Alicja Slawinska
Housing co-operatives in housing construction in Poland, Temidium
1 Ratio legis of housing co-operatives
On 1 March 2023, the Act of 4 November 2022 on housing co-operatives and the principles of disposal of
real estate belonging to the communal real estate resource to support the implementation of housing
projects1 (hereinafter: the “Act”) entered into force. The essence of a housing co-operative is the joint
implementation of a housing project by the individuals involved, in particular through the acquisition of a
registered plot of land and the foundation of a single-family house or a multi-family building with
residential units on it. The ratio legis of the introduction of the above-described formula is to streamline
and assist citizens in carrying out housing investments on their own.
The reason for the legal regulation of construction in the housing co-operative formula is the intention of
the legislator to reduce the housing deficit and to involve citizens in the investment and construction
process in order to meet their own housing needs. Indeed, the task of the housing construction formula in
question is not to make profits, as in the case of development activities, but to meet the housing needs of
the housing co-operative members involved.
As a result, the structure of investors in housing construction, which has hitherto been primarily
concentrated in the developer sector, will change. The broader spectrum of methods of satisfying housing
needs is an advantage for the citizens concerned, who have a direct influence on the course of investment,
and also introduces a proper distribution of power in the housing sector market and eliminates the
monopoly of developer ventures. The introduced solution, on the one hand, transfers the risk of the
success of the housing project to the associated members, on the other hand, puts the interested citizens in
a privileged position, leaving them the right to choose to carry out the project themselves or to entrust it to
a professional entity in the form of a developer.
2 The origins of housing cooperatives
The very idea of a housing co-operative is not new and has been successfully operating in the European
market for many years, subject to the distinctive legislative solutions applied in each country. The idea of
this voluntary association in a spontaneous manner and dictated by the need to meet housing needs was
born in Denmark, where it has been in operation for more than 100 years. In Poland, the model of
cooperative housing development was historically known already in the inter-war period1 , and its
legislative framework was shaped by the principle of freedom of contract and the Latin maxim quod lege
non prohibitum, licitum est2 , however only now it has been properly regulated and has gained popularity
in Polish cities.
The satisfaction of housing needs in Poland is of the following nature3:
(i) of a public and institutionalised nature, involving public funds, e.g. meeting housing needs as a
municipality’s own task,
(ii) of a private and legally regulated nature, carried out by professional profit-oriented entities, i.e. the
development sector,
(iii) social in the form of housing co-operatives.
It is an indisputable circumstance that housing co-operatives involving labour input and time on the part
of the associated members are mainly intended for citizens with small and medium incomes. Otherwise,
those concerned would entrust the construction to professional developers with the necessary know-how
and financial witnesses; alternatively, they would carry out the housing project on their own. Examples of
popular models of formalised housing construction association in Europe are:
(i) cohousing – a form of community housing widespread in Scandinavian countries, an example of which
is Egebakken Community Housing in Denmark as a co-operative association of senior citizens,
(ii) Co-operatives – a form of housing co-operative prevalent in the UK, an example of which is LILAC,
with close neighbourly relationships and percentage participation in rent payments,
(iii) La borda – a form of housing co-operative in Barcelona, in which, in order to integrate the members
of the community, rooms such as the kitchen or dining room are shared spaces. Different social groups
coexist in the community, e.g. families and singles.
3 Characteristics of collective construction
The key term defined in Article 2(1) of the Act is housing development, which is understood to mean the
implementation by the members of a housing co-operative or by a housing cooperative of an investment
and construction project to meet the housing needs of the members, consisting of:
(i) the acquisition of land and the construction of at least one multi-family residential building on it, or
(ii) the acquisition of land and the construction of single-family residential buildings on it, where the total
number of independent residential units is greater than two, or
(iii) acquiring a landed property developed with at least one building and carrying out construction works.
In practice, participation in a housing co-operative allows its members to decide for themselves on key
issues of the housing project, including the development concept of the property, the allocation of
individual residential units and the common area of the property, the method of financing the construction
and other parameters of the development. The guiding principle of collective housing is to meet the
housing needs of the associated members rather than to make a profit.
The basic principles and characteristics of collective construction:
(i) the parties involved are at least 3 individuals;
(ii) the parties enter into a housing co-operative contract or a partnership contract in which, in addition to
the mandatory elements reserved by the Act; they may shape their mutual relations in any way permitted
by law;
(iii) the purpose of the housing co-operative is to meet the housing needs of the parties and not to make a
profit resulting from any real estate dealings;
(iv) the so-called housing investment consists of the following elements: the joint acquisition of the
property and the carrying out of the investment and construction process;
(v) minimising the costs of the housing development by approximately 20% compared to the current
development market
(vi) sharing costs and carrying out the housing project jointly reduces the burden of participation in the
project and reduces the possible risk of failure of the project;
(vii) greater influence on the shape, functionality and aesthetics of the single-family house or dwelling
unit as compared to the property development market, where a professional entity dictates the
development concept in advance;
(viii) in the case of a housing co-operative, the parties also have greater decision-making power over such
elements as neighbourhood selection, the investment and construction process (including renovation) or
negotiations with a bank on a housing loan for the development;
(ix) discount in the price of property acquired from the municipality under the housing co-op formula, as
discussed below;
(xii) the lack of a hierarchical and formalised structure of the housing co-operative in which there is
equality of parties.
4 Members of a housing co-op
In practice, a housing co-operative is formed by a voluntary association of at least three individuals whose
common intention is an investment project to meet their own housing needs. Pursuant to Article 4(1) and
(2) of the Act, a member of a housing co-operative is a natural person co-operating for the purpose of
realising a housing project. It is noteworthy that the realisation of the housing project satisfies the housing
needs of the members of that housing co-operative or the members of that housing co-operative, or the
own or adopted children of those members, and the persons living with them (Article 2(1) of the Act).
Consequently, the purpose of the single-family house or dwellings created as a result of the co-operative
process is to be inhabited by the members of the housing co-operative or housing cooperative.
The members of a housing co-operative need not be connected by any degree of affinity or other ties. The
legislator has limited the requirement with respect to the parties involved to the stipulation in Article 4(2)
of the Act that only natural persons (implicitly, persons of legal age and capable of undertaking legal
actions) may be members of the project. The adopted structure allows an unlimited number of persons to
participate in a particular housing project, which fully corresponds to the principle of an alternative
method of realising housing investments without the participation of the developer. At the same time, the
housing co-op formula, due to the scale of the investment, in no way constitutes direct competition with
developer projects, but only assists citizens (and, in a way, relieves municipalities of their own tasks) in
meeting housing needs. An inherent advantage of housing co-operative construction is the participation of
residents in all decisions concerning the design and implementation of the project.
Although the legislator does not reserve any formal conditions for the associated members (apart from the
above-mentioned one), there is no doubt that the success of a housing project largely depends on the so-called human factor, i.e. the ability to find a compromise on the key issues of the housing project.
Consequently, the parties involved should share the same goal and vision for the realisation of the housing
project. Participation in a joint investment project strengthens social and neighbourhood ties. In this
respect, the housing co-operative also fulfils a social and educational function, as it develops in the parties
involved the capacity for co-determination within the association or cooperation with administrative
bodies, as well as a number of other skills necessary in the investment and construction process, which
each member can use for his/her own needs in the future. Participation at every stage in a housing project
develops civic awareness and strengthens business initiative.
The subject of the legal regulation under review, in addition to the membership of a housing co-operative,
has been extended to housing co-operatives1 that participate on an equal basis in the implementation of a
housing project, including making an offer and joining a tender for the acquisition of real estate organised
by the municipality under the rules regulated by the Act.
5 Housing co-operative models
Pursuant to Article 5 of the Act, two models of cooperation are envisaged in the form of a housing co-
operative contract or a civil partnership contract, subject to the special form of a notarial deed in both
cases. In both models, the Act provides for an open catalogue of mandatory elements of the contract,
including:
(i) the subject matter of the housing investment;
(ii) the rules for settling the investment;
(iii) the principles of financing the housing investment;
(iv) the manner in which matters are conducted and decisions made;
(v) principles of representation;
(vi) rules for entering into the contract and rules for withdrawing from the contract;
(vii) the duration of the contract;
(viii) rules on termination of the contract.
In both co-operation models, the joint and several liability of the members of the housing co-operative is
joint and several. It is important that for both cooperation models the provisions of the Act of 20 May
2021 on the Protection of the Rights of the Purchaser of a Dwelling or Single-Family House and the
Developer Guarantee Fund1 do not apply, in particular the protection tools provided therein, i.e. the
developer’s pre-contractual obligations or the guarantee fund. In the case of a housing co-operative, none
of the parties involved is privileged, as it is characterised by the equality of the associated members.
6 Communal housing stock
An important role in the implementation of the Act is played by the municipality at the stage of disposing
of real estate belonging to the municipal real estate resource in order to support the implementation of the
housing co-operative. Pursuant to Article 12 of the Act, the municipality is authorised to dispose of real
estate for the purposes of housing co-op construction exclusively to members of the housing co-op or
housing cooperatives. The disposal of real estate forming part of the municipality’s housing stock shall
take place by means of a limited written tender.
Only members of housing co-operatives and housing associations may submit bids in the tender. In the
case of members of a housing co-operative, the following prerequisites must all be met in order to
participate in the tender:
1) the members of the housing co-operative, when submitting a tender, are acting on the basis of an
agreement setting out the rules for the co-operation of the members of that housing co-operative;
2) none of the parties to the agreement setting out the rules of cooperation of the members of that housing
co-operative is the owner or co-owner of the property acquired as part of the housing project carried out
by the members of that housing co-operative1.
Municipalities not only furnish interested parties with real estate for development, but also do so on
preferential terms, i.e. they grant discounts and entitle them to repay the price of the real estate in
instalments, provided that the period of repayment of the instalments does not exceed 20 years. Pursuant
to Article 23 of the Act, ‘If the municipal council approves the granting of a discount, the first owner of a
dwelling or a single-family dwelling building in which no premises have been separated, covered by a
housing project carried out with the use of the real estate to which the approval applies, may apply to the
executive body of the municipality for a discount after at least two thirds of the period of repayment of the
price of the real estate has elapsed and at least two thirds of the price of the real estate allocated to the owner of the dwelling or building has been repaid’2.
In addition, the municipal council, in order to meet the housing needs of citizens, may agree to settle the
real estate price in exchange for the price of the dwelling to be sold to the municipality. The impetus for
the municipal entity’s support was a legal regulation in the form of the Act, which forms the basis and
foundation for all measures taken in this area. The provisions of Chapter III of the Act concerning the
disposal of communal real estate within the framework of a housing co-operative correspond to Article
24(2) of the Act of 8 March 1990 on communal self-government3, according to which communal housing
resources are intended, among other things, for the implementation of housing projects. Consequently, the
object of disposal of real estate from the municipal housing portfolio will be the land designated in the
planning acts for housing purposes.
In view of the far-reaching legal consequences in the form of the sale of real estate from the municipal
portfolio to meet the housing needs of the members of a housing cooperative or housing association, it
became necessary to adequately secure the regularity of the transaction by reserving legal instruments in
the form of a right of repurchase and a right of pre-emption in favour of the municipality. “The Act
introduces a separate basis for the statutory right of repurchase of real estate. The conditions for
exercising this right must be compulsorily specified by the municipal council in the resolution on the
disposal of real estate. The disposal of the real estate must be subject to the repurchase right. The
provisions of the Act considerably expand the catalogue of situations in which the statutory right of
repurchase of sold municipal real estate arises. (…) For a period of 20 years from the date of disposal of
real estate, the municipality shall have a right of first refusal in the event of the sale of that real estate,
premises, or a single-family residential building in which no premises have been separated, included in a
housing project carried out using that real estate. If the right of pre-emption is exercised, the sale price
shall be reduced by an amount equivalent to the unpaid portion of the price of the real estate attributable
to the seller. “4 Both the right of repurchase and the right of pre-emption are subject to disclosure in the
land and mortgage register established for the real estate constituting the subject of the sale transaction.
Pursuant to Article 33 of the Act, in the event that the municipal housing stock is used for housing
purposes under the described formula, the municipality will be entitled to apply for an infrastructure grant.
Given the above, it can be assumed that the housing co-op model will also benefit municipalities.
7 Advantages and risks of housing cooperatives
Co-operative housing creates an opportunity for its members to directly influence the development
concept and decision-making participation in the investment and construction process. The above-
described co-operative model not only creates social and neighbourhood ties at the stage of housing development, but also makes it possible to manage the common residence and influence its shape and
surroundings after the project is completed. The involvement of individual community members at every
stage of housing development raises social awareness and a sense of responsibility for the completed and
managed property.
In the case of responsible and competent members of the housing community, the housing co-operative
has the advantage of a high degree of freedom to shape the parties’ mutual relationships, financial
participation and responsibility for individual elements of the project. It will not be untrue to say that each
housing project, due to its specifics and the participation of specific members of the community, has an
individual and unique character. The financial aspect should not be overlooked, which makes it possible to
save a significant amount of money and to allocate it, for example, to a higher standard of finishing of the
housing project.
Undeniably, the smaller scale of a housing co-operative investment and the lower degree of formalisation
compared to a development project should, in the case of housing construction, translate into shorter
construction times. Housing co-operatives do not use protection tools such as a guarantee fund and do not
use a more complicated financing method using, for example, an open escrow account as required for
developers, as in the case of a housing co-operative there is an equality of parties, which should also
influence the greater freedom and flexibility of carrying out the investment.
On the other hand, the lack of reservation of the aforementioned safeguards, less formalism and
supervision than in the developer model may raise concerns as to whether there is too much risk in
entrusting the housing development to non-professionals. The starting point for any discussion and
assessment of risks should be the assumption of rationality of the parties involved in collective
construction. When allocating one’s own money, time and effort, a reasonable assumption is that the
members of a housing co-operative or housing association will act in their own best interests, aiming to
complete the project in which they will ultimately live. This circumstance should be the highest guarantee of sound and reliable action on the part of those involved in the housing development. Furthermore, due
to the scale of the housing project compared to the parameters of a development project, in the event of a
possible failure, the size of the failure will also be smaller.
As can be seen from the statutory definition of housing development, the advantage of collective housing
is the possibility to participate in the development process using already existing buildings. The
development of previously sited buildings (e.g. a former warehouse or industrial building or a derelict
tenement) is an extremely economically advantageous solution for speeding up the housing development
process. Such a methodology of action also has a positive impact on the visual aspect of the spatial development of the urban fabric and contributes to increasing the value of areas where housing co- operatives improve the aesthetic value of the space.
In conclusion, the discussed statutory solutions should be assessed positively, as they provide citizens
with additional tools for satisfying their housing needs in an independent and different way than the
developer monopoly prevailing in the housing sector.