People from outside Poland have been buying houses, apartments and land here for years. These transactions were normally completed with cash, since mortgages were unavailable for foreigners. Recently, however, Poland has been witnessing something of a transformation in the real estate market.

It is hard to estimate exactly how many houses and apartments in Poland were bought by foreigners after 1989, as there are no official statistics or data collected from real estate agencies. It is estimated that foreigners account for 5 to 15 percent of those taking out loans. "Currently about 10 percent of the clients coming to us for mortgage advice are foreigners. We cooperate with over a dozen banks, so we have a good take on what's happening in the Polish market. Foreign interest in buying apartments in Poland is growing every year," says Arkadiusz Rembowski of Money Expert.

Ostensible obstacles
Bank statistics do not paint an accurate picture since foreigners who do not work in Poland buy apartments here with cash. The reason for this is that getting a mortgage is impossible without permanent residence and employment, as no bank will cooperate. If a foreign manager earning a high salary while working on a long-term contract for an international corporation were to buy property, the situation is obviously a little different.

Annoyances still exist even in those cases, though. According to market experts, many banks were simply not prepared to serve foreign clients. One problem was a simple linguistic one. "Many foreigners were surprised that the documents needed to sign the mortgage agreement were not translated into English. The whole procedure is a lengthy one with many legal and tax complexities to explain. It was a shock to some," says Marcin Kossowski from Expander financial advisors.

Real estate revolution
That was then, and since then things have changed drastically. Banks in Poland have finally noticed the gap between the expectations of foreign clients and the realities of their operations. "Some banks have prepared special proposals aimed at people without permanent sources of income or residence in our country. Taking into account that what is now possible was unthinkable a couple of years ago, one could say that what we're experiencing is something of a revolution," says Patrycja Skotnicka, financial advisor at Expander Prestige.

Banks such as BZW WBK, Fortis Bank, Millennium and Deutsche Bank had special offers in place in December 2005. Many of the procedures were simplified, so fewer documents were necessary. The most important forms were translated, and employees were better prepared.

Mortgage banks are increasingly starting to accept income from abroad as a basis for granting a loan. Of course, it is better for both parties if the client works in Europe. Some banks even accept documents in foreign languages without the need to have them translated by an "official" translator, which was a long tedious process in the past.

To make life easier for foreigners, some banks don't even require the physical presence of the person applying. It is not uncommon nowadays to see all necessary paperwork being completed by a representative of the client, usually a notary.

"Currently there are even situations in which clients who have a mortgage on, say a house in England, turn to Polish banks to see whether they could convert their English loans to a cheaper one at a Polish bank. For now it is impossible, but that might be the next step," says Skotnicka.

Maturing market
The entire market is changing in response to customer needs. An agency specializing in finding prospective English buyers for Polish properties recently began operations. In Poland, it cooperates with real estate agencies, banks and advisory firms.

Many foreigners want to buy an apartment in Poland not just for themselves. They treat the rapidly growing Polish market as a place for sound investments. "Quite often you see clients wanting to buy two, three or more apartments. They know the situation and expect a quick return on their investment," says Rembowski.

Where are the real estate hot spots in Poland? According to analysts, foreigners are most interested in Warsaw. The capital accounts for about 70 to 80 percent of the houses, flats and luxury apartments sold. Popular locations include Marina Mokotów, Miasteczko Wilanów and other high standard residential complexes with the conveniences Western buyers expect. A new complex-Czarny Las, close to Grodzisk Mazowiecki-is being built specially for foreigners.

Buyers from the UK are the ones most interested in Poland, accounting for up to 80 percent of all foreigners making such purchases. Buyers from Spain, The Netherlands, Italy and Germany each have a small share of the market.

Culture clash
In spite of the huge progress being made, Polish banks still have some work to do before foreign clients can feel comfortable taking out mortgage loans. Different business customs between local banks and clientele from abroad are apparent. The English, Americans or Germans have completely different views when it comes to getting a loan. They are surprised not only by the amount of documentation, but also by the way Polish banks approach the issue altogether.

"For example, foreigners cannot understand why the bank will not give them a mortgage if they have other financial obligations. In the United States, if someone doesn't have a dozen credit cards and a few tax deductions, they are not a credible client for a financial institution. In Poland, it is the opposite; they will not get another loan because the remaining earnings are too low," says Skotnicka.

While such nuances are often difficult to accept by a foreign client, the recent upward shift in the real estate market is expected to continue for some time.
Agnieszka Domańska