Tenant verification: Government launches housing regulations offensive

• There will be mandatory income verification for all tenants of municipal apartments. The government also wants to abolish automatic inheritance of municipal apartment lease agreements. This is to curb the procedure of taking over municipal resources by wealthy individuals.
• Deputy Minister of Development and Technology Tomasz Lewandowski also announces the abolition of the possibility of selling municipal apartments with a discount.
• Another thing is work on the central register of apartments and the regulation of short-term rentals and the tax on vacancies. - There is a chance for a supra-political agreement on topics related to housing policy - believes Deputy Minister Lewandowski.

In June, we are to learn the assumptions of the draft law imposing on local governments the obligation to verify the income of all municipal tenants. The new law is to introduce changes to the Act on Ownership of Premises, the Act on the Protection of Tenants' Rights and the Act on Housing Benefits. Why such verification?

Tomasz Lewandowski, Deputy Minister of Development and Technology: Municipalities currently do not verify who occupies council flats because they do not have the tools to do so. We want to give them these because the problem is significant. Recently, one of the stations publicized a shocking situation - a fairly wealthy deputy marshal of one of the provinces lives in a council flat and pays very little for it.

We have been working on this project for several months now, discussing these solutions with cities, municipalities, and the housing commission of the Association of Polish Cities.

Firstly, we want to give municipalities the opportunity to verify the income of all lease agreements, not only those concluded after April 21, 2019, as is currently the case, because the provision currently in force does not solve the problem.

Secondly, a provision was introduced at that time that such income verification should take place no more often than every 2.5 years, but without the municipality's obligation to do such verifications. The municipality could enter in the municipality's housing resources management program that it would verify this once every 10 or 50 years. Or simply not do such income verifications. Now there is a proposal that verification should be obligatory for the municipality and take place at least once every 5 years.

A separate issue concerning income verification is the question about the philosophy of this change. Because either we increase the rent so as to push the wealthier person out of the pool, or we consider terminating the contract. Or we do not harm someone for starting to earn more, but let them pay rent close to the market rent. This philosophy is closer to me. In a situation where someone entered the municipal pool and incurred significant expenses for renovation, which should be the burden of the local government, it will be possible to settle the expenses in the increased rent rate .

We also want to eliminate the automatic inheritance of lease agreements in the municipal stock provided for in the currently applicable regulations. Today, permanent residence with a parent or spouse who has a municipal lease agreement guarantees that at the time of their death, one automatically enters into a lease relationship. The municipality has no say in this, and apartments often go automatically to quite wealthy people. The planned change will eliminate this automatism.

A person living together with a person entitled to a municipal flat will be able to apply to the commune to conclude a lease agreement after his death, but like all other citizens, he will be verified in terms of income and assets. This is currently the case with grandchildren living with grandparents

There will also be several other regulations regarding property verification . Today, you submit a declaration that you do not have the right to a flat in the commune where you are applying for a flat or in a nearby commune, but there is no talk of a single-family house. If someone has a single-family house, this is not an obstacle. We are sorting this out and giving the communes the tools to verify such property status. If someone has a single-family house, this is a basis for refusing to grant you a flat, and in the event of its duration, for terminating the lease agreement in a municipal flat.

In terms of investment, developers dominate the Polish housing market, and only a fraction of what is being built is social, municipal investment. Given the meager municipal and TBS resources (estimated at around 780,000 apartments compared to almost 16 million apartments in Poland), an additional problem is the fact that municipalities are selling off assets they already own, even with a 95 percent discount. Does the government have any idea how to stop this?

- There is a bill from the Left in parliament on this matter. If this bill does not pass, we will submit it to the government again in one of the bills I mentioned. This is a bill that eliminates the right to sell municipal housing units with a discount in the Real Estate Management Act.

It would come into force on 1 January 2027, so the processes that have already been initiated are ongoing. There is no will on our part to make it difficult for municipalities to clear up certain situations, but we are at a point in economic and civilizational development when there is no longer any justification for further selling off municipal assets with a discount.

If the local government decides that from the point of view of the effectiveness of managing this property, from the point of view of the costs that it would have to incur, for example, for the modernization of buildings, it is rational to sell a given building, let it do so, but without discounts, and let it allocate the funds obtained for new housing.

And what about such projects that enjoy huge popularity, such as "Mieszkanie za remont"? There are queues in Krakow, and they are also very popular in Poznań.

- It would be possible. The whole direction of changes in the management of the municipal housing resources is aimed at equipping local governments with many instruments, giving them a chance to implement this housing policy in a wise way, reaching for various forms of housing support.

In the act I mentioned, we introduce, for example, the possibility for the commune to rent up to 20 percent of premises in newly built blocks of flats and modernized tenement houses on market terms.

Such flexibility, firstly, will give the commune additional funds that it will be able to allocate for renovations, for new investments, and secondly, it introduces a social mix. We will have not only municipal tenants, but also market tenants. What is more, the residents of the commune will see that the housing policy of the commune can include them, because they will have a permanent lease for an indefinite period of time in a premises where they will be able to live until they die. And they will have a reliable, public landlord.

The principles of financing social and municipal housing, which we are currently working on, are moving towards awakening local government activity and using various legal tools that are already available. We have already completed the draft law on this matter, in the first half of July we will be ready to submit it to the government.

We want to do this by introducing prioritization of applications for non-refundable support for new buildings and new premises for municipalities that, for example, acquire apartments through social rental agencies for their resources, implement projects as part of integrated investment plans, acquire premises, for example in the apartment for land formula. The idea is for local governments to be more active than before, to conduct a housing policy aimed at acquiring apartments. Not only new apartments, but also within the framework of social rental agencies - private apartments, from the rental market.

When you talk about the social mix, you are probably also talking about dispelling the mystery of what municipal housing is and who it is for.

- In 2016, when I became deputy mayor, we started changes in Poznań with a large advertising campaign, for whom municipal and social housing is available. Many commercials, billboards, city lights, showing who is in the municipal housing stock. Unfortunately, the research showed that these are housing units for the poor, often described by respondents as "pathology, alcoholics and slyboots". We showed how it really is, who it is for, what are the advantages and benefits of living in the municipal housing stock. We wanted to build housing programs for all income and age groups.

Building a program, spending large amounts of money from the city or state budget without a strong narrative that these apartments are not, contrary to popular opinion, for smart alecks and people from the margins, but for absolutely everyone who does not dream of a 30-year loan, will not work. Guided by this local government experience, I believe that we should also speak loudly in the government that social housing is for the economically weaker as well as other tenants dreaming of affordable rent and a stable lease agreement.

What percentage of rental apartments should constitute in Poland and in what perspective do you see this?

- It would be a huge success if we were able to deliver around 20 thousand new apartments per year . I am talking about the resources built by local governments, local government companies, TBSs, SIMs and, note - also housing cooperatives. Perhaps this pool could be a few thousand larger if we added renovated vacant buildings and apartments from the market within the framework of social rental agencies.

About 200 thousand new apartments are put into use in Poland every year . A large part of them are apartments in single-family houses, terraced houses, semi-detached houses. About 130 thousand are built in multi-family buildings. So if we were to put into use about 20 thousand apartments in this social, public resource, understood as the one that the state subsidizes, this is really a leap - 10 percent of the total.

It is also worth dealing with a certain myth or imprecise statement at this point that there is a shortage of apartments in Poland. Is this really the case? Yes and no.

Today we do not have a statistical deficit of apartments, because for several years we have had more apartments than households , and this is due, among other things, to the fact that there are families that have several apartments.

However, we have towns where shortages are visible, because the rental market and the supply of apartments are still unsaturated. These are usually large agglomerations. However, it is impossible not to see demographic changes that are progressing from year to year. We will of course try to stop these trends, but we will not reverse them, because it is similar in the whole of Western Europe.

In a situation where we will be dealing with a demographic decline, the government should co-finance the construction of new apartments where they are lacking - in agglomerations, parts of the country where we would like to focus on development, for example in county towns, former provincial capitals. We should focus on this there, but apart from that, we should put just as much emphasis, if not more, on using the resources that we already have. We should reach for vacant properties.

Even through the aforementioned social rental agencies: acquiring these apartments, if necessary - paying extra for the rent, because today it is already possible. Renovation of these apartments is also possible with public money. Social rental agencies at local governments, at housing cooperatives, on the one hand, help people who cannot afford an apartment at an affordable rent on the market, and on the other hand, they help owners because they relieve them of the problems associated with renting.

And what about newly delivered apartments that are bought solely for short-term rental? In many cities, entire buildings, entire staircases look like this.

- Short-term rentals must be regulated - I have no doubts about that. I am less bothered by new apartment buildings with short-term rentals, and what hurts me most is the situation when residential functions in tenement houses in city centres are transformed into utility functions in the form of short-term rentals. In this way, we are flushing out the urban fabric of a very important element, which are the tenants. Then there are no shops there, no craft shops, we only have restaurants. In addition, we generate huge tensions between neighbours in buildings where such premises operate.

However, this is a legislative initiative that I am leaving for the moment when we have already passed the main acts concerning financing, changes in the management of the municipal housing resources, housing cooperatives (a major act concerning housing cooperatives will be submitted to the government in the third week of June).

I think that during the holidays we will sit down to write an act on the central register of premises . It will introduce the obligation to enter all residential premises in the country into the register , which will show us what we have at our disposal in the public and private resources. It will show us whether the apartments are used for the purposes of meeting one's own needs or for rent - and if so, whether for a long or short term. This register will introduce the assignment of an individual number to each premises with assigned features for the public or private resources or the manner of using the premises.

Thanks to this, we will have a great knowledge base on how many apartments are rented, short-term, long-term, and we will know whether short-term rental is a problem, and if so, where. We will also have knowledge about vacancies in the public and private stock, which will allow for rational construction of public housing programs. Knowledge about the stock will be useful to the government, but also to local governments.

We want to give municipalities the tools, including fiscal ones, to limit short-term rentals - so that they can do it in specific places, e.g. when there is a shortage of long-term rental premises in a given district. In Berlin, for example, short-term rentals can be conducted for no longer than three months a year. Then the owner calculates how much they could earn in three months and considers whether it would not be better to rent the apartment long-term - for 12 months.

Some time ago we also talked about a tax on vacant properties . Municipalities could introduce it when they see that new investments are being made in city centres, but for speculative reasons they are being held, and the apartments are empty. Or if they see that tenement houses are being bought and nothing is happening there for years, they are being held in order to sell them in a few years at a big markup. We want to give the possibility of imposing a tax on vacant properties on the owners of such premises and properties. This would be a local tax, and the municipality would decide whether it wants to introduce it. Similar solutions are used in cities in the USA and Canada, among others.

However, for this, you need to know what the housing structure is. And such a register is to be introduced by the act I am talking about.

How do you see the opportunity for changes in housing policy in the current political situation - i.e. after the election of Karol Nawrocki, and therefore in the perspective of the next two years of cohabitation of the government and the president?

- I don't think the president would veto this type of bill. I find it hard to imagine that. I also talk about various solutions in parliamentary committees with PiS MPs. And I think there is strong support for many of these solutions there. There really is a chance to take housing issues out of current politics and arguments.