According to Eurostat, a mere 13%[1] of Poles rent housing, a figure decidedly below the EU average of 31%[2]. The limited possibilities of property purchase by young Poles, however, are driving the significant development of the rental market. Those who cannot afford a mortgage are usually left with the option of living with their parents or renting. The number of companies involved in renting and managing their own or leased real estate is growing dynamically. As the data gathered in the BIG InfoMonitor Debtors Register and BIK database show, in the last year, the unpaid liabilities of this group of entrepreneurs increased by 40%.
Investing in rental properties has been gaining popularity among both private and institutional investors for years. It is still a relatively safe and long-term beneficial form of capital investment. In the short term, however, it may be quite unstable, as it is influenced by many factors. “The rate of return from renting is the ratio of rent to property value. Currently, in the largest cities, it is 4-6%. Compared to the profits from treasury bonds or deposits, renting becomes less attractive. Previously, inflation and the lack of other investment options favoured investing in real estate, but now other attractive alternatives, such as retail bonds, have appeared. As a result, developers are delivering new flats, and investors dissatisfied with profits are trying to sell their properties, which puts pressure on the market and creates a problem with sales. This is evident in the increase in offers on the primary market,” says Dr. hab. Waldemar Rogowski, Chief Analyst at BIG InfoMonitor.
Rental costs are rising again
The purchase prices of flats have been rising for years, as has the cost of maintaining properties. The cost of renting also increased for many years, but as Otodom data shows, since the beginning of 2023, this increase has been considerably slower. What’s more, at the beginning of 2024, rental rates recorded declines. The situation changed in the summer, when slower than in previous years, but nonetheless, rental costs in most cities started rising again. According to the Otodom report, in provincial cities, the average rental cost in August rose by 2.4% compared to July and 3.2% year on year, averaging PLN 3633[3]. One of the reasons was undoubtedly the jump in supply caused by students looking for accommodation for the new academic year.
The situation in the rental property market is reflected in the data of the BIG InfoMonitor Debtors Register and the BIK credit information database. The overdue debt of entrepreneurs dealing with renting and managing real estate (PKD 6820Z Rental and management of own or leased real estate) from July 2021 to July 2023 consistently decreased at a rate of about 2% year on year. Comparing the current data with those from a year ago, we can already see a significant increase. Over the year, the value of unpaid liabilities of the industry increased by PLN 464 million and at the end of July 2024 amounted to as much as PLN 1.62 billion.
Despite the growing number of entities in the real estate rental sector, the percentage of companies struggling with the timely repayment of debts entered in the BIG InfoMonitor Debtors Register and the BIK database has been changing slightly for several years and oscillates at 3.3-3.8%. Currently, there are 2076 companies (active, closed, and suspended).
Higher costs of service and maintenance of premises and protection against dishonest tenants. This is what the market is grappling with
Of the nearly 1.8 million rented flats in Poland, 40% are municipal (community and social) owned flats and those offered by the Social Construction Society. 1% are owned by institutional investors, and the remaining 59% are rented by private owners[4], also through property management agencies. All these groups have to cope with rising service and maintenance costs and the risk that tenants will not pay their obligations on time.
High costs combined with loss of income can, however, lead to a debt spiral that the tenant will find hard to escape. “Legislation focused on tenant protection does not facilitate debt collection. A prudent protection can be the prospect of reporting overdue obligations to the BIG InfoMonitor Debtors Register. The knowledge that such an entry makes it difficult, and sometimes even impossible, for example, to make instalment purchases or to sign a subscription agreement with a telecom, is a good motivation to pay the obligations on time,” reminds Sławomir Grzelczak, President of BIG InfoMonitor.
[1] This value includes all forms of rental, including rentals from municipal resources (community, social), cooperative, and TBS.
[2] Eurostat data from the “Housing in Europe 2023” report
[3] Otodom reports: http://blog.otodom.pl/docs/OTOD_raportzrynku_SIE2024.pdf?_gl=1*1sktt21*_gcl_au*MTkyNjU0NzQ5Mi4xNzI3OTg2MDQw*_ga*NjQ5MzY1MzIuMTcyNzk4NjAzOQ..*_ga_6PZTQNYS5C*MTcyODAzMTU0NC4zLjEuMTcyODAzMTU1OC40Ni4wLjA
[4] https://mieszkanicznik.org.pl/rynek-najmu-prywatnego-w-polsce/
Source: https://managerplus.pl/rynek-najmu-w-polsce-rosnie-ale-zmagania-z-kosztami-i-zadluzeniem-coraz-wieksze-49907
