The Ministry of Development and Technology is once again taking aim at micro-apartments. First, the construction of apartments smaller than 25 sqm was banned. Later, attempts were made to limit the possibility of bypassing those rules through commercial premises. Now, new technical conditions are intended to close another loophole used for micro-apartments in hotels, aparthotels and student residences. The problem, however, is that every time the market finds a new workaround. Micro-units, regardless of regulation, still have a loyal group of buyers.
According to the latest version of the draft regulation on technical conditions, it will no longer be possible to design units smaller than 25 sqm in collective residence buildings either. The change is intended to curb the practice of building small units that are formally classified as commercial premises, but in reality function as apartments.
“This is another stage in the long-running war between the regulator and the market,” comments Jarosław Jędrzyński, an expert at RynekPierwotny.pl.
From liberalisation to tightening
The paradox of the entire story is that just a decade ago, the administration’s approach was exactly the opposite of today’s. In 2016, the infrastructure ministry planned to abolish standards concerning the minimum size of residential rooms, arguing that the parameters of homes should be determined primarily by the market and buyers’ preferences.
As experts from RynekPierwotny.pl argued at the time, micro-apartments were not a Polish invention, but a natural element of how the world’s largest metropolitan areas function — from New York and London to Paris. In conditions of rapidly rising property prices and advancing urbanisation, the segment of the smallest apartments was supposed to be one element of a more diversified developer offer.
At that time, the prevailing belief was that the market itself would verify the scale of the phenomenon.
Two years later, however, there was a sharp regulatory turn. From 1 January 2018, regulations came into force banning the design of apartments with an area of less than 25 sqm. The regulation was intended to improve housing standards and limit the most extreme cases of squeezing people into minimal living space.
And indeed, from the point of view of urban planning or quality of life, it is difficult to deny the rationality of these arguments.
The problem is that the housing market rarely submits to simple administrative bans.
Micro-apartments are not a new invention
In public debate, the smallest units are often presented as a relatively new product of so-called “pathological development”. In reality, apartments of a dozen or so square metres have existed in Poland for decades, including during the communist era. For many people, they were the first step towards independent living.
Just several or several dozen years ago, few people were particularly surprised by studios of 16, 18 or 20 sqm, especially in large cities and attractive locations. Their advantage was a relatively low nominal price, a good location and the possibility of living independently without having to rent a larger property.
According to analyses by RynekPierwotny.pl conducted before the introduction of the 25 sqm limit, demand for the smallest units remained stable at around 1–2% of total demand on the primary market. The segment was therefore niche, but durable and clearly present in the structure of the market.
It was this stable demand that meant micro-units did not disappear from the market despite regulation.
Demand did not disappear. The market found a workaround
After the new regulations came into force, developers very quickly began to use alternative legal formulas.
Because the restrictions applied only to residential units, the market began to see the emergence of:
micro-apartments,
aparthotels,
condohotels,
private student residences,
commercial premises functioning as apartments.
Formally, these were not apartments, but commercial units or collective residence buildings. In practice, however, they often functioned exactly like classic residential units.
Buyers accepted numerous disadvantages, including:
a higher 23% VAT rate,
a less favourable legal status,
registration limitations,
operational problems.
In return, however, they received a product that was relatively cheap to buy. Even if the price per square metre was very high, the small floor area meant a much lower capital entry threshold than in the case of a traditional apartment.
And this is where the fundamental clash between two ways of thinking about the housing market becomes most visible.
A clash of two housing-market logics
Supporters of a more market-liberal approach argue that the state should not administratively eliminate a product for which there is lasting demand. In their view, micro-units are a natural market response to high apartment prices, urbanisation and the changing lifestyles of residents of large cities.
In practice, the smallest units are most often purchased by:
students,
singles,
young employees moving to the largest urban areas,
investors looking for small rental units.
In many cases, this is not even a choice of comfort, but a choice between a very small apartment and having no possibility of buying one’s own home at all.
On the other hand, there is an equally strong urban-planning and regulatory approach, which points out that the problem is not only the size itself, but the circumvention of the law and the disruption of the logic of spatial planning.
This aspect is highlighted, among others, by Hanna Milewska-Wilk from the Institute of Urban and Regional Development. As the expert points out, buildings formally designed as hotels, aparthotels or service facilities in practice start to serve a residential function, which leads to infrastructure overload and urban chaos.
A municipality plans for:
a specific traffic intensity,
utilities consumption,
service or office functions,
appropriate technical infrastructure.
Meanwhile, in the place of a planned service facility, a building inhabited by hundreds of people appears. As a result, both the logic of spatial planning and the actual functioning of the city begin to diverge.
The ministry is trying to close the last loophole
The new regulations are intended as a response to precisely this mechanism.
This is no longer only about banning the design of apartments below 25 sqm, but about limiting the possibility of bypassing earlier regulations through the construction of micro-apartments in collective residence buildings.
This is a very important change, because in recent years this very segment has become the main channel for the development of the smallest units on the market.
In practice, this means another stage of tightening the system:
first, micro-apartments were banned as residential units,
then the market moved into commercial premises,
then into aparthotels and student residences,
and now the regulator is trying to limit this route as well.
The new regulations are therefore no longer fighting only the floor area of a unit, but the mechanism of circumventing previous rules.
A war that will not end quickly
The history of micro-apartments reveals a paradox of the Polish housing market. For years, the state has tried to regulate a segment that it itself wanted to liberalise just a decade ago. The market, however, responded with successive legal structures — from commercial premises to aparthotels and condohotels.
It is difficult to expect otherwise. As long as apartment prices remain high and some buyers are looking for the cheapest possible entry point into the market, interest in the smallest units is unlikely to disappear.
“The question is rather whether this segment will operate within transparent and coherent legal frameworks, or whether it will continue to be pushed into successive legislative grey zones,” concludes Jarosław Jędrzyński.
Source: CEO.com.pl
