guaranteed Housing Credit Act to make it easier for housing cooperative members to obtain financing for residential projects.

In turn, communes deciding to sell real estate to members of a housing cooperative from the communal stock of property at a discount will be able to apply for government grants for implementation of infrastructure projects. Additionally, the use of the alternative methods of settling the purchase price of property described in the previous paragraph will expand the possibility of implementing the commune’s own housing tasks by increasing the portfolio of real estate put at the disposal of the community. The interests of the commune will also be secured through the right to repurchase the property under the terms specified in the resolution on disposal of property from the communal stock. And for a period of 20 years the commune will have the right of first refusal to purchase real estate previously sold to members of a housing cooperative for the purpose of implementation of a residential project.


Projects already implemented in Poland by informal housing cooperatives show that grassroots construction ventures have great potential. Interest in such ventures should increase after introduction of financial incentives for members of housing cooperatives, particularly in light of the current economic situation, high prices of units offered by real estate developers, and the difficulty of obtaining mortgages. The introduction of formal possibilities for the operation of housing cooperatives, combined with all the incentives in the act, can effectively encourage implementation of such ventures in the current market realities.

However, it seems that the profitability of projects of this type will depend on the method of implementing them by members of the housing cooperative. The greatest savings, compared to schemes offered by real estate developers, will be achieved by housing cooperative members who are as involved as possible in implementation of the project, which in turn requires bringing together members who are knowledgeable about construction, the development process and project management, and also have time to devote to the project. The members of a housing cooperative can also outsource implementation of the project to professional builders, but then they will not achieve significant savings compared to schemes offered by developers, who can outsource the same services and purchase construction materials at preferential rates. So it remains to be seen whether the new law turns Poland into another Denmark, where grassroots construction is an important part of the residential market.

Dr Radosław Wiśniewski, adwokat, Real Estate practice, Wardyński & Partners