«The residential real estate market in Warsaw remains dynamic.» How COVID-19 impacted the Polish real estate market
Poland attracts Russian citizens mainly by the right to high social security, prospects for building a career and or starting a business, the opportunity to receive a high-quality European education, as well as a profitable investment, including residential properties. We talked to Galina Kharlamova, a leading realtor at East West Reals in Warsaw, about the way the COVID-19 pandemic has affected the decisions of Russians and the Polish real estate market in general.
«Our clients from the Russian Federation are divided into two groups. The first group purchases housing for living: because of moving to the country on the basis of a permanent residence, children entering higher education institutions, business relocation, etc. The second group includes investors who continue to live in Russia permanently but keep investing in real estate in Poland in order to save capital or get a stable profit. In general, the pandemic has not affected the volume of residential real estate transactions, but the transactions themselves are carried out mostly in a remote format now. Our clients send us a notarized power of attorney (apostille is not required). We make a sworn translation into Polish and purchase real estate on behalf of our clients. Payments are made by transferring funds from the buyer’s current bank accounts in the Russian Federation to the current accounts of developers or, in case of a secondary market, to a notarized deposit.
The residential real estate market in Warsaw remains dynamic — a one-bedroom apartment in the center of Warsaw is still on sale within 2-3 weeks. Apartments with a small area (30-35 m2) in the center are even more popular for further rental. That is the most common request from buyers from Russia on both the primary and secondary markets of Warsaw. Prices in Warsaw, after remaining unchanged in April-May 2020, continue to grow. This is also due to the rising prices for construction materials, the high cost and shortage of labor, the constant demand for real estate in the capital of Poland, not only from the former CIS countries but also within the country, as well as the interest of investors from EU and Israel in real estate in the Polish market.
The Polish market attracts a lot of Russian investors. The legal framework of Poland has repeatedly proved its focus on the buyer. When purchasing real estate from a developer the buyer never transfers money directly to him. Payments to the trust accounts are made gradually after the completion of each stage of construction. The price per m2 is fixed in the contract with the developer at the ground-excavation phase and cannot be changed during the entire construction period (~2 years). The contract with the developer is registered in the state cadastral register.
To purchase an apartment, a citizen of the Russian Federation only needs to have the international passport.
Here is the approximate scheme of the purchase:
- You contact a real estate agency and tell them about your search criteria in as much detail as possible.
- According to these criteria, the agency sends you the appropriate options for consideration.
- You choose the one that suits you best. When buying remotely, we make a video of the apartment, its location, and the surroundings. When purchasing in person, we organize views and presentations of the objects.
- If the property is purchased from the developer, we sign a reservation agreement and pay for the reservation. The process is remote. We exchange scanned copies.
- Prepare a power of attorney in the Russian Federation. If the client is in a registered marriage, a power of attorney from both spouses is necessary. You always get a sample power of attorney from the Polish notary office, where the transaction will be taking place. For your convenience, the real estate agency sends this power of attorney for translation into Russian.
- After receiving a power of attorney from you, the agency passes it for a sworn translation into Polish.
- The contract with the developer is signed at the notary and registered in the state cadastral register.
- After putting the house into operation, a final contract with the developer is signed.
- Registration of property rights in state institutions is also carried out on the basis of a corresponding power of attorney in the name of the buyer.
- Apartments from the developer are rented on the stage of the standard developer’s finish.
- If the property is purchased from the owner, there’s only one additional step: after signing the reservation ( and paying for it) the funds from the buyer are transferred to the notary’s bank deposit. This form of payment is recognized as the safest one for both the seller and the buyer. After signing the contract of sale, the notary transfers funds to the seller’s account. If the transaction does not take place, the notary is obliged to return the received funds to the current account of the buyer.
It is more difficult to buy a house with a land plot, land plot, or commercial real estate. To purchase this type of property, non-Polish citizens must obtain permission from the Polish Ministry of Internal Affairs. The Ministry checks whether the buyer has any connection with Poland and whether such an acquisition contradicts the strategic interests of the Republic of Poland.
Working with our agency, Russian citizens remember all the nuances:
- While in a registered marriage, each of the spouses must sign the contract of sale or a power of attorney. In addition, each of them can purchase real estate as their own personal property.
- Payment of tax from civil transactions when buying real estate on the secondary market accounts for 2% of its value.
- If you sell a property less than 5 years after buying, you must pay 19% of the income tax on the difference between the price of the original purchase and the subsequent sale.
- If you want to purchase commercial real estate, land, or a detached house on a land plot, you must obtain a permit from the Ministry of Internal Affairs.»