Saturday, 15 March 2025
A major shift in urban planning is underway in Poland as new legislation mandates that every municipality adopts a general plan, outlining specific planning zones. While the law aims to promote sustainable urban development, experts warn that it may inadvertently reduce land availability, particularly for residential projects, leading to higher housing costs and market distortions.
Under the amendment to the Planning and Development Act, which took effect on 24 September 2023, municipalities have until 1 January 2026 to enact general plans. These plans, now recognized as local law, must define various planning zones, including those designated for multi-family residential, single-family residential, and homestead development.
“The general plans will not replace or amend existing local development plans but will serve as guiding frameworks for future zoning decisions,” explains Michał Zajączkowski, Senior Associate at Wolf Theiss. “However, the new legislation limits the size of areas designated for housing development based on a formula that calculates the future demand for residential space. This could significantly reduce the supply of land available for investment, particularly in areas not yet covered by local development plans.”
Concerns Over Land Supply and Market Impact
Experts predict that as a result of these restrictions, municipalities may effectively prohibit residential development in areas that would otherwise be suitable for housing. By allocating zones for alternative uses or restricting development entirely, cities could see a shrinking land supply for new housing.
According to the Ministry of Development and Technology, 1,500 out of Poland’s 2,477 municipalities have already begun working on their general plans, reporting spatial data to meet the new requirements. This means over 60% of municipalities are actively engaged in restructuring their zoning frameworks.
“The intention behind the amendment was to curb urban sprawl and promote sustainable city development,” notes Anna Herbetko, Associate at Wolf Theiss. “However, instead of considering the actual spatial dynamics of a city, the new law imposes arbitrary limits on residential expansion based on undeveloped land absorption formulas. This may lead to a land supply shortage, fueling price increases. A better approach would be to create incentives for higher-density development while discouraging sprawl through carefully structured infrastructure costs.”
Potential Risks for Property Owners and Local Governments
Beyond limiting new residential developments, the new regulations pose further risks for landowners. Many plots located on the outskirts of cities may not be viable for non-residential projects, nor would they be profitable, making them effectively undevelopable.
“This amounts to a form of planning expropriation,” argues Zajączkowski, “as owners will be unable to develop their land for housing, yet they won’t be entitled to compensation under the law, as no zoning plan is technically being changed or revoked.”
The transition to general plans could also lead to social tensions. In Warsaw, for instance, 55% of the city lacks valid zoning plans, relying instead on outdated planning documents from 2006. As the city races to meet the new legal requirements, residents in districts like Białołęka, Wilanów, and Wesoła have already begun protesting potential restrictions on future development.
“The urgency of implementing these plans raises concerns,” says Herbetko. “If rushed, the process may result in decisions that do not reflect the interests of residents, developers, or landowners. Protests could further delay implementation, leading to even greater uncertainty in the real estate market.”
A Necessary but Flawed Reform?
Few dispute that Poland’s urban planning system needed reform. A 2023 report by the Supreme Audit Office (NIK) highlighted major inefficiencies in the current system, which had been in place since 2003. The report found that previous regulations failed to ensure rational urban development, lacked social oversight, and contributed to spatial chaos—which experts estimate costs Poland more than PLN 83 billion annually.
The old system allowed large residential estates to be built in areas without proper sewage systems, roads, or public transport, forcing municipalities to bear the costs of retroactively providing infrastructure. However, Herbetko and Zajączkowski argue that the new regulations do not introduce effective mechanisms for infrastructure cost recovery, relying instead on the existing betterment levy—a tax that allows municipalities to recover up to 50% of the land’s increased value after infrastructure improvements.
“The reform is well-intentioned but incomplete,” Herbetko concludes. “Without new, more effective ways for municipalities to finance infrastructure, the new system may fail to achieve its goals, instead creating new barriers for development and housing affordability.”
As municipalities work against the clock to implement general plans by 2026, developers, landowners, and policymakers will be closely watching to see whether this legislative overhaul brings clarity and efficiency to urban planning—or exacerbates existing market challenges.
Source: Wolf Theiss
