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August 9, 2023
The amendment to the Spatial Development and Zoning Act signed by the President provides for some fundamental changes.
We outline the practical implications for investors of the amended Act.
For investors, an important change resulting from the amendment is that planning permits (Polish: decyzja o warunkach zabudowy) will expire 5 years after the date on which they become legally valid. The change will not affect planning permits issued so far – decisions which will be valid before the amendment enters into force will continue to be valid for an indefinite time.
The introduction of a master plan (Polish: plan ogólny) will also be important for real estate market. The legislator provides for the elimination of studies of spatial development conditions and directions, which will be replaced by master plans and municipal development strategies. The existing studies are to remain in force until the master plan is enacted, but no longer than until the end of 2025. The Act also assumes the compatibility of local master plans with comprehensive plans.
Worth noting is that previously existing studies will in no way be binding when a municipality adopts a master plan. For example, the master plan may provide for a different zoning of an area than that set out in the previously applicable study.
Investors, should note that, unlike the study, the master plan is to have the rank of a local act and planning permits will have to be consistent with it. Moreover, master plans are to indicate the exclusive areas for which planning permits may be issued and are to determine a number of arrangements set out in the planning permits, such as height and intensity of development and the ratio of the minimum biologically active area.
The issuance of a planning permit will not be possible if the master plan does not allow for such a possibility – the master plan is to provide for areas where the issuance of planning permits will be allowed. At the same time, the Act “motivates” municipalities to adopt master plans – if a municipality has not adopted a comprehensive plan by 1 January 2026, the issuance of a planning permits will not be permitted.
In practice, this means big changes for the planning permits process. Firstly, in a municipality that has not enacted a master plan in time, it will be impossible to obtain a planning permit after 1 January 2026. In such a situation, one has to wait for the municipality to adopt a master plan. Secondly, even if the municipality enacts the master plan timely, there is no certainty that the master plan will provide that a planning permit can be issued for the area.
Investors wishing to obtain planning permit under the more liberal provisions, which do not take into account the changes resulting from the master plan, should therefore hurry up and apply for a planning permits before the end of 2025.
The amendment also provides for the introduction of an integrated investment plan (Polish: zintegrowany plan inwestycyjny) – a special form of local plan adopted at the request of the investor after negotiations and the conclusion of an town planning agreement with the municipality.
The entry into force of the integrated investment plan replaces the existing local plan for the area.
The integrated investment plan provides the investor with a great deal of freedom – it is the investor who drafts the document with the rank of local plan. In addition, the process of adopting an integrated investment plan under the amendment is easier and faster than adopting a local plan – a number of procedures have been simplified. The Act also does not impose an obligation for integrated investment plans to be compatible with master plans.
The investor’s greater freedom in the planning aspect is connected with the need to negotiate with the municipality on the terms of the investment. The Act assumes that, in addition to adopting the integrated investment plan, the municipality will conclude a town planning agreement with the investor. Such an agreement may stipulate that the investor will carry out ‘complementary investments’ in addition to his investment. For example, this could be the construction of a public road or a cultural activity facility.
The integrated investment plan will therefore allow investors more freedom to implement their plans, which involves negotiating the terms of the investment with the municipality. The success of the project in this aspect depends on how the cooperation with the municipalities will look like in practice.
In summary, changes to planning permits and the introduction of master plans will be particularly important for real estate market and investments. Investors should review their plans in terms of eliminating studies of spatial development conditions and directions and replacing them with master plans, as well as taking into account changes to planning permits. On the other hand, the integrated investment plan can become an attractive alternative for investors to accelerate their planned investments.
In connection with the adoption of the aforementioned Act, some Municipalities, including the Capital City of Warsaw, decided to suspend work on the adoption of new studies on spatial development conditions and directions, which, especially in Warsaw, raised a number of doubts among residents, property owners and investors. However, as announced, the development concepts provided for in the draft studies, which will not be adopted, will be transferred to master plans. The above, therefore, requires ongoing monitoring of the activities of the planning authorities and preparation for the implementation in practice of the changes enacted by the commented Act.