Law and Justice, the ruling party in Poland, within the framework of the “Polish Deal” is raising the tax burden on income from rental housing drastically and without a transition period. In this way, the government wants to slow down the growth of property prices and, at the same time, increase budget revenues. This is a wrong direction.
It is already more expensive and less tax beneficial to live in a rented apartment than to own one, and the reasons for the rise in property prices lie in the National Bank of Poland’s (NBP) loose monetary policy and supply barriers.
Meanwhile, the development of the rental market, especially of institutional lease, is a positive structural change in the Polish economy.
The housing model in Poland and other post-socialist countries is strongly focused on ownership, rather than renting as in Western Europe. This limits labor mobility, as people are less likely to look for a better job outside their place of residence when they already own an apartment, especially if they bought it with a long-term loan.
The lack of a developed rental market also makes it more difficult for young people to move out from their parents and become independent. It also limits the access of lower earners to the most attractive jobs concentrated in the centres of the largest metropolises, and thus hinders their social advancement.
Owning an apartment with a large loan can be a crutch in many life situations, especially in the context of professional mobility. Institutional lease, which has been developing in Poland recently, run by specialized corporations, may be an answer to many factors which today make apartment renting less attractive than ownership.
Institutional tenancy agreements that better protect the interests of owners and tenants, the diversification of risk in hundreds of apartments, and a long-term horizon of operations may significantly reduce the inconveniences reported by Poles related to price, unpredictability of rent changes, limitations on changes in the arrangement of apartments, frequent inspections by owners, or uncertainty about the termination of the agreement and the possibility of its continuation over many years.