Problems with land utilisation plans

When wrongly introduced, land utilisation plans can bring big financial losses.

Two-thirds of all the investments made in Poland are based on development conditions (in Polish: warunki zabudowy).  It is caused by the lack of land utilisation plans in the cities. Even when they are passed, they often clash with the development conditions which were previously granted, which, in consequence, causes a surge of claims for millions-worth compensations. The problem has arisen in Poznań, now it can also occur in Kraków.

There are, admittedly, such cities as Gdańsk and Gdynia, where plans and conditions overlap almost in 100%. It is enough for the investors, and so the investment based on plans are made. There are also, however, such cities as Kraków, Poznań and Łódź, Warsaw to some extent. There, the areas in which the building investors are interested, do not have utilisation plans. In such cases, we largely rely on the development conditions – comments Jacek Bielecki, CEO of Polski Związek Firm Deweloperskich.

The issue of passing land utilisation plans is directly connected to the previously granted development conditions. People managing Gmina are afraid of possible claims based on wrongly introduced plan, clashing with development conditions, and they often do not pass the plans.

According to PZFD’s CEO: It is not about the costs of making such a plan – they are not that repellent. The problem are the possible claims connected to passing the plans: for example lowering the worth of the real estate or the necessity of the city taking over the real estate for public infrastructure. That costs make Gmina resign from planning land utilisation, even though it should be done.

For the developers, land utilisation plans not consistent with the previously granted development conditions can have very negative consequences, such as losing a big part of money. If the developer or other investor has already spent large sums, for example on buying the land, getting all the arrangements, design etc., and it turns out that the land utilisation plan have the land allocated for another type of the building, it is a serious problem, also the economic one – comments Jacek Bielecki. These sums can amount to 7-10% of the whole investment’s worth.

In some European countries there is a reversion of the order compulsory in Poland. Jacek Bielecki explains: We could have a system, where the investor proposes land utilisation and the Gmina, on that basis, passes a plan. The plan is then passed for a specific intention of the specific investor. I am aware that it is a controversial solution, but that would free Gminas from the areas which are lingering and with which nothing will probably happen anyway.

Both the investments based on development conditions and those following the land utilisation plans are connected to complicated bureaucratic procedures, leading to acquiring a building permit. The problem is with the rules of law – they are unclear while describing conditions that have to be met before a building permit is given. If the conditions were precisely codified, with all the required arrangements, documents and intermediate administrative decision listed, it would be much better. Currently, there are cases when the office has demands exceeding filling various projects, for example bringing appendixes, documents, agreements which are not listed in the law but only based of the whims of some office workers – stresses CEO of Polski Związek Firm Deweloperskich.

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