What to expect on the Polish rental property market in 2024

The Polish rental property market is certainly not a leader within the European Union. Eurostat data shows that approximately every twentieth Polish resident lives in rented housing on the open market. However, the situation on the rental market is of great interest. This is all thanks to rapid rent increases starting in 2022. In 2023, the price situation in the rental market has already stabilized. However, renting in 2024 is a topic that may cause some concerns - for both landlords and tenants. So what can you expect in the rental market over the next 12 months?

The Polish rental property market is certainly not a leader within the European Union. Eurostat data shows that approximately every twentieth Polish resident lives in rented housing on the open market. However, the situation on the rental market is of great interest. This is all thanks to rapid rent increases starting in 2022. In 2023, the price situation in the rental market has already stabilized. However, renting in 2024 is a topic that may cause some concerns - for both landlords and tenants. So what can you expect in the rental market over the next 12 months?

• In 2024, rising utility prices could be a bigger problem for tenants than rising rents. Let us remind you that the “freezing” of prices for electricity, gas and heat will only be in effect until the end of June.

• Owners of traditional rental apartments will be able to increase rent by approximately 11% in 2024 without additional justification. However, such growth will be problematic due to the market situation.

• Even if the government launches a new apartment program to start, the outflow of clients from the rental market is likely to be less than in all of 2023. The mentioned churn on the scale of the entire rental market is not of great significance.

Below we will talk about what rent might look like in 2024. Of course, not all changes can currently be predicted.

In six months, expensive utilities may become a problem

Based on current market observations, it can be assumed that in 2024 there will be no such problems with the supply of housing to the rental market that tenants experienced two years earlier. There were approximately 30% more rental housing available in November 2023 than 12 months ago.

The current market supply of apartments for rent is similar in size to the period immediately preceding the events in Ukraine. If there is no increase in immigration from this country and an increase in demand, then a significant increase in rental costs in 2024 could be due mainly to increased utility bills. Leases in 2024 will of course depend on the government's energy policy.

Let us remind you that the increase in prices for electricity, gas and heat for households was “frozen” only until mid-2024. There is no assurance that the price lock will be extended by the government under the same conditions.

Maximum rent increases are not always possible...

There is no doubt that rents in 2024 will also be affected by inflation. The Polish National Bank predicts that the rate of price growth in 2024 will reach a level close to 5%. But remember that the rules that allow rent increases without additional justification take into account inflation rates for the previous year.

This is true for the rules regarding traditional tenancies because in casual and institutional tenancies there are no restrictions on rent increases. Only the agreements of the parties arising from the contract are significant.

The General Directorate of Statistics (GUS) has not yet published a corresponding message, but it can be assumed that annual inflation calculated for 2023 will be about 11%. It is by this percentage (about 11%) that apartment owners will be able to increase rents without citing the need to achieve adequate reimbursement of capital costs and fair profits (see Article 8A, paragraph 4e of the Law of June 21, 2001 on the Protection of Tenants' Rights, Housing Resource municipality and on amendments to the Civil Code - dated 2001 No. 71, paragraph 733).

However, the question may arise as to whether market conditions will allow apartment owners to impose such large rent increases. Rentals in 2024 are likely to be much more robust in terms of supply and demand than they were two years ago.

Credit subsidies were less significant than many people think

As for 2023, owners of rental apartments will to some extent feel the impact of the 2% secure lending program. The fact is that more than 80,000 households have applied for preferential “mortgages”. Every third applicant in the BC 2% program previously rented an apartment. The outflow from the rental market will be about 20,000 - 25,000 families. This way, tenants won't have a decisive influence on what renting might look like in 2024.

It is worth remembering that throughout Poland there are about 1.1-1.2 million apartments for rent. The impact of government subsidies on the rental market appears to be overestimated. In 2023, for example, a reduction in the number of Ukrainian citizens in need of rental premises may be of greater importance.

Even if the government launches a new start-up home loan subsidy program, support for which is still uncertain in the government coalition, the outflow of clients from the rental market (associated with the transition to “owning your own apartment”) will likely be less than in the whole of 2023. However, this factor should not be of great importance. Owners of rental apartments should also respond calmly to announcements of increased costs for government rental construction. Even if the government did manage to significantly increase the number of council premises within a few years, they would be allocated first to people waiting in queues for a long time.

Source: website egospodarka.pl