Zoning fee, betterment levies, and reduction of the real property value

offer for real property owners

Our professional services related to the zoning fee and betterment levies often lead to a considerable reduction of required fees or their cancellation. Under the Law on Planning and Spatial Development, it is possible to obtain compensation for the reduction of the real property value resulting from the change in or enactment of the zoning plan.

Dear Sirs and Madams, first we would like to present a brief outline of one of the issues our company deals with, namely, the representation of the investment property owners in the proceedings concerning the zoning fee and betterment levies, as well as obtaining compensation for the reduction of the real property value.

The betterment levy is assessed by the municipality on the basis of the real property management law. The betterment levy may be imposed only in connection with the increase in the real property value arising from:

  1. the construction of technical infrastructure facilities financed with the resources of the State Treasury or local government units (Chapter No. 7)
  2. division of the real property, (Art.98a)
  3. consolidation and division of the real property (Art.98b)

Each of the above-mentioned legal titles constitutes an individual and separate basis for determining the amount of the betterment levy, which may however, occur simultaneously (except, in the case of coincidence of situations described in Items 2 and 3).

Until recently, the municipalities have rarely used the opportunity to charge the betterment levy, which was to a large extent the result of the mentality developed in the former system because the regulations allowing the collection of the betterment levy have been effective for many years, and the legal basis was even included in the law on spatial development dated 1994, which is no longer valid at the moment.

OAt present, more and more often, the municipalities including the City of Warsaw use the possibility to charge the betterment levy. This results, in particular, from the change of the city policy and from making a reasonable assumption that the community of the municipality may not incur all costs of constructing the technical infrastructure, like the water supply system in the street X, if it is to be used only by persons living at that street.

Hence, the legislative bodies introduced the necessity of residents’ sharing the costs of construction of the technical infrastructure, based on an assumption that after the construction of, for instance, the water supply system, gas pipelines, sewage system, or roads, the value of the real property will grow.

An analogous solution was adopted in the case of making division or consolidation, because it may be assumed that the division of a large plot of land, for example with an area of one hectare, into smaller plots intended for construction should result in the rise of its value. The situation is similar in the case of consolidation of several smaller and very narrow plots, and subsequently their division into valuable plots.

The fact of imposing the betterment levy results then from the growth of the real property value caused by the events enumerated in the Law on the Real Property Management.

Zoning fee is another levy paid to the municipality, however, its legal basis arises from a different statutory act, namely, Article 36 Section 4 of the Law on Planning and Spatial Development.

The fee is assessed and charged for the growth of the real property value caused (change of the zoning plan, new plan) by the change of the designation of a given piece of property in the zoning plan. Contrary to the betterment levy, the zoning fee is not automatically charged in connection with the growth of value of the real property related to the change in the plan, because a sine qua non prerequisite for its assessment is the sale of the real property by its current owner or holder of perpetual usufruct right within 5 years from the date when the zoning plan and/or the change in that plan became effective.

Many owners are not aware that such fee exists and do not include its costs in the price of the property when they offer it on the market for sale. As a result, after the sale transaction they are often surprised by the claims lodged by the municipality, which are, in principle, fully justified.

Compensation for the reduction of the value of the real property related to a change in the zoning plan. The value of the real property does not always grow as a result of the change in or enactment of the zoning plan. Sometimes, the value of the real property may drop in consequence of one or several unfavorable solutions adopted in the plan. Such real property ceases to be attractive from the investment point of view and there arise grounds for lodging relevant claims under Article 36 Section 1 of the Law on Real Property Management.

The owner or perpetual usufructuary of the real property may lodge the claim for damages after the change in or enactment of the zoning plan on the following conditions:

  • if it is not possible to use the real property or a part thereof in the manner as used before,
  • if it is not possible to use the real property or a part thereof in accordance with its former designation ,
  • if the use of the real property or a part thereof in the manner as used before is considerably limited,
  • if the use of the real property or a part thereof in accordance with its former designation is considerably limited.

In all cases mentioned above, it is necessary to appoint a property valuation expert as the person statutorily empowered to estimate the value of the real property. The correct estimation of the real property value by the valuation expert forms the basis for the proper decision of the relevant authority.

The task of our advisory company is to have such fees and charges reduced or lifted in the course of relevant proceedings concerning the betterment levy or the zoning fee. After carrying out various analyses of the factors affecting the growth or reduction of the value of the real property, under a proper procedure, we present these factors to the authority dealing with the case and the appointed valuation expert in order to obtain the lowest possible fee payable by our client.

We play a similar role in the proceedings concerning the reduction of the real property value, this time however, our goal is to ensure that the client obtains the highest possible compensation for the reduction of that value, or obtains another real property as an alternative or gets the possibility to sell the real property (or a part thereof) at an attractive price .

We invite you to read the detailed description of the company’s activity which has been presented on this webpage. If you wish to learn more details related to one of the fields we deal with we will be happy to arrange a meeting at any time convenient to you and discuss all the issues face to face. We do hope that you will find the above-described issues interesting.