After years of discussion, REITs are finally set to enter the Polish legal system. A new law on Real Estate Investment Companies (SINNs) is expected to be enacted in 2025. Although the reform is being promoted as a boost for the rental market and a way to engage Poles' capital, experts warn: without adequate safeguards, the funds could exacerbate the housing crisis. Are REITs an opportunity for professional rental development or a threat to housing affordability?
Real Estate Investment Trusts (REITs) are specialized investment entities that allow capital to be invested in real estate primarily for rent - without the individual investor having to purchase it directly. They most often operate in the form of publicly traded companies, regularly paying dividends to investors from profits generated from rentals. Their business is based on owning or leasing real estate - such as office buildings, shopping malls, hotels, apartments, warehouses, data centers or even cell towers - with the goal not of selling them, but of reaping long-term rental income.
REITs are very popular around the world and are already operating in at least 46 countries. Their design provides investors with indirect access to the real estate market with a relatively stable income stream. In addition, many of them enjoy preferential tax ation - including, among other things, exemption from corporate income tax (CIT), as long as the majority of profits (usually at least 90%) are paid out in the form of dividends. Despite their global popularity, Poland has for years lacked adequate legal regulations to allow the operation of this type of investment vehicle - but this situation is about to change.
Attempts to legislate REITs in Poland
Intensive work on Polish REITs has been going on for several years. The first serious attempt to introduce them into the Polish legal system took place in 2016, when the Ministry of Finance announced a draft law on real estate rental market companies (SRWN), also known under the working name FINN(Companies Investing in Real Estate R ental). The purpose of the law was to create an investment vehicle operating in the capital market, which would enjoy CIT exemption provided that at least 90% of the rental profit is used to pay dividends or reinvestment. According to an analysis published by the Financial Observer on the draft FINN and its assumptions, there were also planned restrictions on the level of debt (max. 70% of asset value) and an obligation to invest at least 70% of assets in real estate and related companies. The law was scheduled to go into effect on January 1, 2017, but the draft did not get beyond the inter-ministerial consultation stage and was abandoned, despite initial support from the Stock Exchange and its inclusion in the Capital Construction Program at the time.
In 2018, the Ministry of Finance made another attempt to introduce the equivalent of REITs into the Polish legal system, presenting a draft law on Companies Investing in Real Estate Rental (SINN). The draft stipulated that SINNs would be joint-stock companies with a minimum share capital of PLN 100 million, investing mainly in residential real estate for rent. The goal was to allow investors, including individual investors, to participate in the real estate market without having to purchase units directly.
However, as described in an analysis of the draft SINN law, the proposal raised serious questions. Experts alarmed that the funds' massive investment in housing could reduce the availability of units for individuals, driving up prices and pushing individual buyers out of the market. There were also reservations about preferential taxation of SINNs, which could distort tax competition and draw capital away from the government bond market - hitherto seen as a safe haven for Poles' savings. As a result, despite earlier announcements, the law was not passed, and the topic of REITs was again postponed for several years.
REITs in Poland from 2025? The government is completing work on the law
Recently, however, the topic has returned. The current government has once again taken up the topic of introducing REITs. What's more, it has put it in the Ministry of Finance's Strategy for 2025-2028, in which it is enshrined as a priority objective of state policy (objective 3.1.3), which includes the development of real estate-based investment instruments. According to an analysis on the priority of introducing REITs in Poland, the Finance Ministry confirmed that it is completing conceptual work on the law and that informal consultations have already been held with market participants - the result of which was assessed as positive. In turn, according to "Rzeczpospolita's" commentary on the advancement of work on the REIT law, experts close to the project confirm that the legislative assumptions are practically ready and are only awaiting formal referral for further proceedings.
Information so far indicates that Polish REITs - which are to operate formally as joint stock companies under the name SINN (Companies Investing in Real Estate Rental) - will cover a wide range of assets. According to the declarations made by the Ministry of Development and Technology in 2024, they are to invest in both commercial real estate (such as office buildings, shopping centers, warehouses, dormitories or nursing homes) and institutional rental housing (PRS) - although the residential segment is not to be their primary area of activity. As highlighted in a publication on the principles of future REITs, the participation of housing in the investment portfolios of SINNs will be possible, but subject to the application of statutory safeguards - including restrictions on the funds' development activities to counteract the use of REITs for tax optimization by developers.
At the same time, as another study on the potential impact of REITs on the housing market notes, the introduction of these instruments may contribute to the development of the institutional rental sector, increasing the availability of long-term rental housing and improving the quality of housing management. REITs, as entities with a long-term focus on property maintenance and stable rental income, could bring order to the currently fragmented rental market in Poland, at least in theory.
Will REITs worsen the availability of housing?
Although the reform is aimed primarily at developing institutional rentals, many experts point to potential side effects, especially in terms of housing availability for individual buyers. As the analysis of this new system indicates, the structure of REITs was designed to reduce pressure on the secondary market. The requirement for high entry capital and the preference for investment in new projects are intended to discourage funds from competing with households for existing units. In this context, however, it is worth noting that there are parallel plans for the government's "First Keys" program, which could significantly increase demand in the secondary market, as it is intended to support the purchase of the first apartment precisely from the already available offer. This could lead to a paradoxical situation in which some state policies seek to relieve the burden on the retail market, while others - while pursuing social goals - further increase competition for a limited number of units.
In addition, experience from other countries shows that even with well-designed regulations, the entry of institutional investors into the housing market can lead to a change in the ownership structure and the way the rental sector operates. In Canada or the United States, the activities of REITs have been criticized because of rising rents and limiting the availability of substandard units. Therefore, as noted in a study on the social impact of REITs, Polish regulation must not only protect buyers and tenants, but also set clear rules on which market segments REIT funds can direct their capital into.
The Finance Ministry assures that the draft law takes these risks into account and includes provisions to protect housing stock from speculative buyouts. As money.pl points out in an article on the planned rental market reform, the introduction of REITs could contribute to the ordering and professionalization of rental, which is one of the main challenges in the Polish housing market today. Large funds, which will be obliged to manage properties on a long-term basis and pay dividends from rental income, can introduce new standards and stability for tenants.
However, this does not mean that the presence of REITs in the residential segment will be neutral for the market. As studies from other countries show, even moderate participation by institutional investors can affect local rental prices and supply structure. Therefore, experts urge that in the course of further legislative work, special attention should be paid not only to protecting the interests of investors, but also to ensuring the availability of housing for less affluent households. As "Rzeczpospolita" reminds us in its analysis of the readiness of the draft law on REITs, much will depend on the final wording of the law and whether a balance can be maintained between the public interest and market expectations.
Benefits and objections to housing REITs
The impact of REITs on the housing market is complex and largely depends on the solutions adopted in the legislation and the specifics of local conditions. The Polish bill envisages mechanisms to direct the funds' capital primarily toward new investments, rather than the purchase of existing housing, so as to reduce pressure on the resources available to individual buyers. As noted in the analysis of the planned reform, such funds can act as long-term partners in the construction sector, procuring entire packages of apartments for rent. In practice, such action can increase the supply of units, reducing upward pressure on prices.
The entry of REITs also marks the emergence of a new type of landlord in the rental market - a formalized one, operating according to corporate procedures. As pointed out in a study on the role of REITs in cleaning up the rental market, the entry of funds can improve the quality of relations between tenants and landlords Standard contracts, better maintenance of buildings, transparency of rules - all elements that can increase the stability of the rental market. In many countries, as a study published in Real Estate Economics shows , the professionalization of the rental market as a result of the presence of REITs has even been associated with a decline in rents in the multifamily housing segment - especially where the funds invested in new construction and depended on stable occupancy.
On the other hand, the influx of foreign capital remains a significant risk. Listed REITs naturally attract international investors, which could increase interest in the Polish real estate market. As Canadian Dimension' s publication on the financialization of the housing market notes, treating housing as an investment asset could lead to rising property prices disconnected from the income realities of local communities. These concerns are not unfounded - in some regions of the U.S., REITs accounted for up to a quarter of all single-family transactions , as documented in a report by the U.S. Government Accountability Office.
This phenomenon dovetails with a broader process of financialization of the housing market - described by Canadian Dimension, among others - in which housing is beginning to be treated not as a basic good, but as an investment asset. The funds, seeking to maximize profits, are employing strategies such as so-called renovation, i.e. removing existing tenants and renting at a much higher rate. In Canada, this has been linked to the disappearance of low-cost housing from the market - more than 300,000 units disappeared there between 2011 and 2016.
REITs in Germany: lessons to be learned
Germany is among the countries that have decided to take a very cautious approach to REITs in the context of housing. Real Estate Investment Trusts were introduced there by a 2007 law, but their access to the housing sector was restricted from the outset. Under the law, German REITs (G-REITs) are not allowed to invest in existing apartments built before January 1, 2007, which was intended to prevent a mass buyout of rental stock and protect tenants from speculative rent increases.
G-REITs must be joint stock companies (AGs) based in Germany and listed on a regulated stock market. They are required to hold more than 75% of their assets in real estate and pay out at least 90% of their profits as dividends. At the same time, REITs enjoy CIT and trade tax exemption at the company level, with taxation occurring only at the investor level.
The scope of German REITs was supposed to be limited mainly to commercial real estate - such as offices, shopping centers and logistics parks. However, the market has become heavily concentrated anyway. Companies such as Vonovia - which are not formally REITs - have dominated the rental segment, acquiring tens of thousands of apartments. As a result, rising rents and limited availability of units in major cities have led to strong social tensions. In Berlin, a referendum was held in 2021, in which residents voted to expropriate the largest apartment owners (those with more than 3,000 units). This is a good indication that the problem of financialization is not just about REITs, but more broadly about institutional investors as such.
A similar logic can be found in the assumptions of the Polish law - high capital requirements and mechanisms preferring financing of new investments are supposed to reduce the risk of competing with individuals for existing apartments, as confirmed by expert comments.
A completely different strategy has been adopted by Singapore, where REITs are almost exclusively limited to the commercial market. Housing remains largely in the hands of the state, and its protection is based on, among other things, the introduction of a 65 percent tax on the purchase of residential property by financial institutions. This level of taxationeffectively discourages investment funds from entering the housing market. Combined with an active public rental housing policy, this approach effectively controls housing prices without restricting the activities of REITs themselves. Approximately 80% of Singapore's housing units are built and managed by the state-owned Housing & Development Board (HDB). These apartments are made available to the public on a long-term quasi-ownership basis, which ensures the stability and availability of the units to the general public.
Can REITs raise housing prices?
The introduction of REITs into the Polish market may increase housing prices - both for sale and for rent - and this is due to several overlapping mechanisms. These types of investment funds operate with large capital scales and are focused on maximizing profitability, which could create significant strains on an already difficult housing situation. Poland has been struggling for years with a shortage of housing, high levels of overcrowding and low availability of housing in relation to income. Against this backdrop, the emergence of a strong institutional player may, in some segments of the market, further limit the purchasing capacity of individuals.
All of these mechanisms may have particularly noticeable effects in the context of the current housing situation in Poland. High prices, declining mortgage availability, rising rental rates and the lack of a comprehensive housing policy create an environment in which additional demand from investment funds may not only fail to solve the problems, but may actually exacerbate them. Therefore, it will be crucial that the design of Polish REITs - in addition to tax incentives - also include mechanisms to protect the market from the effects of speculation and excessive concentration of housing ownership.
