Poor reception for housing plans

Last week Prime Minister Kazimierz Marcinkiewicz and Piotr Styczeń, the Deputy Minister of Transport and Construction, announced Law and Justice's (PiS) residential plan, according to which the government will refund half the interest on first-time buyers' mortgages.

Terms and conditions

There are many provisos. The mortgage must be taken in Polish złoty by a family or a single mother. The new apartment must not be larger than 75 sqm, or house not bigger than 100 sqm, but the interest covered in both cases would refer to 50 sqm. The government will pay the interest for eight years only and the price of the apartment should not be higher than the average for a given voivodship.

According to Marcinkiewicz, the law will take effect in the summer. "A loan of zł.100,000 with an input of zł.20,000, and at the price of a 60-sqm apartment of zł.2,000 per sqm, means monthly installments of some zł.500," explains the Prime Minister. Deputy Minister Styczeń and the Prime Minister estimate that within the next six years some 300,000 families will take advantage of the zł.4 billion the government plans to spend.

Limited impact

Developers are not that optimistic. Andrzej Halicki form the Polish Association of Developers says the draft will not increase the number of potential loan takers because it does not help their financial standing, which has to be secure before the loan is given. The average price for a voivodship from the two quarters previously does not reflect the price increase in the cities.

"People in cities will not be able to take advantage of the law unless they buy a substandard apartment in distant suburbs. The regulations will not put any pressure on the price but rather encourage people to take loans in złoty," says Halicki.

Election promise

It is unlikely that the project will help increase the number of new apartments to the three million that Law and Justice (PiS) announced before the elections. "We still lack a few of the three million," says Marcinkiewicz. In order to achieve PiS' plan, the number of new apartments would have to reach 375,000 per year. The number amounted to only 114,000 in 2005. "Unless the government introduces other regulations to enhance the supply of new apartments, nothing will change. What we need is spatial planning and new building law. Only 13 percent of Warsaw has spatial plans," says Halicki.

The government says the draft is not the only way it plans to help the residential market. Piotr Styczeń adds that the government's residential program includes apartments for rent, social apartments and housing co-operatives.