Recent comments

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31 December 2018
Kazimierz Kirejczyk, FRICS

Long-term rental only for a year?
21 November 2018
Maximilian Mendel, Ph.D., MRICS

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Long-term rental only for a year?

21 November 2018

70% of all premises owned by rental property investors are studios and 1-bedroom flats. Over 50% of the rented units are not larger than 40 sq. m. No wonder the typical tenants on the rental market are singles and childless couples. Interestingly, owners of larger units are more inclined to rent individual rooms in their properties rather than entire premises to families with children or single parents, suggests the latest REAS report entitled “Renting in Poland. Individual landlords – contracts and tenants.”

The rental market is accelerating. There are more and more investors each year, both institutional ones and, more importantly, individual ones. According to REAS, the share of rental properties in the overall volume of transactions on the primary residential market in 2017 reached up to 40% in some cities. The scale of investments in this sector on the secondary market received much less attention. Investing in rental properties remains one of the most attractive and relatively safe investments, while according to official statistics this area remains largely ‘invisible’.

The results of the annual research carried out by REAS already for the second time suggest that the rental market is much more active than it might seem.

Fragmented market, yet more and more professional

The first survey conducted in 2017 among members of the Mieszkanicznik Polish Residential Landlords’ Association and people interested in the activity of this organization showed that the majority of respondents bought their rental properties and often turn to professional companies for assistance in management of their assets. The second edition of the survey confirmed that the majority of owners (about two-thirds) have more than one unit for rent. In addition, nearly half of all respondents have been renting properties for at least 5 years.[1].

“We decided to learn more about this still unexplored part of the real estate market, because global trends and a shift in the approach to ownership in the youngest generations suggest that the rental market will soon become the second most important market segment apart from flats for sale,” comments Maximilian Mendel, REAS partner responsible for consulting in the area of institutional rental. “Individual rental is still the most popular arrangement in Poland, and although the housing stock owned by our respondents is very fragmented, it is fortunate that people dealing with rental are becoming more and more professional.”

 

Rental of individual rooms continues to be popular

The latest REAS report focuses on contracts with tenants. It suggest, among all, that 450 owners who took part in the survey and declared owning 1727 flats for rent, are currently party to 2752 rental contracts. Statistically, this corresponds to 6.1 contracts per owner and 1.6 contracts per flat. This offers the conclusion that many flats are rented to more than one tenant, e.g. by renting individual rooms.

In view of the above, it is not surprising that the most numerous group of tenants are singles or young co-tenants who do not form a household (over 51% in total), usually students or people starting their professional career. “Based on the responses provided by the respondents, foreigners are a growing group of tenants, which is almost as numerous as the group of students,” comments Maximilian Mendel, REAS expert.  “The question about nationality was not asked in the survey, yet the selected “from outside the European Union” option and the currently recorded demographic phenomena allow to assume that many of the tenants are citizens of Ukraine.

Long-term rental with a one-year contract

Contracts are usually concluded for one year (60% of all responses) and then renewed. As many as 21% of the respondents have tenants who live longer than 4 years in the flats rented by them. Fixed-term contracts are a solution that protects owners against potential problems, such as eviction or a major dispute with the tenant. Expiry of the contract is a good opportunity to check the condition of the flat, increase rent or simply get rid of a troublesome tenant.

Among the latter are those who are in arrears with rent, are notoriously late with payments (33% of the responses) or do not care about the condition of the rented property. A quite frequently mentioned problem the owners have to deal with are also complaints from the neighbours (18% of the responses).

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You will find more information in our report entitled “Renting in Poland. Individual landlords – contracts and tenants.” We also encourage you to familiarise yourself with the findings of the first edition of the survey, published in the report entitled “Renting in Poland. Individual landlords and their housing stock.”



[1] The report was compiled on the basis of responses provided by 470 (the first edition of the study) and 450 (second edition of the study) rental property owners. Both studies differed in the topics that the questions concerned. In view of the specific character of the group of respondents (members of an organization whose mission is to professionalise the rental market), the results may not accurately reflect the nature of the entire residential rental market in Poland.