Lucky number seven

Parliament has passed a bill on social housing which indefinitely maintains a preferential seven-percent VAT rate on residential housing. The rate applies to flats measuring up to 150 sqm and houses up to 300 sqm.

"This is great news for those buying flats or houses," Open Finance's analyst Emil Szweda said. "This doesn't mean that apartment prices will fall, but they won't rise too much either," he added.

The Sejm's decision prevents the VAT rate on these homes from increasing to 22 percent (Poland's standard VAT rate) beginning from next January, when Poland's transition period for EU membership was to expire and VAT rates were to rise to standard levels.

The preferential rate can only be applied to "social housing" - thus the introduction of the definition of social housing in the bill.

"If we didn't have this definition of social housing, we could have expected a surge in prices," Szweda said. According to the Confederation of Polish Employers (KPP), the prices of apartments could have increased by around 15 percent if the preferential VAT rate hadn't been maintained.

Szweda also pointed out that many of those who invested in real estate hoping to benefit from the expected VAT increase (and the resulting price increase) are unlikely to hold off selling their property. "This could result in increased apartment supply," Szweda said.

The seven-percent VAT rate extension also applies to renovations. Those renovating their property are able to get a tax return covering the difference between the seven-percent and 22-percent VAT rates.