The introduction of a property tax based on market value — known as the cadastral tax — is one of the most controversial ideas in the debate about the future of Poland’s housing market. Unlike the current system, in which tax rates are determined by the size of a property, the cadastral model is based on its market value. Such solutions already exist in many EU countries, where rates typically range between 0.5% and 3% annually.
In Poland, current charges are symbolic: the owner of a 100-square-meter apartment pays just over PLN 100 per year. If a 1% cadastral tax were introduced, the annual bill for the same apartment in Warsaw could reach PLN 15,000. The difference is dramatic. For example, owning a house in a smaller town valued at PLN 700,000 would mean paying PLN 7,000 in annual tax — an amount many households could struggle to bear.
Could a Cadastral Tax Improve Housing Availability?
There are several reasons why the idea keeps resurfacing. First, housing prices have risen sharply, fueled in part by government credit programs. Second, in Poland, apartments have become a kind of “gold standard” — the primary vehicle for capital investment. With limited investment alternatives and negative experiences with insurance-linked products or bonds, many people with cash or credit capacity invest in real estate. Some rent out apartments for steady income, while others hold onto them, expecting long-term appreciation.
A cadastral tax could reduce the attractiveness of such investment-driven demand and improve access to housing for those buying homes to live in. International institutions such as the OECD and IMF have long argued that Poland’s current property tax system is inefficient, does not reflect the true value of assets, and generates minimal revenue relative to GDP.
Who Would Pay the Price?
The potential effects of a cadastral tax are mixed. On one hand, it could cool the market, curb runaway price growth, and increase municipal revenues — funds local governments desperately need after income tax cuts. These additional resources could support housing construction or local infrastructure.
On the other hand, such a tax might lead to steep rent increases, as landlords pass costs onto tenants. For owner-occupiers, especially retirees and low-income households, it would mean significant new burdens. Many could find themselves “asset rich but cash poor” — owning valuable properties without sufficient liquidity to pay the tax. Some might be forced into debt or even to sell their homes.
The impact on the wider housing market could also be profound. Poland has over 1.8 million vacant dwellings. A property tax could trigger mass sell-offs of these units, substantially boosting supply and potentially causing price corrections of up to 50%. Such a shock would also affect banks, as falling property values would erode the collateral backing mortgage loans, weighing on financial institutions’ balance sheets.
Which Scenario Is Realistic?
The political context is crucial. Around 87–90% of Polish households live in owner-occupied homes. A universal cadastral tax would therefore hit millions of voters directly, making it a politically explosive proposal. For this reason, no one is seriously considering a blanket version of the tax.
The most frequently discussed compromise is taxing only second or third homes. This approach would spare single-property owners while targeting investors and landlords. Although revenues would be lower than under a universal tax, they could still amount to several to over a dozen billion zlotys annually, with less severe social consequences.
So, is the cadastral tax the right solution? The answer is complex. On one hand, it appears fairer than the current flat-rate system, as it better reflects actual wealth. On the other, implementing it without adequate preparation could do more harm than good — increasing municipal revenues and calming the market, but at the cost of higher burdens and potential destabilization.
If the issue is to be revisited seriously, broad consultations, gradual implementation, and relief measures for vulnerable groups — seniors, large families, and people with disabilities — will be essential. Alternatives could include a vacancy tax, forcing owners to put unused properties to productive use, or a progressive tax based on property value rather than simply the number of units owned. Given Poland’s unique situation, where housing is the primary store of wealth, any reforms must be introduced slowly and cautiously. Otherwise, instead of stability, the market could face a disruptive shock harming both owners and tenants.
Author: Anton Bubiel – Housing Market Expert, SonarHome
Source: CEO.com.pl
