Housing Act 2023 is now set to come into force in July as planned, as the Senate approved it in May with amendments. In this fourth and last part of our series – which previously discussed the Social Rental Agency (SAN), the housing co-op, Safe Mortgage 2%, and Home Account and Home Deposit[1] – we take a closer look at two remaining topics in Housing Act 2023: Home Bonus, and the agreement between BGK and the operator bank. We begin, however, by discussing the Senate’s amendments to Housing Act 2023 and their fate. It should be noted that the final text of the bill will not be known until it completes the legislative process, i.e. until the Sejm holds its final vote and the legislation is signed into law by the President.
Senate amendments to Housing Act 2023
The Senate has made a total of 24 amendments to Housing Act 2023. All have now been considered by a Sejm committee[2]. Three are particularly noteworthy.
The first stipulates that the state will subsidize mortgages to keep their interest rate at 0%, not 2%. As the upper chamber explains, “The Senate has come to the conclusion that, if the state is to provide genuine support to citizens in satisfying their housing needs, the loan should have a zero interest rate. Such a loan will represent an important encouragement for people seeking to satisfy their housing needs to commit to a financial obligation that will last for several decades.” The Sejm committee has recommended that this amendment be rejected.
In another important amendment, the Senate has abolished the obligation to report all payments into Home Account that its holder receives in the form of donations from immediate family members (e.g. from parents) to the tax office. Donations of up to a total of PLN 2,000 (€441) per month, received from one or more persons that are in the account holder’s “first tax group” for inheritance and donation tax purposes, do not have to be reported. The Sejm committee has recommended that this amendment be approved.
Thirdly, the Senate has changed the part that said that the interest rate is fixed “for the first 120 months of repayment” to “throughout the subsidy period”. As it explains, the change is necessary because the lending bank may grant the borrower a grace period, allowing them to delay repayment. The Sejm committee has recommended that this amendment be approved.
I. Home Bonus
Eligible to receive Home Bonus from the government are persons who are saving money through Home Account or Home Deposit and are spending the savings strictly for the purposes defined in Housing Act 2023, i.e. 1) to build (and to finish to their desired standard) a single-family house; 2) to purchase a land plot with the aim of building a single-family house on it (provided that such construction is permitted there under the local zoning plan, or under a decision on land development conditions); 3) to purchase (and to finish to their desired standard) an apartment or single-family house; 4) to co-conduct a housing project as member of a housing co-op; 5) to acquire a cooperative member’s right of ownership to an apartment or single-family house (and to finish it to their desired standard), or to make a contribution to a housing cooperative scheme.
Home Bonus cannot be inherited.
Eligibility for Home Bonus does not arise in the first month of saving. Under Housing Act 2023, Home Bonus is calculated for each calendar year of the account (Home Account or Home Deposit), on 15 March of the following year. To become active, it has to be calculated at least three times, or four times if during the first calendar year the account was opened for less than 9 months.
Article 14 of Housing Act 2023 contains a mathematical formula for the calculation of Home Bonus. Its amount is determined by two things: the total amount deposited into Home Account or Home Deposit as of the end of the last month; and a “Home Bonus indicator,” which is calculated in one of two alternative ways: based on the average inflation rate in the year in question, as announced by the Central Statistical Office (GUS); or based on the average price per square metre of a home, as announced by GUS in fulfilment of provisions of the “Act of 30 November 1995 on state assistance in the repayment of certain home loans etc.” – whichever is higher.
Home Bonus is paid out together with funds accumulated on Home Account or Home Deposit within 14 days of the holder’s withdrawal request, or at a later date indicated by the holder.
Importantly, Home Bonus is paid out by the operator bank from its own resources. The operator bank is entitled to a 1% commission deducted from the bonus amount. So it can be assumed that the holder receives 99% of the bonus amount.
II. Agreement between BGK and operator bank
To be able to operate Home Accounts and Home Deposits – and to pay out Home Bonuses – a bank has to apply to, and sign an agreement with, BGK, the government bank. Draft Housing Act 2023 contains an (open-ended) list of elements that should go into such an agreement. One is the manner and format of recording Home Bonuses accrued on an account for each year. It should ensure uniformity of records across banks and enable the transfer of records between banks in case the holder decides to switch banks. It also has to ensure that BGK has access to data on the number and amount of Home Bonuses that have been calculated. Another important element to be included in the agreement is the manner in which Home Bonuses are paid out.
These obligatory elements arising from Housing Act 2023 may be complemented, of course, by applicable Banking Law regulations or industry good practices.
For the sake of future savers it is worth noting, finally, that Housing Act 2023 requires BGK to publish an up-to-date list of banks authorized to operate Home Accounts and Home Deposits on its website.
[1] The previous three articles can be found here: Part I, Part II and Part III
[2] For a full text of the Senate’s resolution, and for the Sejm committee’s report of its work on Senate amendments, see: Druk nr 3096, 3096-A – Sejm Rzeczypospolitej Polskiej.