Thursday, June 20, 2024

Deloitte: Poland enters the phase of economic expansion

The divergence of economic moods in Poland...

Two Years On: War in Ukraine and Its Global Impact

On February 24, 2022, a full-scale Russian...

Challenges in Polish Rental Market: The Need for Balanced Tenant and Landlord Rights

REAL ESTATEChallenges in Polish Rental Market: The Need for Balanced Tenant and Landlord Rights

Rent arrears, property damage, or moving out without payment are just a few of the problems tenants can cause for property owners. According to a Rendin survey, nearly 70% of rental property owners have faced such difficulties. Terminating a lease with a dishonest tenant is only the beginning of a long process that doesn’t necessarily end in eviction. “We need changes to grant certain rights to property owners and to establish an efficient eviction system,” emphasizes Alina Muzioł-Węcławowicz, a housing policy specialist.

If rent arrears reach three payment periods, the landlord can terminate the lease agreement under the law, which also entitles them to file for eviction. The landlord cannot evict the tenant without a court order. Initially, they must send a notice to the tenant stating their intention to terminate the lease and provide an additional month for the tenant to pay the overdue rent.

“When a tenant persistently defaults on rent, often without a connection to their actual financial situation, cases are taken to court. Unfortunately, the legal process involves several lengthy stages. We have a significant backlog of eviction cases,” Alina Muzioł-Węcławowicz told Newseria Biznes.

However, the legal proceedings can take several years. If the court finds that the tenant is unlawfully occupying the property, it can order the tenant to vacate the premises. If the tenant does not comply after the verdict becomes final, the case is handed over to a bailiff. The court may also grant the tenant the right to social housing, considering their financial situation, but certain groups are protected by law, such as pregnant women, pensioners, low-income retirees, minors, the unemployed, the seriously ill, and people with disabilities.

“The court usually orders eviction with the right to social housing, but there is a shortage of such housing in Poland. Consequently, the severe repercussion of eviction does not have a strong impact because it is not realistic for many people. They are not worried because if it is supposed to happen in a few years, they do not feel the need to pay rent. This is one of the fundamental problems,” the expert explains.

Data from GUS indicates a shortage of social housing in Poland. At the end of 2022, 70.2 thousand households were waiting for social housing, including over 40 thousand households (57%) under eviction orders.

In 2023, the Ombudsman warned that property owners are reluctant to rent out apartments due to the extensive legal protection of tenants’ rights and weaker protection of landlords’ rights. Owners fear issues with unreliable tenants who may not pay rent or refuse to leave. They particularly avoid renting to families or individuals with children, as these groups have special protection against eviction. This is reflected in the 2022 Rendin survey, where 64% of landlords cited the risk of tenants being unable to afford rent and fees as their main concern, and nearly 19% mentioned difficulties with evicting tenants.

“We have strong tenant protections. I am not suggesting severely limiting them, but rather balancing these rights and giving property owners rights as well, ideally within a general regulatory framework,” says Alina Muzioł-Węcławowicz.

Today, landlords are protected by occasional leasing (for individuals not conducting business in renting) or institutional leasing (for business owners renting properties). Both forms allow landlords to use a simplified eviction process for tenants who do not meet their obligations.

“It is unfortunate that we have constructs like occasional and institutional leasing. These solutions complicate the rental situation. Many European countries have a single regulation for apartment rentals, but in Poland, policymakers create forms to facilitate certain market segments. This approach does not lead to success,” the housing policy specialist assesses.

The Ombudsman has noted that not all private rental agreements are concluded as occasional or institutional leases, and these forms do not dominate the rental market.

“We need changes to grant certain rights to owners and balance these rights. We also need an efficient eviction system that serves as a deterrent. Currently, it is ineffective. Faster court processes would make people face the consequences of not paying rent sooner,” says Alina Muzioł-Węcławowicz.

According to GUS data, at the end of 2022, tenants in nearly 24% of the 8.1 million housing units were behind on rent payments, with total arrears (including interest) exceeding 6.9 billion PLN. Tenants in municipal housing had the highest share of total arrears (62.7%).

“Municipalities, if more than 50% of their housing is municipal, face significant rent arrears and are hesitant to invest in a sector that causes them problems. Additionally, many municipal tenants still operate under the outdated notion that state-owned property means it is unowned, leading to misuse. This is unfortunately socially acceptable,” says the expert.

GUS data shows that in one-fifth of municipal housing units, tenants are behind on payments. This issue affects almost half of cooperative housing units and one-third of privately-owned units in buildings managed by housing associations.

Nearly 90% of eviction proceedings are initiated due to rent arrears. In 2022, of the 13.1 thousand court proceedings, almost 73% involved municipal housing tenants, and nearly 13% involved tenants in privately-owned units within housing associations. Of the 6.1 thousand eviction orders issued, 80% involved municipal housing tenants.

Check out our other content
Related Articles
The Latest Articles