The government announces that as of 2023, permits to build single-family houses for own residential purposes will be a thing of the past. The Warsaw Enterprise Institute supports any legislative initiative that minimizes the involvement of officials in the economic activities of citizens. However, we would like to emphasize that in the situation of rampant inflation, which forces interest rates to rise, and a stagnant developer market, further deregulation of the construction market, based on individual initiative, is an absolute necessity. This is the only way to meet the housing needs of Poles struggling with financial difficulties.
According to the announcements made by the Minister of Development and Technology, Waldemar Buda, from 2023 it will be possible to build single-family houses up to two storeys and without any space limitations without a permit, provided that they serve the investor’s own housing purposes. This will be an extension of the principle introduced within the framework of the Polish Order, according to which it is possible to build a house of up to 70 m2 without a permit (a notification to the relevant office is sufficient). At the same time, the Ministry wants to introduce the obligatory supervision of a construction manager whose task will be to supervise the proper realization of the investment. The introduced changes do not exempt from the requirement to apply for zoning regulations or to conduct the investment in accordance with the local zoning plan.
Warsaw Enterprise Institute appreciates the freedom aspect of the ministry’s plans. It is individual initiative that can fill the gap left by developers who limit their investments in response to rising interest rates or risks generated by the war in Ukraine. According to the Central Statistical Office (CSO), investments in the property development industry fell by as much as 22 percent through May compared to the same period in 2021. The availability of new apartments for Poles will decrease not only as a result of falling supply, but also as a result of the purchasing power of their wallets reduced by record inflation.
A slump in the construction market, which accounts for as much as 7.4% of Poland’s GDP, could have very serious consequences for the entire economy. Therefore, the proposed solution is a step in the right direction, but it is only a drop in the ocean of needs, which is the freedom to build on your own land. According to the Doing Business (2020) report, Poland ranks 92nd in the world when it comes to registering property, 60th when it comes to connecting utilities and 39th when it comes to obtaining building permits. Considering that we are the 22nd economy in the world, based on GDP, this means regulatory backwardness. These still complicated procedures explain to some extent why the abolition of permits for houses of up to 70 square metres has not caused a revolution in the market. Only 364 houses have been built under this formula so far. Incidentally, this also proves that all the gassy forecasts predicting that Poland would be flooded by temporary construction as soon as the citizens were given a bit of freedom were unnecessary alarmism.
As far as the latest government proposal is concerned, the exclusion of developers from it should be given special consideration. It is reasonable insofar as it prevents building chaos and housing estates from being built anywhere, which in practice creates externalities for local authorities, who have to build roads and utilities to the new estates at taxpayers’ expense. However, this exclusion will cease to be justified once one of the biggest problems of the Polish construction market is resolved: the lack of local zoning plans. Poland is only 31.4% covered with them! Such plans define precisely where and what can be built, preventing drain on local budgets. Unfortunately, the problem of the lack of such plans has not yet been solved by any government – we are still waiting for the daredevil.
In conclusion, the Warsaw Enterprise Institute applauds the increased freedom to dispose of one’s own property, the need for which has finally been recognized. Maybe in the near future we will see a revolution in legislation, such as making it possible to cut down a tree on one’s own property! Other steps that could help the broader housing industry include changes to tenant protection laws, which currently discourage individual investors from investing and de facto inflate housing rental prices.
We encourage those in power to be more courageous and far-sighted in their actions.
