Critics say the amendments won't greatly simplify pre-construction bureaucracy dreamstime.com / Joyfull

Controversy grew last month over proposed changes to Polish construction law. One result of the outcry was that President Lech Kaczyński sent the legislation to the Constitutional Tribunal for review rather than signing it into law, saying that it infringed on property owner’s rights.

Enacted by Parliament towards the end of April, the amended law aims to simplify administrative procedures regarding the process of investing in real estate, but a number of its provisions have drawn the ire of lawyers and real estate market insiders.

Building permit scrapped

Unlike the current construction law, the proposed amendments do not provide for a building permit as such but instead call, in most cases, for the relevant authorities to be notified that construction of a project will be started. According to Joanna Wojnarowska and Mateusz Grabiec of legal firm Baker & McKenzie, having the right to carry out construction in this way could potentially have far-reaching consequences. They say it would simply mean the circumvention of administrative proceedings.

“Administrative proceedings [in the proposed law] may only get underway in the case of a protest, which [the relevant authorities] may lodge upon the negative assessment of a notification,” Wojnarowska and Grabiec said in a statement sent to Lokale Immobilia. They noted that the new law would give authorities only 30 days to lodge such a protest, and that the lack of protest would imply tacit consent for a particular investment.

An exception to this pattern would be made for projects whose impact on the environment would be deemed considerable – those projects would require a special registration process. However, defining which projects fell under this definition could prove problematic, Wojnarowska and Grabiec said.

One of the most controversial consequences of these new procedures – and one of the main objections to the proposed law – is the fact that they would exclude neighbors from the decision-making process, as well as other property owners on whom the investment could have an impact. Neither notification nor registration of a construction project would oblige the authorities to inform those people of the investor’s plans.

That, according to the Baker & McKenzie lawyers, would likely result in potential disputes between investors and neighboring property owners during the actual construction process, which could result in a relative increase in investment risk.

Comprehensive law needed

Even putting these potentially fatal flaws aside, the new legislation would not necessarily translate into a streamlined investment process, according to property market insiders.
“The legislator is very right in his resolve to simplify procedures related to starting a construction. Such changes are needed and anticipated by investors,” Piotr Stachulski, manager of developer Diamentic Estate, said in a statement. He stressed that the amended law would still require that investors obtain a ruling on the conditions for a property’s development, which is the first step of a construction process.

“Admittedly, that [only] applies to locations which are not covered by local spatial development plans. Those [plans], however, are missing in the majority of Polish cities,” said Stachulski. He added that the lengthy process of obtaining a ruling was the main factor slowing investment in the current market.

According to Baker & McKenzie’s Wojnarowska and Grabiec, a real streamlining of the construction process would require more systematic changes, including cohesive regulation and a simplification of urban planning.

“What is enticing is the idea of preparing a construction law code that would comprehensively regulate the whole process of investment and construction,” they said.