BuyingFlat

A step-by-step guide to buying a flat in Poland

There has never been a better time to buy a flat in Poland!

With its low cost of living, improving infrastructure and attractive job opportunities, Poland is the place to be right now. Foreign nationals purchased over 7000 apartments in Poland in 2018, almost 50 per cent more than in 2017.

I was heavily engaged in the process of buying a flat in Gdańsk throughout the first part of 2019. I bought a flat as a citizen of Poland. However, this step-by-step guide to buying a flat in Poland applies to citizens of the EEA, EFTA and Switzerland who are entitled to acquire any kind of real estate in Poland without a permit.

 

Let’s break things down …

 

 

Step 1 – Ready to buy a flat in Poland? – The hunt for your dream property

The most obvious way to search for flats is online. If you’re looking to buy a flat in Poland, the following sites seem to be leading the way with offers:

otodom

rynekpierwotny

gratka

olx

morizon

I am not in anyway affiliated to otodom.pl, but I found that this site is more user-friendly and probably has the most offers. Otodom also seems to be the go-to place for people who wish to sell privately, in other words, without an estate agent. I bought my flat directly through the owner.

During my search for a flat in Gdańsk, I cooperated with a few estate agents. My experience was quite positive. Considering that estate agents carry out some of the bureaucratic procedures for you, it can be fruitful to liaise with estate agents which only take commission from the seller. They are rare but do exist.

If you find a flat, and the only way to buy it is to pay a commission fee, I believe that it is possible to negotiate the fee with most estate agents, so you could end up paying less than the standard 3% commission rate.

 

Step 2 – Negotiate the price

So, you have found the flat of your dreams?

The next step is to think about how to pitch an offer to the seller.

Well-maintained and relatively new flats are in high demand in Gdańsk, particularly in the area in which my flat is located, so I didn’t want to make too low an offer because I was aware that the seller probably had other interested parties.

The seller’s asking price did not include the two parking spaces in the underground garage and a “komórka lokatorska” – a separate storage unit in the underground garage in which dwellers can store anything from paint to bicycles. 

I pitched my offer in such a way that I would pay the seller’s asking price plus a little bit extra. In reality, I got one parking space and a storage unit for free. Underground parking spaces in big cities in Poland are not exactly cheap so I was quite satisfied. I recently rented out both spaces as I don’t plan to buy a car yet. 

During the negotiation phase, I also told the owner that I wanted him to leave ALL the furniture, appliances and pictures in the flat. He was a little taken aback by my demand. However, I had a right to ask just like he had a right to say “no”. Anyway, he agreed to my proposal. 

All in all, both parties were satisfied. I also avoided paying a commission fee to an estate agent, which saved me in the region of 5,000 EUR. 

 

Step 3 – Check the property

Land register:

Each property (flat, house, land) has its own land register. It is a public, electronic database (Elektroniczne Księgi Wieczyste) which everyone can access in order to check the status of a property. You should request the appropriate register number from the seller.

If you do not know Polish, it is well worth hiring the services of a lawyer to check the register and guide you through the process of buying your property. Google Translate has its uses but there’s a time and a place to use it!

The land register is divided into four sections: 

Section I:

Here you will find details about the property itself (address, status, type, etc.)

Section II:

This section contains details related to the ownership. It means that you will be able to verify whether or not the seller is the owner and has the legal right to sell the property. 

Section III:

In this section, you can find out whether there are special rights belonging to third parties in relation to the property. These might be servitudes – such as the right for neighbours to use an internal road and permission for the electricity company to carry out services within the vicinity of the building. It is also crucial to check that there are no special servitudes for any tenants connected with the property. The last thing you need is for a stranger to have the lifelong right to dwell in your property! 

Section III also contains also information on any debt-enforcement procedures against the owner and official warnings about legal issues regarding the property title.

Section IV:

Here you will find information regarding any outstanding debts or mortgages. Make sure that this section is empty. If the owner informs you that they purchased the flat via a bank loan, you (or your bank) will have to pay any outstanding difference for the property to the owner’s bank, up to the outstanding balance of the mortgage loan. 

The above points direct refer to properties purchased on the secondary market (rynek wtórny), as newly built houses are not provided with a land register. However, it is possible to check whether a developer took a loan to construct a building as you can gain access to the general ground land register.

Other documents required to buy a flat in Poland:

When talking with vendors, you should also ask them to provide you with the following documents:

1) previous notarial deeds, including corrections, proving the acquisition of the apartment;

2) certified copy of the entry in the Land (and Mortgage) Register (wypis z rejestru gruntów i budynków);

3) a copy of the property’s records (wypis z kartoteki lokali);

4) statement from the Housing Association confirming the current status of due payments in relation to the property (czynsz);

5) City statement/decision on property tax.

All other necessary documents will be demanded by the public notary.

Technical inspection

It would be a prudent move to hire someone who is savvy in properties to check the condition of the flat you wish to buy. There are companies that specialise in inspecting the condition of the walls as well as water, power and gas facilities. The cost of such an inspection depends on the size of the flat but it should not amount to more than 400 PLN. 

I skipped the inspection process as my flat is in a relatively new building constructed by a well-known developer in Tri-City. Nevertheless, you do not have to copy what I did if you’re unsure about the developer and state of the building or apartment. 

 

Step 4 – Signing the preliminary contract

Now, it gets exciting – as you are ready to sign a preliminary agreement, called Umowa przedwstępna sprzedaży. This document guarantees that both the buyer and the seller promise to fulfil their contractual obligation, in other words, the buyer agrees to purchase the property at a specified price and within a set timeframe. Respectively, the seller agrees to sell you the property under the provisions that had been previously agreed. 

At this stage, you should also make an advance payment, or deposit, to the seller. The amount of the deposit depends on the negotiating parties.

A key point that you need to be fully aware of is that there are TWO types of advance payments:

(a) “zaliczka” – this type of deposit is fully-refundable and makes it possible for each party to withdraw from the preliminary agreement;

(b) “zadatek” – this type of deposit makes the buyer more bound to the agreement as cancelling results in a loss of the deposit. If the seller wishes to withdraw from the preliminary agreement, they would have to return DOUBLE THE AMOUNT of the initial deposit to the buyer.

To summarise the above, my lawyer communicated the following very helpful advice to me at the time the notary officials were compiling the preliminary agreement:

The amount of the deposit depends on negotiating parties. I would say that 10% was adequate provided the preliminary sale agreement was signed under notary deed form (not only certified by notary but in duly notary deed form that allows you to demand the apartment to be transferred by the court verdict if the seller failed). If the seller offers just a written form for the preliminary contract (that will not give the buyer the right of demanding the transfer in front of the court), pln 10k will be more reasonable. In any case, the pre-contract should be signed prior to the transfer of any deposit.

No matter what form the pre-contract gets the deposit (provided it was called in the agreement as “zadatek”) shall be returned double to the buyer if the seller fails to sign a final contract or will be lost by the buyer if he fails. If the deposit is called “zaliczka” it should be just returned to the buyer if any party fails to sign the contract.

Agreeing on a date for the final contract:

When agreeing on a final date for the final contract and the eventual transfer of the remaining sum of money to the seller, make sure that you give yourself enough time to arrange any formalities and, if necessary, take out a mortgage from a bank. This usually takes a bit longer for foreigners – around two months.

One month should not make too much difference to your or the seller’s life so it is worth giving yourself some extra breathing space, in other words, three months.

I did not have to take out a mortgage, but I still gave myself two months to transfer foreign currency to Poland, withdraw it from my bank account and exchange it into Polish złoty at an exchange office. 

How to sign a preliminary contract:

It is possible to sign a preliminary contract in two ways. The first way, which I recommend, is signing the agreement by means of a notary deed. Although you might have to pay between 1000 to 2000zl, depending on the price of the property, it is far more reassuring to know that the whole process is being securely supervised.

When it comes to buying a flat from the developer company on the primary market (rynek pierwotny), it is obligatory to sign a notary deed. This agreement is called umowa deweloperska and contains plenty of information, provisions and appendices designed to protect buyers. 

Another way to compile a preliminary agreement is for the buyer to sign a regular bilateral civil agreement with the seller. This is done without any intermediary. In order to protect yourself from any dubious contractual clauses, you can always come up with your own version of the preliminary agreement.

Crucial advice:

It is recommended that the following is included in the preliminary contract: “wolny od jakichkolwiek ciężarów, ograniczeń i roszczeń osób trzecich”. This will guarantee that there are no hidden debts or third-party stakes in the property.

 

Step 5 – Financing

It is very straightforward to buy an apartment in Poland with cash. You have to pay the amount to the seller under the conditions agreed in the preliminary agreement.

If you wish to take out a mortgage, you have to apply for a loan in a bank. However, you may not be proposed an offer by every bank. Therefore, it is recommended to apply to two or three banks at once.

As soon as it becomes clear that one of the banks won’t subject you to never-ending bureaucratic requests, go with this bank if their offer is inviting enough for you. After all, your end goal is to meet the deadline for completing the purchase of the property defined in the preliminary agreement.

People without Polish citizenship are not necessarily discriminated against, but banks give a decision based on specific conditions. In reality, if you have a residence permit in Poland and a full work contract, it should not be an issue to get a loan. The process usually takes around two months and banks may demand that you pay more than the legal minimum of 10% of the agreed value of the property.

 

Step 6 – Signing the final buy/sell agreement, other financial obligations and finishing things off

The final stage is to sign the buy/sell agreement with seller. Irrespective of whether the transaction takes place on the primary or secondary market, the final agreement must be signed in the form of a notary deed. If you buy the property on the secondary market, you can pay the remaining amount of money after the deed is signed. 

Notarial fee:

This is the fee for the services of a notary public and for the preparation of a document (agreement) in the form of a notarial deed. The notarial fee is commonly covered by the buyer.

The maximum notarial fee is defined by law, and depends on the value of the subject of the notarial act:

  • lower than 3,000 PLN – PLN 100;
  • from 3,000 to 10,000 PLN – PLN 100 + 3% on the surplus over 3,000 PLN;
  • from 10,000 to 30,000 PLN – PLN 310 + 2% on the surplus over 10,000 PLN;
  • from 30,000 to 60,000 PLN – PLN 710 + 1% on the surplus over 30,000 PLN;
  • from 60,000 to 1,000,000 PLN – PLN 1010 + 0,4% on the surplus over 60,000 PLN;
  • from 1,000,000 to 2,000,000 PLN – PLN 4770+ 0,2% on the surplus over 1,000,000 PLN;
  • over 2,000,000 PLN – PLN 6,770 + 0.25 % on the surplus over 2,000,000 PLN, however not more than 10,000 PLN.

The above are net amounts to which 23% VAT should be added.

PCC Tax

After signing the sales agreement for a flat on the secondary market, a tax on civil law transactions must be paid at a rate of 2% of the value of the purchased real property.

Apartments bought directly from a developer are sold at 8% VAT tax. A rate of 23% rate applies to parking spots.

Finishing off:

The notary office can be entrusted to create an entry in the land and mortgage register. This costs PLN 200. The change of owner should also be reported at the local municipal or communal office competent for the location of the property.

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That’s it. It has never been simpler to buy a flat in Poland ;-

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