As Bartosz Turek, Senior Analyst at HRE Investments notes, The Polish system may have at least a number of reasons – directly and indirectly – on the situation in the housing market. This will include, for example, the effects of changes in the tax system and the construction process. The government also decided to directly influence the housing sector through a program of loans without special contribution.
As Bartosz Turek explains, it is specifically about Secured Home Loan Program. Offering such a solution has been assumed by the HRE think tank for several quarters. This idea, which has been translated into law, will enter into force at the end of May. The program will be available to everyone who does not have their own “M”, but also to families who live in a very small apartment. Having creditworthiness and credibility in addition to the funds necessary to carry out the transaction (commissions, fees, documentation fees, taxes), you will be able to get a loan to buy real estate or build a house without your own contribution or with a small contribution.
The maximum guarantee amount that can be offered is 100,000 PLN. zloty. Nobody will give us this money. This amount will only be able to replace or supplement the special contribution to the loan, which, thanks to the guarantee, will be able to finance the entire cost of the apartment or house. The cost is the commission (1% of the guarantee amount). It is also expected that beneficiaries of this program may obtain loans with a slightly higher margin than in the case of standard mortgage loans. It should also be noted that the apartments that will be available for purchase with such preferential debt cannot be expensive. c.If the program were to operate today, ranging from the current market offer in large cities, from several shows to more than twelve percent of the shows in Szczecin, Lublin or Krakow to more than half of the shows in Bydgoszcz, Gorzow Wilkopolski or Olsztyn would be eligible for the program.
People who will benefit from this type of debt and will also have children will be able to apply for a budget subsidy in the form of loan overpayment (20,000 for the second child and 60,000 for each subsequent child). The program starts at the end of May. Its biggest advantage is the real shortening of the road to your apartment for several years. On average, it takes a couple that long to set aside money for the special contribution requested by the bank.
The effect of this program should, above all, be to enable the purchase of an apartment for citizens who, despite having adequate wages, are not able to collect the special contribution required by the banks (eg bear high rent costs each month). Recently, it has become more difficult due to the dynamic growth of housing prices. It is worth noting that only among people up to 35 years of age there are still potential buyers of tens of thousands of apartments who have quit buying due to the pandemic turmoil and have not yet realized their dreams of getting an “M”. “.
Of course, the No Special Contribution loan program may release only a small portion of this group of potential buyers, but there is also another — no doubt quite a lot — group of renters who face rising apartment prices and high living costs for years, who cannot put off a sufficient private contribution to live in The end is on your own. The No Special Contribution loan program is an opportunity for them to live in their four quarters.
And while the program should stimulate demand, it shouldn’t translate dramatically into an increase in housing prices. It doesn’t mean that someone wants to give potential recipients money for free. After all, they must be creditworthy and trustworthy and must have the money to complete the entire transaction. In the end, all zlotys should be returned with interest, interest is much higher than it was a few months ago due to increased interest rates. Beneficiaries must be rational about their capabilities. Therefore, there should be no reckless pursuit of a loan without a contribution, which undoubtedly can often happen when the possibility of going into debt means, for example, several tens of thousands of zlotys from budget support, as in the case of Flat for the Young that’s been running for years.
As the expert from HRE Investments points outIt is also worth recalling what happened in Great Britain when a similar program was implemented on the islands. Several months later, this can be attributed to a property price increase of about 1%. In the current situation (price increase by 10-15% in 2021), the potential impact of this program on real estate prices is minimal, and the social benefits are significant. At the same time, of course, the success of this government program will ultimately depend on the banks and the loan offer they prepare.
In the context of the Polish deal, the government also talked about the idea of a housing voucher, according to which you will be able to get support in applying for an apartment at a rent lower than the market rent (for example, SIM or TBS), and also, for example, families can count on a subsidy to buy real estate or build a house . The amount was to be higher the larger the family. This idea – conveyed during the presentation of the Polish deal – was not remembered for a long time. Only at the end of 2021 did the Ministry of Development and Technology confirm that work on this program was still continuing. If this solution is actually implemented efficiently, it is very likely that the software will not work until 2023 at the earliest.
2. Tax benefits for a large part of my compatriots
We are already witnessing today how The Polish system affects the salaries of citizens. Despite the hiccups in implementing the changes, It is estimated that the changes could lower taxes for many families. If we add the expected wage growth, even after accounting for inflation, there is a chance that many people will close this year “in the black.” It is important to The disposable income level of the population translates into demand for housing. And while the change is unlikely to be diagonal, at least in theory it should contribute to increased demand for housing—especially cheaper ones, that is. popular part.
3. High income earners will pay more
The opposite may be the case on the other side of the tax spectrum. after Changes in taxes will reduce the profits of those who earn more. A higher health contribution, which would not be further deducted from the tax, would simply leave less in the pockets of higher-income citizens. Obviously, this may limit the demand for apartments in this group, which, after all, is especially active in the housing market. At the same time, you should be aware that this effect should also be rather small.
4. Higher taxes will backfire on renters
It is impossible not to mention the tax changes that will affect renters, at least in part. It is located around Landlords need to pay a lump sum on rental income in lieu of income tax. This is a big change, because many owners of apartments for rent in Poland have legally failed to pay income taxes for years, taking advantage of depreciation benefits. This lowered their rent income, and thus also the tax they paid. Today, it has become partly impossible. The transitional provisions only allow the current form of the settlement to be maintained in 2022 only for those who have paid so far. Unfortunately, we should not be under any illusions – the owners will not bear this extra cost in full. They will want, at least in part, to burden the tenants with it.
In addition, the inability to take advantage of the advantages of depreciation, and consequently the high taxes generated by private rent, actually means a preference for foreign investment funds, which in recent quarters have built portfolios of apartments for rent, spending billions of zlotys on the purchase of blocks or even development companies perfect. These foreign investment funds, unlike owners of individual apartments for rent, have a wide range of ways to avoid taxes in Poland.
5. Homes without permits do not worry developers
In the course of the Polish deal, Fr. Possibility to build houses up to 70 m2 without a permit. As we got to know the details of this solution, the original euphoria gave way to cautious optimism at best. The simplified procedure allows you to slightly shorten the time for formalities and reduce costs from several thousand to several thousand zlotys. However, it is not certain whether citizens will begin large-scale construction on the basis of the new regulations. The ability to construct buildings of up to 35 square meters without a permit (“on demand”) was not successful earlier.
When building a house with an area of u200bu200bup to 70 square meters under a simplified procedure, you must have projects in any case, and use the services of a surveyor or designer in the same way when applying for a building permit. In addition, using the new path, you will have to build the house exactly as in the project. If we want to make major changes during construction, we will have to apply for a building permit and put the investment on hold for some time.
For that person who wants to build a house of up to 70 square meters, He must state that he is responsible for any errors in the design. Today there are already voices that this could mean a problem with the financing of construction by the bank or with the insurance of the resulting properties. And if this is not enough, then when building a house up to 70 meters high, you must declare that you are building a house that meets your residential needs.
All this can have the effect that the new regulations will, first of all, give citizens the opportunity to build simple prefabricated summer cottages faster and cheaper. Instead, most investors must follow the existing administrative path and apply for a building permit. Thus, the impact of the new regulations may be the additional demand for construction and leisure plots, but this demand has already been very high so far.
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