* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Between now and the end of the year, the Polish parliament will discuss a new housing program, “Home Plus”, proposed by the government. If adopted, the program would launch in June 2017 and could have a substantial impact on the country’s housing market.
In September 2016, the government proposed setting up a large-scale housing initiative. The initiative would reform public housing and create an affordable housing scheme to citizens who are unable to afford the rent for an apartment.
While the proposed program focuses on build-to-rent concept rather than home ownership, tenants will have the option to buy their homes by repaying construction costs over time. This signals a fundamental shift from the policies favored in the 1990s-2000s when the government supported ownership through credit and tax benefits for homebuyers and refused to fund new construction projects. In the wake of market liberalization in the 1990s, homes in Poland were privatized to sitting tenants. As a result, social housing almost disappeared with more than 80% of the housing stock placed in private hands.
Today, according to the latest Housing Report by Habitat for Humanity Poland, the rental sector makes up less than 15% of the entire housing market. However, most families with moderate incomes cannot afford the rent. In fact, more than $200 million in rent payments are in arrears. In addition, rental units are poorly maintained and are in short supply with more than 160,000 people on the waiting list for an apartment. The housing crisis also affects families who are buying their homes with many unable to repay their mortgages resulting in more than 8,000 evictions every year. The housing problems for private owners started to intensify in 2008 with the global financial crisis and market has never been able to recover from those foreclosures.
Home Plus Plans
The “Home Plus” hopes to reverse the downward trend by using public funds to build more social housing. This will increase the number of housing units to meet the growing demand at a lower price point. Basically, tenants will lease the new housing at 10-20 PLN per square meter, €2-4, and at 12-24 PLN, €3-5, per square meter for the rent-to-own options. While families with children and low-income groups will be given priority, the program will be open to all citizens.
The National Housing Fund will fund construction and act as a state banking mechanism. Land for development will be acquired from the State Treasury as identified by the Ministry of Infrastructure and Construction and swapped for shares of the Housing Fund. Pilot developments, 17 of which have been identified, will be managed by the State Development Bank.
The second part of the “Home Plus” plan will reform existing housing laws and regulations to increase the management capabilities of local authorities and encourage housing self-organization among tenants. These initiatives will not get additional government funds. However, the government will encourage citizens to save through individual housing accounts with banks and cooperative credit unions to take care of their housing needs. The individual housing accounts will be exempt from income and bank taxes, and the government will offer bonuses for those who meet the low-income criteria and make regular deposits.
It will be interesting to see how the new housing program will be implemented in Poland and if it can make an impact on the need for affordable housing. Since 2008, there has been a growing realization throughout Central and Eastern Europe that the “market” cannot solve all housing problems. And the governments have started to recognize their role in housing their populations.
Let’s see what happens in Poland and if the rest of the region follows suit.
