Selling a flat bought with an MDM subsidy

The Mieszkanie dla Młodych (Flat for the Young) programme aims to make it easier to buy a dream flat or single-family house, but using it comes with numerous restrictions. If you do not know the rules, you can even lose the subsidy, which amounts to 10 to 30 per cent of the property's value. How to avoid that? We explain!

• What is Mieszkanie dla Młodych?
• Selling a flat bought thanks to an MDM subsidy
• How to avoid losing the government subsidy?
• How much of the subsidy must be repaid if the flat is sold early?
• When should the subsidy be repaid?
• When can you sell a flat bought with MDM without a loss?

What is Mieszkanie dla Młodych?

Mieszkanie dla Młodych (Flat for the Young) is a system of government subsidies. The programme has been in force since 1 January 2014 and was created for young people who dream of buying their first property – a flat or single-family house – on both the secondary and the primary market. The subsidy offered by the government is meant to help gather the funds needed to buy a home, because it is intended to replace the down payment or supplement it. Its amount depends on the beneficiary's life situation. Interest in the programme is enormous, but using it is subject to numerous rules. To receive the subsidy, a number of conditions must be met.

People up to the age of 35 can benefit from the MDM programme – families, single people and single parents alike, who are preparing to buy their first flat. It makes taking out a mortgage easier, because the subsidy increases creditworthiness and the amount of the down payment. This in turn translates into a smaller loan and a smaller loan instalment.

The subsidy is 10 per cent of the value of a flat whose area does not exceed 75 m2. For a single-family house the limit is 100 m2. This figure may rise by an additional 5 per cent if the applicants have children. Singles and married couples with two children receive a subsidy of 20 per cent, and with three children – as much as 30 per cent. Moreover, under the programme rules, if a third or subsequent child is born into the family within 5 years of using MDM, the subsidy increases by a further 5 per cent. In sum, the government aid can ultimately be as much as 30 per cent of the value of the flat.

READ ALSO – SELLING A FLAT UNDER CONSTRUCTION

Selling a flat bought thanks to an MDM subsidy

Has your financial situation changed? Has another child arrived, making the flat you have lived in so far too small? Do you want to sell a property bought thanks to a subsidy received from the MDM programme? Have you decided to divorce, meaning you will have to give up ownership of the property? Then be careful, because a problem may arise… If five years have not yet passed since the acquisition of the unit, the owner must expect to repay part of the subsidy granted by the government. Why? The restriction period lasts five years. It is a safeguard against dishonest buyers who, thanks to the subsidy, want to acquire a flat at a bargain price and sell it for much more.

How to avoid losing the government subsidy?

By acting carelessly we may expose ourselves to serious financial consequences. A property bought with the support of the government's MDM programme cannot be sold, rented out or lent before 5 years have passed since the purchase. Renting out the property amounts to breaking the rules, which means the subsidy has to be repaid. Moreover, if we acquire another residential unit or house, in part or in whole, we must also expect to repay the subsidy. The only exception is acquiring ownership through inheritance.

If we do not want to lose the subsidy, we should not sell a property bought thanks to the Mieszkanie dla Młodych programme within 5 years of the purchase. Why? If we decide to do so, we will have to repay part of the subsidy. Its amount will be determined by calculating the proportion of the 5-year period during which the unit was not used. Such a sale should therefore be considered carefully. The five-year period mentioned is counted from the moment the mortgage agreement with MDM support is signed. This restriction was introduced in view of anticipated abuses and as a defence against speculators who, hoping for a quick profit, would use the programme and then sell the flats.

How much of the subsidy must be repaid if the flat is sold early?

If we have no choice and must sell the flat, it is worth estimating how much money we have to give back to the government. The amount to be repaid is calculated by multiplying the subsidy amount by a ratio: the number of months remaining until the end of the 5-year period divided by 60, i.e. the 60 months of the protection period. For example, if we want to sell the property after owning it for four years, we must give back 20 per cent of the subsidy received. If, on the other hand, we do so after one year, we must repay 80 per cent. If the subsidy was 50 thousand PLN and we want to get rid of the flat bought with it after owning it for 3 years, we must repay 20 thousand PLN. We calculate this amount as follows: 24 (the number of months until the end of the protection period) is divided by 60, and the result is multiplied by the amount of the subsidy received.

READ ALSO – SELLING A FLAT WITH A MORTGAGE

When should the subsidy be repaid?

Bank Gospodarstwa Krajowego must be informed about an early sale of the flat. The borrower has 30 days to do so, and 60 days to return the money to the account of the Subsidy Fund (Fundusz Dopłat). This obligation lies with the person who bought the property with the subsidy, and failure to comply will result in interest being charged.

When can you sell a flat bought with MDM without a loss?

The happy owners of their own "M" can sell a flat bought thanks to the government subsidy without any obstacles, complications or financial consequences once the protection period has ended, that is, five years after signing the agreement with the bank from which they took out the mortgage. To get a good price, it is best to contact the REMAX Gold office, which has many years of experience in carrying out property transactions. Using our tools and skills, we will help you quickly find a good buyer.