LEGAL ASPECTS OF THE ACTIVITY OF SOCIAL BUILDING SOCIETIES IN THE IMPLEMENTATION OF HOUSING POLICY

113
REVIEW OF COMPARATIVE LAW
VOLUME XXXV
YEAR 2018
LEGAL ASPECTS OF THE ACTIVITY OF SOCIAL BUILDING
SOCIETIES IN THE IMPLEMENTATION
OF HOUSING POLICY
Iga Lalak*
ABSTRACT
Participation in the creation of a social housing association in its proper functioning
is a very important part in the implementation of housing policy. In spite
of this, the institution of the society is still insufficiently clarified, since determining
a flat which in 30% is financed by a citizen as a social one seems to be a vague
term. The aim of the publication is to analyze the issue of social housing associations,
but first of all to show the advantages and disadvantages of this system and
the indeterminate scope of the state’s responsibilities in the area of supporting
housing construction.
Key words: housing policy, housing construction, right to housing, social building
societies.

  1. INTRODUCTION
    The purpose of this article is to analyse and explain the major aims of
    the activity of Social Building Societies (hereinafter: SBS). According to
    the historical background of SBS and housing need in Poland, it is not
    necessary to influence how crucial is to take social policy into account
    while making housing policy. Social policy is a deliberate activity of the
    state, self-government entities and other organizations. This activity aims
  1. THE LIVING CONDITIONS IN POLAND
    Let us discuss the multiple factors within the housing problem in Poland.
    The data, analysed by the Chamber of Building Design, showed that
    in Poland about 50 % of adult children live with their parents as a result
    of unsatisfied incomes. A low income is the major obstacle to buy or to
    rent a house. Whereas the indicator in UE is only 15%. The housing need
    is most wanted in a group of council flats, social rental flats, municipality,
    and welfare housing, which is designate for use in about 5%. According to
    the council flats, in 2013 there are about 16 % less of them than in 2012.
    As far as a council housing is concerned, we may claim that the housing
    need, during this rate of building, will be satisfied within next 50 years7.
    5 Judgment of the Constitutional Tribunal of 30 October 2010, ref. no. K 33/00.
    6 See: Bogusław Banaszak, Commentary to Art. 75, In: The Constitution of The
    Republic of Poland, Commentary, ed. Bogłusław Banaszak, Warsaw: C.H. Beck, 2012,
    s. 307 i nast.
    7 http://www.ipb.org.pl/problemy-mieszkaniowe-polakow/, Novemeber 11, 2018.
    116
    Taking into account the data of Statistical Office, we may claim that,
    in 2017 the housing condition improved in comparison to the previous
    years. As at 31 December 2017 the average number of the housing units
    shall be 3,82 per 1 house including cities 3,57 and rural areas 4,35. The
    average size of the dwelling shall be 74,0 m2 and it has increased by 0,2m2
    compared with last year. The houses were on average 28,9m2 higher in
    the rural areas than in the cities (appropriate ratios for the rural areas can
    be about 93,5m2, but for the cities it is 64,6m2). In 2017 for the lease of
    the municipal resources (excluding the replacement places and temporary
    rooms), there were expecting about 154 182 households. It appears
    that a demand for the lease of a dwelling, within the housing municipal
    resources, is still decreasing and in comparison to 2016 shall be 97,0%.
    Out of the total of the pending for the rental of the municipal resources,
    on the waiting list for municipal flats there are about 63 864 households
    (which is 41,4 % of the total), for the social rental flats – 90 318, included
    53 579 households as a part of the implementation of eviction8. The latest
    report of The Supreme Audit Office9 is a warning signal, as a result in
    Poland there is a lack of about 1,5 mln flats. In the SAO’s assessment,
    there are simple reasons for this, namely, not only a lack of investment
    and a lack of the urban development plans, but also a lack of a coherent
    housing policy10. As a result, not only the way of conducting the housing
    policy is failing miserably. The reason for this is the fact of ignoring the
    problem as well as a lack of an active role of the authorities. One of the
    housing policy consideration was to create social building societies with an
    amount of a lease intended for a mid-level person. For the closer inspection
    of the housing situation in Poland, let us present what the situation is
    in France. The creation of SBS in Poland was modelled closely on a French
    system HLM (fr. Habitation à Loyer Modéré – rent controlled housing)
    that constitutes 50% of all housing in France. It is worth mentioning, that
    the standard of living the HML housing projects is often the lowest in
    Europe. This is a result of the authorities’ involvement in housing policy.
    8 Data downloaded from the Central Statistical Office, Housing in 2017, http://stat.
    gov.pl/, December 2, 2018.
    9 Polish: Najwyższa Izba Kontroli; hereinafter: SAO.
    10 www.nik.gov.pl, December 2, 2018.
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    The social housing programmes in France have an obvious positive effect
    because of a local authority of the State, that has a duty to ensure a house
    for everyone. In other words, a lack of its implementation results in bringing
    a responsible person to justice11.
    As we move into a new phase, social building societies shall be indicated
    as a component of the implementation of Article 75 of The Constitution.
    Social building societies were created in order to play a role in satisfying
    the housing needs by the State. The role of social building societies,
    despite the certain legal situation, still creates a great deal of consternation
    among the tenants12. The Tenants’ ignorance of the law and the legal basis
    has resulted in their sense of injustice or withholding the rules.
    Let us start the explanation of the ground on which SBS is based on.
    The History of SBS has started by The Act of 26 October 1995 on certain
    forms of promoting housing construction13. Since that, we may see
    an uptake in the number of companies and the activity of TBS. Chapter
    4 of the legal act mentioned before, defines the rules how The National
    Housing Fund and Housing associations should function. What is more,
    the main purpose of the Act was to make the building flats possible for
    so called middle-class people who are not in possession of other flats. The
    apartments of SBS are new, intended for renting to those who have a low
    or an average income. To put it in another way, these are the flats of an
    average rent14.
    According to Art. 23 u.p.b.m, we may claim that the companies can
    be formed as limited liability companies, join stock companies as well as
    cooperative. Moreover, the activities of the exact of SBS are governed: by
    the law of 15 September 2000 – Code of Commercial Companies15 (SBS
    11 https://tbs24.pl/tbs-kopia-francuskiego-hlm/, November 10, 2018.
    12 Work at the Lublin Social Building Society allowed to conclude that the vast majority
    of tenants inhabiting resources have no knowledge about their legal situation in
    relation to the Association.
    13 Consolidated text Journal of Laws from 2018 item 1020 with amendments; hereinafter:
    u.p.b.m.
    14 See: Elżbieta Twardowska, “Rola Towarzystw Budownictwa Społecznego w zaspokajaniu
    potrzeb mieszkaniowych ludności w Polsce”, Studia ekonomiczne regionu łódzkiego,
    5( 2011): 43-64.
    15 Consolidated text Journal of Laws from 2017 item 1577 with amendments.
    118
    as a limited liability company and a join stock company), by the law of
    16 September 1982 – cooperative law16 (SBS as cooperative), as well as
    by the Act of 21 June 2001 on the protection of the rights of tenants, the
    housing resource of municipalities and amending the civil code17. In addition
    to those Acts, there are other different regulations that determine the
    principles of SBS activity.
    On the territory of Poland there are about 330 social building societies,
    principally municipal. It means that the municipality co-finances the
    programmes of building houses and flats for SBS. As a result, people who
    are entitled can rent those houses or flats. A situation is different when we
    consider SBS as a private company. In that case, the loan for building is
    taking by the proper company. If a person wants to become a tenant, needs
    to sign the lease agreement or to make a payment called participation in
    the costs of construction (even if the building has been already built) as
    well as to sign the participation agreement. According to this, we may
    claim that a major difference between a public and a private SBS applies
    only to the financing issue.
    Sbs residential buildings, with a rented dwelling, were built using the
    credit granted by the Bank Gospodarstwa Krajowego. According to this,
    we may claim that the subject of the activity of TBS is to build residential
    houses as well as to use them on the basis of the lease. What is more, the
    rental rates, per 1m2 usable area of a dwelling in the housing society, are
    determined by the meeting of shareholders. It has to appeared in such
    a way that, the sum of rents of all establishments operated by the society,
    has to cover the costs of usage and maintenance of buildings as well as
    a repayment of the loan as it contained in Art 28 (1) u.p.b.m.18.
    Sbs can rent residential premises to a natural person only if that person
    is reported to the joint residence, on the cover, does not have a legal title
    to another dwelling in the same town as well as that satisfies the criteria
    relating to an income of the household. According to Art 30a u.p.b.m.
    16 Consolidated text Journal of Laws from 2018 item 1285.
    17 Consolidated text Journal of Laws from 2018 item 1234 with amendments; hereinafter:
    u.o.p.l.
    18 The tenant believes that if one of the rental components is the repayment of the
    loan contracted for construction, each of the tenants repays the loan. This is not true, since
    the party to the loan agreement is only sbs.
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    Sbs has a right to rent a dwelling to the district, to the municipality, or to
    an inter-municipal association in order to rent the properties to a natural
    person or to rent a dwelling for the security purpose as it shown in the
    regulation of a social assistance.
    Another aspect of sbs activity is to purchase residential and non-residential,
    in order to expand or remodelling it for the purpose of a lease
    rental. Furthermore, social building societies can carry out repairs and
    modernization of objects to meet housing needs, on the basis of the lease,
    as well as to lead other activities related to housing and infrastructure such
    as building or buying buildings for sale in these residential buildings or
    premises.
    Another important aspect of sbs activity is non-profit oriented action.
    What is more, sbs activity is devoted to satisfy the housing need
    and has to do that with a view to a task of a State and its implementation
    of the housing needs. According to Art 24 (2) u.p.b.m, it is worth mentioning
    that the revenue of the society cannot be spent for distribution
    among shareholders or members. To Art 25, we may claim that sbs is
    not a company with decision-making power because of legal limitations.
    Firstly, in the company, the Supervisory Board shall be appointed. The
    municipality, in which the company operates, is entitled to put its representatives
    to the composition of the Supervisory Board of the society, in
    the number specified in the statute. We may clearly see that the company
    is under control. On account of a profit distribution ban, sbs shall be
    determined as non-profit institution, which is not exactly right. SBS shall
    be able to make a profit, on condition that, it is allocated to the activities
    of the Office19.
    We should also mention that the resources are for those people who
    do not have a legal title to another dwelling. As a result, a tenant should
    not be wealthy because the public funding cannot be spent on people who
    are able to support themselves financially. In addition, the tenants cannot
    be as well impoverished because that would mean they will not be able to
    pay the rent.
    19 More: Ewa Bończak-Kucharczyk, Towarzystwa Budownictwa Społecznego w świetle
    obowiązujących przepisów, tworzenie, zasady działania, finansowe wsparcie, Warszawa:
    MINIGO, 2013, s. 490 i nast.
    120
  2. SOCIAL HOUSING COMPANY-IMPLEMENTATION
    OF HOUSING POLICY
    In this respect, let us discuss the liquidity of SBS. The period from
    2007 to 2009 was very difficult for housing construction which led to
    difficulties associated with mortgage credits. Consequently, the demand
    on the real estate market has been lessened. The property values have been
    also decreased, while the construction service costs have been increased.
    The economic situation has remained substantially fragile, which caused
    difficulties associated with obtaining credits for a new investment by the
    companies, that specialized in housing construction. Not only the adverse
    change in the labour market but also the difficulties in financial situation
    of the household, have resulted in problems with regaining the amounts of
    the charges from the counterparties.
    Therefore, the provision of the accounting as well keeping the accounts
    are applied to SBS as a commercial company. The rental of a functional
    building as well as a dwelling, in combination with the administration of
    them, appears as an economic activity of the nature of service. While the
    activity of the nature of production appears in selling housing construction
    and dwellings. As a result, we may encountered the products such as :
    dwellings, housing or garages. This may cause the isolation of the entity in
    the accountant, which is devoted to rental of the dwelling as well as to the
    housing construction for sale.
    It should be mentioned again that, besides the legislator’s explanation
    and existing legal limitations, when it comes to sbs activity, the large of
    majority of the tenants are not aware of what a type of a dwelling they
    live in. The participation payment or bail money, that protects the rental
    charges, does not give the tenants a legal title of the dwelling but gives
    only those rights that resulting from a tenancy agreement20. ”Participation
    is the act of taking part in construction payment but it is not the
    act of owning the dwelling. According to this as well as to Art. 10 (1)
    u.p.d.o.f.21, we may claim that it establishes the sources of revenue, that is,
    20 Judgment of Voivodeship Administrative Court in Wroclaw of 23 September 201,
    ref. no. I SA/Wr 1146/11.
    21 Polish: Act on personal income tax.
    121
    the capital and the property law. In relation to Art. 18, we may claim that
    incomes, arising from a termination of a rental agreement and a return of
    participation ,that was required during construction costs of a dwelling,
    must be qualified as a source of an income from the property law. As it
    shown in Art. 18 u.p.d.o.f., a calculation of the property law, determined
    by the Art 10 paragraph 1 (1) u.p.d.o.f. as a separate source of an
    income, is open-ended, as evidenced by the wording “in particular” used
    by legislator. Hence, the adoption of those incomes by legislator, allowing
    to allocate all other revenue/incomes, taken from the property law, other
    than those referred to this category. Not knowing about housing in sbs
    system, undoubtedly, is still arousing much emotion related to rental and
    the whole mechanism of sbs activity. It may also lead to conflict with the
    tenants and the seekers/applicants. Most of the tenants require a response
    about the amount of the loan that they have already paid, even though
    none of the tenants have not signed the contract yet. The mortgage is
    held by sbs, in order to build the housing stock. A tenant takes part in
    the construction costs by the payment of the participation amount. That
    is why, we shall indicate the differences between a rental and a participation.
    Thanks to that, we may determine the powers of tenants and participants
    as well as to demarcate the extent of the protection. Termination
    of a contract may only happen if the legislator indicates the reason. To
    Art 30 paragraph 5 u.p.b.m these are the main reasons for it: submission
    by the tenant in the declaration statements inconsistent with the truth,
    the society says a lease agreement without notice. After the termination of
    the person dealing with it, without legal tittle, shall pay to the receiving
    monthly compensation for the use of the premises at the rate of 200 %
    of the monthly rent, which would have paid if the contract has not been
    terminated. In such a case, Art. 28 paragraph 2 should not be applied.
    The participation shall be 30% of the value of the dwelling, in exchange
    for the payment, the participant meets the standards regulated by the law
    on certain forms of promoting housing construction. In that case, SBS
    signs the lease with that kind of a tenant. The contract concluded with
    a tenant, is open-ended, that is why, it may be terminated only for an
    important reason as well as on conditions listed in Art 11 u.o.p.l. Due to
    this regulation, if a tenant is entitled to rent a dwelling, so termination of
    the lease in legal relationship may happen only for the reasons set out in
    122
    paragraph 2-5 as well as in Art 21 paragraph 4 and 5 u.o.p.l. Unless it is
    a written statement that gives a reason for such action. After examination
    of the tenants’ rights and participation, we may claim that a dwelling in
    SBS system secures the citizen and gives a sense of protection against loss
    of a house by the day. It is an ideal solution for people, who are not able
    to buy a house or a flat of their own.
    In conclusion, it should be mentioned that the participation as well as
    bail money, paid in order to become a tenant of sbs, should not be under
    debt enforcement proceedings, likewise, a dwelling of sbs. The claim of
    a tenant, as a part of participation in the construction, can be enforced only
    if there is a termination of a tenant agreement or a tenant lives a dwelling
    unattended. Before that happens, the amount of the participation belongs
    to SBS. However, at the same time sbs is not a debtor, that is why it cannot
    be enforced due to the debt enforcement proceedings. Hence, owning
    a dwelling is related to a lease. There no grounds to enforce the amount of
    participation by the request of a lease termination22.
    The examination of the implementation of housing policy, by creation
    of sbs system, shows that in comparison to France, Poland appears in an
    unfavourable way. We may claim that, in a crisis situation there is not any
    fall-back if something goes terribly wrong. As it shown by the example
    of a French system, we may see that the state suffers the consequences of
    ineffective fulfilment of their tasks in timely manner. Whereas, in Poland
    the problem has stopped at this stage when the state does not discharge the
    duties of a dwelling provision for every citizen, that is regulated by Art 5 of
    The Constitution. The Constitution of The Republic of Poland states that
    The Republic of Poland shall safeguard the independence and integrity
    of its territory and ensure the freedoms and rights of the citizens, as well
    as the security of them23. To sum up, according to Art 75 of The Constitution,
    the policy conductive to satisfy the housing need depends on the
    protection of the citizens’ activity that aims to own a house or a flat. This
    statement not only refers to the ownership of the housing but also it makes
    22 Judgment of the Appeal Court in Szczecin II Civil Department of 20 October
    2015, ref. no. II Ca 338/15.
    23 Agnieszka Bień-Kacała, “Bezpieczeństwo w Konstytucji RP z 1997 r. – wstępna
    diagnoza”, Przegląd Prawa Konstytucyjnego, 2(2015), s. 13.
    123
    reference to be entitled to rent a dwelling single-handedly24. The title of the
    end, making a decision about choosing a flat in the resources of a sbs is one
    of the forms of meeting the housing needs of citizens. Although it is not an
    apartment acquired for ownership, it gives a sense of security and protects
    you from losing your apartment from day to day. The payment of the share
    which is the participation in the construction costs is one of the elements,
    which gives a citizen’s feeling of belonging to a flat in sbs.
    REFERENCES
    Banaszak, Bogusław. 2012. „Commentary to Art. 75”. In: The Constitution of
    The Republic of Poland. Commentary, ed. Bogusław Banaszak, Warszawa
    2012: C.H. Beck., s. 307 i nast.
    Bernaczyk, Michał, Konstytucyjne obowiązki państwa do podejmowania działań
    w zakresie zaspokajania potrzeb mieszkaniowych jednostki, Uniwersytet
    Wrocławski, Wrocław 2014, s. 4 i nast.
    Bień-Kacała, Agnieszka. 2015. „Bezpieczeństwo w Konstytucji RP z 1997 r. –
    wstępna diagnoza”. “Przegląd Prawa Konstytucyjnego”, 2: 13.
    Bończak-Kucharczyk, Ewa. 2013. Towarzystwa Budownictwa Społecznego
    w świetle obowiązujących przepisów, tworzenie, zasady działania, finansowe
    wsparcie, Warszawa: MINIGO, s. 490 i nast.
    Mikłaszewicz, Przemysław. 2016. “Commentary to Art. 75”, In: The Constitution
    of The Republic of Poland. Commentary to Art. 1-86, Vol. I, ed. Marek
    Safjan, Leszek Bosek, Warszawa: C.H. Beck. s. 1725 i nast.
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    potrzeb mieszkaniowych ludności w Polsce”, Studia ekonomiczne
    regionu łódzkiego, Uniwersytet Łódzki, 5:43-64.
    24 See: Przemysław Mikłaszewicz, Commentary to Art. 75, In: The Constitution of
    The Republic of Poland. Commentary to Art. 1-86, Vol. I, ed. Marek Safjan, Leszek Bosek,
    Warszawa: C.H. Beck, 2016, s. 1725 i nast.