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Poland: Benefits and Drawbacks of Build-to-Rent

Poland: Benefits and Drawbacks of Build-to-Rent

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It is symptomatic of the importance of the real estate market that Generation Y – members of which are often referred to as “millennials” – is also, sometimes, described as “Generation Rent,” because so many young adults have been priced out of the housing market.

This is a social consequence of at least three economic factors: (i) Sustained falls in interest rates (for example, the Euro area average was 14.6% in 1981, 10.2% in 1991, 5% in 2001, 4.3% in 2011, and 0% in 2021); (ii) Increases in the cost of housing (prices increased in the Czech Republic by 8.75% in 2019, in Bulgaria in the first quarter of 2020 year-on-year by 6.21%, and in Poland by 10.9% in 2020, the second highest in the EU); and (iii) A relative shortage of supply (as an illustration, Slovakia (378), Poland (386), and Hungary (455) are at the low end of the European scale of apartments per 1000 residents compared to countries like Portugal (582), Italy (581) or even Austria (541)).

The long-term impact of this will be an increase in the costs of renting, and of course a burgeoning Private Rented Sector (PRS). A relatively new PRS variant, Build-to-Rent (BTR), has developed as an answer to new needs. With relatively more money on the market, a rise in the minimum wage, and the increased willingness of investors to spend their savings on the residential market, CEE is seeing the fast growth of BTR as a viable and profitable real estate product. Necessity is the mother of invention.


Not only is BTR relatively fresh and dynamic, but socio-economic trends point to a stability and profitability that will keep investors happy for the next few years, especially in CEE. In 2016 – the year in which the Urban Land Institute published the first institutionalized guide to BTR – an Ipsos poll found that in Poland, for example, the majority (64.5%) of residential tenants were between 20- and 29-years-old, signalling great growth potential for the BTR market.

What is more, there are other promising groups of potential tenants. The rising employment status of tenants bodes well for the future of BTR against the backdrop of an unemployment rate of 3.1% in Poland among young people, compared to an EU average of 7.5%. The same is true for the increasing number of foreigners as tenants, which has been on the rise since 2014. Currently, five percent of the population are foreigners – some two million people – and Poland has one of the highest levels of immigration in the EU.

The steady growth of prices on the Polish residential market (fuelled mostly by private investors) and high mortgage requirements from banks mean that the purchase of apartments continues to be increasingly less affordable for young people. “Generation Rent” is becoming more entrenched, institutional leases are becoming more common, and recent polls indicate that 41% of tenants are happy to rent because they are unable to purchase their own apartment. This percentage will no doubt rise, making this another box to tick for BTR investors.


At the moment, BTRs are selling like hotcakes. The price of plots in Warsaw and the archetypal Mitteleuropa city of Wroclaw have shot up by around 20-30% in the last five years. To guarantee a tasty ROI, potential buyers need to start investing now.

A major point of complexity for lawyers working with BTRs in Poland, for example, is the wide gap between the needs of investors and current legislation in the area of master plans. There are no specific regulations for BTR buildings, which bear similarities not only to residential buildings, but also to service buildings, as the business activity of developers is to provide services, not to sell apartments to new owners.

Besides the main service of tenancy, BTRs also provide additional services for tenants, making them closer in character to hotels or hostels, which in Polish law are categorized as “collective residence” buildings. However, the difference between hotels, dormitories, BTRs, and ordinary residential buildings, in some legal aspects, is not always clear, which leads to confusion.


When investors wish to obtain a BTR building permit, our goal is to help establish the legal status of the BTR in light of the local master plan. Polish law, for example, does not determine if a BTR can be built on areas described in the local master plan as areas permitted for residential or services use. The challenge begins today.

By Przemyslaw Kastyak, Partner, and Sebastian Janicki, Senior Associate, Penteris

This Article was originally published in Issue 8.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.