Legal Highlights for Real Estate – December 2022

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Draft amendment to the Law on Real Estate Management – transformation of perpetual usufruct into ownership for entrepreneurs

On 5 December 2022, a draft amendment to the Law on Real Estate Management and Certain Other Laws by the Ministry of Development and Technology was published on the website of the Government Legislative Center. The pending legislation is intended to enable entrepreneurs to become owners of land they hold in perpetual usufruct. According to the draft’s assumptions, the new regulations are intended to strengthen the sense of legal stability of citizens by eliminating temporary land use in favor of ownership. The amendment is also intended to reduce the economic burden on entrepreneurs – perpetual usufructuary – by eliminating the obligation to pay annual fees for several decades, as well as to rule out concerns about surprise increases in annual fees.

The passing of the law is expected to complete the process of extinguishing the institution of perpetual usufruct from the Polish legal order.

According to the draft, the sale of the property to its perpetual usufructuary may not take place earlier than before the expiration of 10 years from the date of conclusion of the agreement on giving the land for perpetual usufruct. The mechanism for determining the acquisition fee included in the draft is intended to allow the price of the property to be negotiated in such a way as to minimize the amount of state aid provided under the de minimis limit. The value of public aid in this case would be the difference between the equivalent of the market value of the property adopted for the purpose of determining the fee and the price to be paid by the usufructuary (this is to be set at the level of at least 20 annual fees according to the current valuation of the land). This is important because the permissible limit for state aid is 200 thousand euros over three consecutive years. Once this threshold is exceeded, the entrepreneur is obliged to return the entire excess as unduly collected public aid. In the event that the value of the aid were to exceed the indicated threshold, the competent authority, by way of a decision, will determine the amount of surcharge on the determined land acquisition price.

The amendment stipulates that the principle will not be enfranchisement by virtue of law, as in the case of the reform on residential land, but on application.

The draft law is currently at the opinion stage, with completion scheduled for 2023.

Extension of the group of customers entitled to a maximum price for electricity

On 16 December 2022, the amendment to the Act of 27 October 2022 on emergency measures to reduce the level of electricity prices and support for certain consumers in 2023 (the „Amendment„) was presented to the President for signature. The Amendment will dispel many doubts surrounding the interpretation of the above provisions. Pursuant to the Amendment, new categories of eligible customers will be able to benefit from the maximum price for electricity of PLN 785/MWh, including:

• entities which, by virtue of a law, contract or other legal title, are entitled or obliged to provide electricity in premises used by other entities (which would have the status of an eligible customer) to the extent that they provide electricity in these premises;
• housing communities and housing cooperatives to the extent that they have not previously held the status of eligible customer.

The Amendment is particularly important for companies which, when leasing premises to others, do not themselves qualify for the maximum price.

Those belonging to the above categories have to submit a declaration of entitlement to the maximum price by 31 January 2023.