Can we expect a revolution in the housing sector?
An appeal by HRE Investments to the state administration to liberalize regulations regarding getting a mortgage is now bringing about its first effects. Several months ago, the developer holding company requested that the required own contribution to mortgage loans should be lowered for homebuyers seeking their first flat. Yet until recently, it has been only a dream, but the dream may come true soon. On May 15th, the main assumptions of the “Polish Deal” (Polski Ład) programme developed by the ruling camp were presented. It also covers the housing policy. According to these assumptions, the government is to guarantee banks for own contribution to mortgage loans. The contribution guaranteed may even amount to 40 percent of the property value.
Nowadays, the young, who earn honest money, often cannot afford to take out a loan to buy their dream house or flat. Although a household budget could bear regular payments of loan instalments, the amount of own contribution to mortgage remains the biggest obstacle. However, the proposed changes in this respect may allow young homebuyers to overcome this obstacle.
“We assume that the guarantee will be granted at a rate of up to 40 percent of a flat value to enable purchase with no own contribution, both on the primary and secondary market”, says the Ministry of Economic Development, Labour and Technology. The guarantee is offered to homebuyers under 40 years of age and its amount is to be PLN 100k maximally.
“The interest in buying flats is enormous. Premises and houses are sold almost promptly. Paradoxically, we are at the point where our supply capacity is limited. We expect that thanks to the new solutions buyers’ interest in the middle-segment flats will be even bigger. With a state guarantee for own contribution to mortgage, customers may aspire to buy larger flats. This obviously should gladden developers”, says Michał Sapota, CEO of HRE Investments.
“It should be however noted that there are still other factors that hinder developers’ operations. I am talking about material prices, labour costs, availability of plots”, continues.
Support to families
But that’s not all. The ruling party announced a lot more changes. The so-called “Housing Voucher” (Bon Mieszkaniowy) is expected to be a milestone. It will make a partial remission of a mortgage loan possible. A size of the loan remission will be determined based on a number of children in a family. Families with six children may obtain assistance of up to PLN 145k. The condition is that a family does not own a house, premises or flat of a usable area greater than 65 sqm.
Families with two children will benefit from the so-called “Social Family Voucher” (Społeczny Bon Rodzinny). The voucher can be used to cover a participation in the Social Housing Association (TBS/SIM) from which a family wants to rent a flat or to finance a housing contribution towards purchase of a flat from a housing cooperative. In this particular case, it is assumed that the assistance will amount to PLN 40k.
Changes in the construction law
Another proposal concerns construction of small single-family houses without a permit. Currently, houses of area up to 35 sqm can be erected on the basis of notification only. This metric area is to be extended. According to the assumptions, it will be 70 sqm, or even 90 sqm for houses with attics. Trend for modular houses will just snowball.
“I am curious to see effects of this liberalization. It creates significant opportunities for developers constructing single-family houses, provided that under the new regulations investors will not be required to self-build a house. If no, it would be a huge advantage for small developers constructing houses by the order of investors who cannot do it personally. The momentum of investments would be just impressive”, says Sapota.
The Ministry of Economic Development, Labour and Technology is now preparing a bill to implement these new regulations. A new IT system has to be developed to start the housing voucher programme, so the projected effective date of entry into force of regulations in question is January 1st, 2023. When it comes to the state surety and guarantees for own contribution to mortgage loans, it is expected that the regulations will enter into force next year.
Last Updated on May 21, 2021 by Łukasz