The Polish real estate market has been undergoing dynamic changes for years. The traditional model, in which rentals were the domain of private landlords offering individual apartments, is slowly giving way to new, more organized forms. One of these, gaining in importance, is institutional leasing . This solution, while still less popular than occasional leasing, addresses the growing needs of both professional investors and increasingly demanding tenants. Understanding what institutional leasing is and who it is intended for is becoming crucial for anyone navigating the modern rental market.
In this article, we will look at this form of lease from all sides – analysing its legal framework, key differences from other contracts and the profile of the tenant and landlord for whom it was created.
Defining institutional tenancy: legal framework and characteristics
Institutional rental was introduced into Polish law in 2017 by the amendment to the Act on the Protection of Tenants’ Rights, on Housing Benefits and on Amending the Civil Code . Its key regulations are contained in Articles 19f-19i of this Act. The aim was to create a legal tool that would strengthen the position of landlords conducting business activities and thus encourage investment in the rental housing market, known globally as PRS ( Private Rental). Rented Sector ).
The essence of this definition lies in a fundamental assumption: the lessor in an institutional lease agreement can only be an entity conducting business activity in the rental of premises. This is a key differentiator. This means that a private owner who does not have a registered company and treats rentals as a supplementary source of income cannot use this form of agreement. It is reserved for professionals – investment funds, development companies, and entrepreneurs for whom property rentals are the core of their business.
An institutional lease agreement must be concluded for a fixed term. Crucially, the agreement is accompanied by a notarial deed from the tenant, in which they submit to enforcement and undertake to vacate the premises by the date specified in the landlord’s request.
Who can become a landlord in the institutional model?
As mentioned, the lessor must be an entrepreneur. This seemingly simple rule has profound implications. It limits the range of entities that can offer this type of agreement, while professionalizing the market. In practice, lessors in the institutional model are:
- Real estate investment funds : Specialist entities that build or purchase entire buildings exclusively for long-term rental purposes.
- Developers : Developers are increasingly diverting part of their investments into build -to-rent projects , where apartments are not sold but go to the rental market managed by the company itself or a specialized operator.
- Individual entrepreneurs : Individuals conducting business activity with the appropriate PKD code (Polish Classification of Activities), i.e. 68.20.Z – Rental and management of own or leased real estate , who manage a portfolio of several or a dozen or so properties.
This ownership structure brings predictability to the market. Tenants don’t have to worry about the owner suddenly deciding to sell their apartment, as it’s part of the company’s long-term business strategy.
Institutional, occasional and general leases – a comparison of the key differences
For a tenant, distinguishing between different legal forms of lease can seem complicated. The table below clearly outlines the fundamental differences, making it easier to understand which type of agreement you’re dealing with.
The greatest contrast concerns the landlord’s status and the consequences associated with it, especially regarding tenant safety. In institutional tenancies, the lack of a requirement to designate alternative accommodation significantly simplifies the eviction procedure for the landlord, but also poses greater risk to the tenant.
Step by step: what does the process of concluding an institutional lease agreement look like?
For someone new to this form, the process may seem more formal than a standard rental. In reality, it’s very structured.
- Finding an offer and verifying the landlord : institutional rental offers come from companies. It’s worth checking the company’s records (KRS, CEIDG) to ensure they are legally permitted to conduct rental activities.
- Analyzing the contract template : Professional landlords provide a clear, though often lengthy, contract template. Pay particular attention to provisions regarding rent adjustments, security deposits, the parties’ obligations, and the terms of contract termination.
- Visiting the notary : This is a crucial step. The tenant (sometimes accompanied by the landlord) visits the notary’s office to submit a declaration of voluntary submission to enforcement regarding the vacating of the premises. The notary explains the legal consequences of this act. The cost of preparing a notarial deed typically ranges from 300 to 500 PLN and is most often covered by the tenant.
- Signing the contract and handing over the premises : after delivering the notarized declaration to the landlord, the actual lease agreement is signed. The final step is to prepare a handover protocol and hand over the keys.
Advantages and disadvantages of institutional leasing from a tenant’s perspective
Each solution has its advantages and disadvantages. Analyzing institutional leasing from a tenant’s perspective reveals clear benefits, but also certain risks.
Advantages:
- High standard and modernity : Apartments offered in this model are usually new or recently renovated, located in attractive parts of cities.
- Professionalism and transparency : Contracts are prepared by lawyers, minimizing the risk of unfavorable or unclear provisions. Communication with the property manager is formalized and effective.
- Certainty and security : The tenant is dealing with a stable business entity, not an individual. This reduces the risk of sudden termination due to the landlord’s personal agenda.
Defects:
- Higher costs : Rents in institutional leases can be higher than the market average. In addition, there are the aforementioned notarial costs associated with signing the declaration.
- Less flexibility : Rules are rigid and rarely negotiable. The process is more formal, which may be a drawback for some.
- Simplified eviction procedure : Failure to provide alternative housing poses a significant risk. In the event of a loss of financial liquidity, the tenant is placed in a significantly more difficult legal situation.
Advantages and disadvantages of institutional leasing from the landlord’s perspective
To fully understand this model, it’s important to look at it from the perspective of an entrepreneur. For companies investing in rental properties, it’s a business tool with specific advantages and challenges.
Advantages for entrepreneurs:
- Simplified and expedited enforcement : This is a fundamental benefit. The ability to recover premises from an unreliable tenant more quickly minimizes financial losses and downtime.
- No contract time limit : Unlike occasional leases (limited to 10 years), institutional leases can be concluded for any specified period of time, which ensures stability and predictability of income.
- Greater credibility in the eyes of financial institutions : A real estate portfolio managed on the basis of formal institutional lease agreements is perceived as a more stable asset, which makes it easier to obtain financing for subsequent investments.
Disadvantages and requirements for the entrepreneur:
- The need to run a business : This involves costs (ZUS contributions, accounting services) and administrative obligations.
- Limited taxation : Entrepreneurs cannot take advantage of the simple lump sum tax on recorded income available for private rentals. Income from institutional rentals is taxed under general rules (tax scale) or a flat tax.
- Formal reporting obligations : Running a business requires comprehensive record-keeping and reporting, which is more complex than private rentals.
Apartment as a service – a new philosophy of renting
Institutional leasing is more than just a contract. This phenomenon fits into a broader cultural trend of “living as a service.” This model assumes that tenants are renting not just four walls, but a complete package of amenities and experiences.
PRS companies often offer:
- Mobile applications for rental management that allow you to report faults, make payments, and reserve shared spaces.
- Packages of additional services , such as high-speed internet , access to streaming platforms , cleaning services and concierge.
- Community organization through events for residents, shared relaxation areas, gyms and co- working spaces in the building.
This approach transforms the perception of housing from a tangible asset to a comprehensive subscription service. A good example is the story of Anna, an IT expat who moved to Warsaw. Instead of searching for an apartment on her own, she chose an offer from a PRS company. She admits that convenience was key: a single, fixed fee covering rent, utilities, and internet , the ability to report any issues via an app, and access to a gym in the same building. For her, it saves time and guarantees a standard she’s willing to pay more for.
The impact of institutional leasing on the Polish real estate market
The development of the PRS sector, whose legal foundation is institutional leasing, has a complex impact on the entire housing ecosystem. On the one hand, it increases the supply of professionally managed rental properties. It introduces new standards of quality and service, forcing private landlords to improve the quality of their offerings. In the long term, this increased supply may contribute to stabilizing rents.
On the other hand, concerns are emerging. Investment funds, by purchasing entire buildings in bulk from developers, limit the pool of units available on the primary market for individual buyers. This can lead to local property price increases, as confirmed by market analyses by consulting firms. This phenomenon, in which large players compete with citizens for the same resources, is the subject of heated debate in many European countries. In cities like Berlin and Dublin, the rapid growth of the institutional rental market has become a serious political and social issue, leading to regulations restricting the activities of funds.
The Future of Institutional Leasing in Poland: Forecasts and Potential Changes
All indications are that the role of institutional rentals will continue to grow. Real estate experts predict in industry reports that by 2030, the number of apartments in this segment could increase several-fold, exceeding 50,000 units. This trend is driven not only by economic factors, such as rising interest rates and difficulties in obtaining a mortgage, but also by generational changes. Younger generations increasingly prioritize flexibility and access to goods over ownership.
To support this development, we will likely see further legislative changes. Discussions include introducing tax breaks for investors in the PRS sector and simplifying administrative procedures related to the construction of build -to-rent projects .
Summary: Is institutional leasing the solution for you?
Institutional leasing is a specialized tool that professionalizes the Polish rental market. It is an attractive proposition for entrepreneurs seeking a safe and effective way to manage their property portfolio, as well as for a specific group of tenants – those who value high standards, convenience, and predictability, even at the expense of higher rents and less flexibility in negotiations.
The decision as to whether this model is right for you depends on your individual priorities. What institutional leasing is and who it’s for is therefore a question not only of regulations but also of lifestyle, financial needs, and willingness to accept a new, more service-oriented approach to housing. One thing is certain: its growing popularity will permanently change the landscape of the Polish real estate market.
Signature Estates editorial team