Changes in the law – the end of subdividing units in single-family buildings?
In accordance with current regulations, in a single-family residential building it is allowed to separate no more than two residential units.
The provisions of the Law on Premises Ownership stipulate that in order to establish separate ownership of premises, it is required to obtain a certificate from the district governor on the independence of the premises – however, the regulations do not stipulate an obligation for the district governor to examine how many independent premises will be or have already been separated in a building that was built as a single-family dwelling.
This loophole in the regulations was exploited by investors who erected large single-family residential buildings on land zoned for single-family development in such a way that they could easily separate, for example, six residential units, and then – upon completion of the single-family building – obtained certificates of independence for the units in the building and established their separate ownership. Single-family buildings were effectively becoming multifamily, even though they did not meet the regulatory requirements for such buildings.
In order to combat such activities, the recently enacted law on the National Real Estate Assets has introduced provisions to amend the Law on Premises Ownership.
According to the added section 1a to article 2 of the Law on Premises Ownership, the establishment of separate ownership of an independent residential unit will be possible only in accordance with the provisions of the local plan or the contents of the zoning decision and in accordance with the construction permit or a successfully completed application and in accordance with the occupancy permit. The amendment is intended to eliminate cases of separating more than two units in single-family residential buildings and actually converting them into multi-family buildings.
The law has been forwarded to the President for signature and is expected to take effect 30 days after publication. Its entry into force will be important for investors pursuing the construction of single-family buildings with the intention of “converting” them to multi-family, as well as for potential buyers of units in buildings built as single-family.