Perpetual usufruct in Poland comes to an end

Perpetual usufruct in Poland is a sort of a public ground lease, you can find more details about it here.

The Polish government is currently working on a new bill that will cancel the perpetual usufruct for residential land. That means that once the bill comes into force, all owners of apartments, houses and commercial properties located within residential premises built on the perpetual usufruct ground will gain full ownership title to the land.

According to the bill’s backers, who will benefit from the bill, owners will be asked to pay a 20 years conversion fee. The fee will be the same as the standard yearly payment, but it can’t be adjusted more often than every 3 years and only using the inflation rate. This is a big benefit as previously the city council’s had the right to adjust yearly payments quite substantially, based on the new ground valuation, which resulted in much higher payments, especially in the main Polish cities.

The government is also proposing an incentive for owners who would like to pay the conversion fee in one go – they will get 50% discount, which means paying effectively for 10 years instead of 20 years.

Same rules will apply to underground parking spaces in residential buildings.

The government plans to introduce this new bill in January 2017.

This is great news for owners of properties built on perpetual usufruct land. They will gain full ownership of the land and in long term will not have to a pay yearly fee, at the same time avoiding any increases in annual payments.

Contact us for more information about how this may affect your property.