Council flats designed for sale are usually in a poor technical condition, in need for renovation and a lot of money. The persons renting these flats have priority to buy them. In that way cities are relieved of financial burden related to the flat maintenance. And for buyers it is an opportunity to buy a flat at a good price. Discounts for the flat purchase, depending on the technical condition and the devastation level, reach even 99 percent. In 24 municipalities audited by NIK in the period 2011-2014, over 7.5 thousand flats of this type were sold. The majority of them (70 percent) were sold with a discount of over 81 percent, of which 43 percent with discount of over 90 percent.
Cities properly execute the sales procedure. They correctly calculate prices and due discounts for buyers. Significant improvement can be observed particularly in 14 cities which NIK audited in 2010. The re-audited local governments eliminated irregularities identified in the previous audit. The most serious irregularity was the failure to notify tenants in writing about the planned sale of flats and their priority purchase right. However, it was the first time the auditors noticed the same irregularity in six different cities. The duty to notify tenants may seem a formality but NIK points out that neglecting it may have serious consequences, especially when a third party will claim rights to a given premises. In four cities the lists of properties designed for sale lacked some of the required information, e.g. the deadline for placing requests by persons entitled to priority purchase.
In this audit NIK identified cases of breaching the Real Estate Management Act, such as.:
- demanding advance payment from a potential buyer to cover the flat valuation costs (such cases were detected in 15 of 24 audited cities). Persons who wanted to buy a flat had to pay 100 to 500 PLN in advance. It was particularly bad in Starachowice and Szczytno, where advance payments were obligatory under city council resolutions (PLN 350 and 100 correspondingly). They said that if the transaction was not concluded by fault of the buyer, he or she would not get the money back. NIK urged the city to stop such practices. The Polish SAI made governors especially sensitive to that matter since they were advising city council resolutions;
- ineffective recovery of discounts subject to reimbursement in the cases provided for in the law (if the buyer sold the flat before the lapse of five years from the purchase to a non-related person) - the audited cities recovered only 11 percent of amounts due. Three cities did not take any action in that matter, one of them did but only after three years from the flat resale.
Following the audit NIK obliged the city heads to:
- stop requiring potential buyers to make advance payments to cover the costs of flat valuation;
- demand immediate reimbursement (also in court) of granted discounts in all statutorily justified cases.
