USA-China Tensions Transform Global Market

After the U.S. elections, relations between the...

Last Chance to Redeem Land from Perpetual Usufruct by August 31st

REAL ESTATELast Chance to Redeem Land from Perpetual Usufruct by August 31st

Until the 31st of August, entrepreneurs who hold ‘perpetual usufruct’ rights on land have the opportunity to apply for its redemption. Annual fees for perpetual usufruct can go up to tens or even hundreds of thousands of zlotys. Therefore, acquiring ownership of such lands will be extremely beneficial – according to an expert from the advisory company, Lege Advisors.

“The need to pay fees for lands in perpetual usufruct is a significant burden for entrepreneurs. The amount of the annual fee is determined by the value of the property and equals a certain percentage of this value, depending on the function performed by the property. Fees for perpetual usufruct also undergo annual adjustments, which in practice means their constant increase. Therefore, entrepreneurs owning such lands must take into account a long-term constant cost increase,” says Magdalena Pudło from the advisory firm, Lege Advisors.

The conversion of perpetual usufruct rights for residentially developed lands into property rights took place by law in 2019. Under current regulations, it became possible to also take ownership of lands used for commercial purposes. The opportunity to redeem lands subject to perpetual usufruct applies to developed lands that were given in perpetual usufruct before the 31st of December, 1997. However, this does not apply to port areas or allotment gardens.

Disposal of a real estate property used for conducting business to its perpetual usufructuary occurs on their request. The request should specify the legal basis that authorises the perpetual usufructuary to redeem, identify the property, demonstrate the legal title to the property, and attach documentation proving that the property meets the redemption conditions according to new regulations. The application is submitted to the appropriate local governor, mayor, or president, as long as the land is owned by the territorial self-government unit.

“The price of the land property used for conducting business is set at a minimum of twenty times the amount constituting the product of the current percentage rate of the annual fee for perpetual usufruct and the value of the land property specified on the day of the sale agreement. In the case of commercial lands, the price can be a minimum of 60% of the property value on the day of sale (20×3%) and a maximum of 100% of its value,” explains Magdalena Pudło from the advisory company, Lege Advisors.

Public assistance up to a certain limit

In relation to the sale of a land property used for business operations, public assistance regulations apply. For many entrepreneurs, land redemption will therefore be a more beneficial solution than constantly paying high fees. In cases where the value of public assistance exceeds the de minimis aid limit (200,000 EUR over 3 calendar years), financial support is provided up to this limit. The remaining part of the price has to be paid additionally, either one-off or in installments.

A perpetual usufructuary of the land property, who meets the presented conditions, can demand the sale of this property on his behalf within 12 months from the day the law comes into force, i.e., until the 31st of August, 2024.

Check out our other content
Related Articles
The Latest Articles