On 24 September 2023, a major spatial planning reform came into force in Poland. It will definitely shake up land development potential and property values. Investors need to be aware of the new regulations and adjust their strategies accordingly. Time is of the essence. It is important for investors to act quickly and to take advantage of the opportunities available to them.
Elimination of the zoning study
For decades, land development opportunities in Poland have been determined by zoning studies (in Polish: studium uwarunkowań i kierunków), local plans (in Polish: plan miejscowy) and zoning decisions (in Polish: decyzja o warunkach zabudowy). However, according to the new amendment, all studies will have ceased to be valid by the end of 2025. The intention of the legislator is to replace the studies with a new legal instrument, namely a general plan. If the municipality does not manage to adopt a general plan after the study expires in 2026, an investment paralysis might occur, as the investor will not receive a zoning decision and the municipality will not be able to adopt a new local plan.
Last chance to obtain a local plan based on an existing zoning study
After 2026, it will only be possible to adopt a new local plan if the municipality has previously adopted a general plan. However, there is an important exception to this principle – in a situation where the draft local plan is available for public examination until the end of 2025. In such a case, the existing zoning study may be used as the basis for the adoption of the local plan. This is important because a comprehensive assessment of the legal situation may lead investors to conclude that the contents of the current zoning study are more favourable than the expected general plan, or that there is a risk that the general plan will not be adopted promptly, resulting in an investment paralysis in a given municipality from 2026 onwards.
Therefore, it may be advisable to immediately request the municipality to initiate the relevant proceedings for the adoption of the local plan, so that the draft of this plan can be submitted for public review by the end of 2025 and remain in line with the existing study.
Limitations to the possibility of obtaining a zoning decision
As a result of the implementation of the spatial planning reform, local authorities are currently faced with a large influx of applications for zoning decisions for land that is not covered by a local plan. There is a rush to obtain legally binding zoning decisions before 2026. There are several reasons for this situation.
Firstly, it is currently relatively easy to obtain zoning decisions for a large number of plots. However, after 2026, such decisions will only be granted for areas that are categorised in the general plan as “further development areas” and that are subject to specific “social infrastructure accessibility conditions”, such as proximity to a primary school or public green spaces. This measure was introduced to prevent urban sprawl. As a result, a significant number of plots will be deprived of the right to develop through zoning decisions. In the absence of a local plan, these plots may lose their right to development for years or even decades.
Secondly, under the old legal regime, the investor’s ability to construct a building based on the zoning decision is determined by the analysis of the existing development in the vicinity of the land (urban planning analysis of the surroundings). This principle of continuity of existing development will become a thing of the past. According to the spatial planning reform, zoning decisions will have to comply with the specific planning zone profile set out in the general plan, not with the existing buildings surrounding the land.
On the one hand, this means that zoning decisions can be made for types of development that do not actually exist in the vicinity of the property, provided that these types of development are envisaged in the general plan – theoretically opening up new development opportunities for a given plot of land.
On the other hand, the inapplicability of the principle of continuity of existing development may limit investment opportunities if the planned development does not conform to the general plan, but refers to the development that already exists in the vicinity.
Therefore, the assessment of whether a zoning decision should be pursued depends on a specific case and the investor’s plans for the property in question. If the developer intends to continue the existing development in the vicinity of the property, he should obtain a zoning decision under the old provisions and time is for him/her of the essence.
Thirdly, the rules for determining the parameters and indicators of development permitted in the content of the zoning decision will change. These parameters will be determined by an analysis of neighbouring properties within a radius of no more than three times the front of the building plot, but more than 200 metres. Under the old rules, there was no restriction on the maximum size of the area to be analysed.
Fourthly, if we look at the advantages of using the old regulations, we will see that one of the main advantages is the possibility to obtain zoning decisions that remain valid indefinitely. However, the new regulations have changed this scenario: only zoning decisions that have become final by the end of 2025 will be valid indefinitely. If a zoning decision becomes final after 31 December 2025, it will only be valid for five years. The expiry of a zoning decision can have a significant impact on the investment process. For example, if the zoning decision expires during the proceedings of obtaining a building permit, it is impossible to acquire the building permit until a new zoning decision is granted. Likewise, if a zoning decision expires after the construction has started, it is not possible to change the content of the building permit until a new zoning decision is issued. As a result, there will be a strong incentive to start construction as soon as possible after a zoning decision and a building permit have become final.
Integrated investment plan, i.e. local plan at the request (and cost) of the investor
From 24 September 2023, investors are entitled to prepare and submit an Integrated Investment Plan (in Polish: Zintegrowany Plan Inwestycyjny i.e. “ZPI”) to the relevant municipality. The ZPI is a special type of local plan that is officially adopted by the municipality but in practice prepared and financed by the investor. Should the municipality rush to adopt the local plan if the developer can bear the cost of preparing the ZPI?
It is expected that in many cases municipalities will suggest that investors submit the draft ZPI. The adoption of the ZPI is conditional on the investor entering into an urban planning agreement with the municipality, which will specify the investor’s specific obligations towards the municipality, including whether the investor is obliged to finance the construction of an ancillary investment such as a kindergarten, school, bus stop or sports field. At present, the scope of these costs is not limited by the amendment, which leaves room for negotiation between investors and municipalities and encourages municipalities to use the ZPI as an important (or even main) spatial planning instrument instead of a standard local plan, which is very costly for the municipality to prepare.
Conclusion
The implementation of this significant spatial planning reform will inevitably have an impact on property prices, with some properties increasing, and others decreasing, in value. However, the question of whether the reduction in property values caused by the reform will give rise to a claim for compensation requires a separate publication.