Piotr Kula from Rendin talks with Mieszkanicznik’s president, Jacek Kusiak, about how to rent property safely and how to navigate this market responsibly.
You’ve been active in real estate for more than 20 years, and for the past 10 years you’ve led the Mieszkanicznik Association, which, as stated on your website, supports landlords in conducting safe and ethical property rental. We can have an endless discussion about safety and ethics.
Mieszkanicznik was created precisely to make the process of renting property as safe as possible for the landlord, especially in a legal system where there is no equality between the landlord and the tenant, and the latter is often in a privileged position. Before Mieszkanicznik came into existence, people often operated in the dark, did not know how to conduct tenant screening, often did not have contracts or found a ready-made half-page template on the Internet that did not protect their interests in any way. And then, there were problems, losses, court battles... From the beginning, Mieszkanicznik was a place to exchange experiences. We learned from each other, drew conclusions, observed trends, and then also created them, primarily by establishing rental standards.
Five golden rules of Mieszkanicznik ensure the safety and ethics of transactions.
Tenant background check
Good agreement
Security deposit
Quick reaction
Knowledge, people, contacts, mutual support
We are halfway there; some standards are not yet introduced, and there is room for development.
We’ll talk about these principles and how they work in practice in a moment, but what I’m curious about is how much has the rental market in Poland changed over these 10 years?
Radically. First of all, 10 years ago almost everyone in this market was involved in one thing – long-term rentals. That was 99 percent of the contracts. Occasionally, someone had a short-term rental. Now, on the other hand, we have long-term rental, short-term rental, and hybrid rental; we have property management, real estate investment funds, and investor groups; we also touch on loans, insurance, renovations, and flipping in our business. The word flipping didn’t even exist some time ago. Today, many people do not even know what home staging is. At present, the rental market is severely fragmented. If you ask the attendees of the Mieszkanicznik Association meetings, each person does something different.
How have the problems that Mieszkanicznik solves changed over these 10 years?
Problems used to arise because there were no signed contracts, no tenant screening, no security deposit collected. Today, the market is more stable, but also more diverse; different forms of earning from the market have emerged. There are different procedures for short-term, long-term and hybrid rentals. This creates some problems, but - and here I may surprise you - members of Mieszkanicznik rarely have serious problems with tenants. In the meantime, we even set up an arbitration court, but it proved unnecessary because there are too few cases to maintain it.
People learn this business, educate themselves, and if they follow these five rules, they avoid trouble?
Yes. Five golden rules of Mieszkanicznik are an almost 100 percent guarantee of a peaceful tenancy. On the other hand, I often hear voices about serious problems, sometimes even pathologies in the market, but they involve people outside our association who are quite reckless in their transactions and do not follow these fundamental five golden rules, asking for trouble, so to speak.
People often don’t understand that if you give strangers your property, property worth 300, 500 thousand zlotys, it’s good to have control over it. We often give the example that when you buy an iron with instalments, they check your creditworthiness, and they monitor your credit history in various databases. In rental, these rules have not been followed until recently, and it turns out that tenant verification and asking them the right questions are even 90 percent of success.
But our rules work both ways. At Mieszkanicznik, we attach great importance to rental ethics. We treat tenants with respect and as partners. We promote and recommend good tenants. The rental offers that we present are factually correct, and our rental contracts are understandable and precise and come with handover reports. Changes in rent are made in accordance with the provisions of the contract, the deposit is always settled in accordance with the provisions of the contract. We first try to resolve any disputes amicably, taking into account the interests of both parties.
Tenant screening based on verification is one of the golden rules. The second rule is to take a security deposit. And that’s where a company like Rendin comes in, telling landlords they have something better than a security deposit. How did you react to that?
Very calmly and with curiosity. Everyone has their own ways to protect themselves, and it is good that new methods are being developed. Some people use occasional lease contracts to protect themselves, and I have been using a regular contract for 22 years. When the rental is done right, it also works. The most important thing is not to create problems and to keep life simple. If the solution that Rendin proposes effectively protects the interests of the landlord, then great, let’s roll it out. It is advisable to have several good solutions to choose from.
You mentioned at the beginning that Polish law protects the interests of an unreliable tenant more than an honest landlord. What does this look like in practice?
It is the issue that is the biggest challenge for us. If you woke me up at three in the morning and asked me what one thing I would like to change in the Polish rental market, I would immediately answer that I would change the law to equalise the opportunities of the landlord and tenant. So that when something goes wrong, there is no protective period from November to March, no ban on evictions due to a pandemic, and fraudsters cannot laugh in our faces.
Today, the problem is that if someone cheats and evidently breaks the law, they do not fall under the criminal code, but you have to file a civil case against them. It is not right. Someone who lives in someone’s apartment without paying should automatically be prosecuted. It’s like someone borrowed a car from another person and said they needed it for commuting to work and won’t give it back.
Internet forums are full of such stories, and landlords outdo each other in ideas for getting rid of a rogue tenant, often in ways that do not comply with the law.
And this is the inequality before the law. We had such a case that the tenant hasn’t moved out for fourteen years! At some point, the law should stop treating such a person as a normal tenant, and start treating them as a scammer. If someone was supposed to pay 2 thousand zlotys for rent, and their debt to the landlord is already 10 thousand, it will be unrecoverable in a while. At the bank, if you don't repay the loan for three or four months, the termination procedure is started, and that’s it. And in the case of that man who lived without paying for 14 years, if you count 2 thousand zlotys per month, his debt amounts to 336 thousand. It is certainly unrecoverable. So we are dealing with a fraudster, and the law should treat him exactly as such: either he pays back or goes to jail.
Unfortunately, the law works the way it does, so we have to apply our own procedures to reduce the risk of such an event, and here again I reiterate the five principles of Mieszkanicznik; screening, security deposit, good contract, quick reaction, and mutual support of Mieszkanicznik members.
Well, just how do association members help each other?
It involves not only sharing experiences, reporting problems, working on procedures, standards, but also, for example, exchange of information about rogue tenants. We have internal, non-public instruments to check the person who wants to rent an apartment. If any member of our association has reported problems with insolvency or inappropriate behaviour of such a tenant in the past, we will know about it. This data is not publicly available, due to the GDPR, but there is a provision in the rental contract that in case of actions that grossly violate the provisions of the contract, we can put the tenant on our list of rogue tenants. Such a provision is a deterrent and one of the elements of tenant verification. If someone has bad intentions in advance, they will think twice about signing such a contract, because they will know that they are not dealing with a rookie, but with a landlord who can look after their interests.
At Rendin, there is no need to make a database of fraudsters. They simply won’t go through our system and can’t sign a contract with us.
As I said before, any solution that makes the rental process safer is valuable, and I applaud every one of them. However, life changes unexpectedly. Today you rent your apartment to a tenant, you have a trouble-free tenant for a few years, but suddenly his life situation changes, problems begin, things can take a different turn. We also do not assume that the tenant is a fraudster. We trust people, but we trust our procedures even more. And we protect ourselves. We minimize risk. We believe in the power of contract provisions. Legal power, as well as that acting on the subconscious.
In this context, was there anything that surprised you about the results of the survey that Rendin carried out under the auspices of Mieszkanicznik? It shows that as many as 7 out of 10 landlords of rental apartments have had a problem with at least one tenant. Rent arrears, damage to the apartment and moving out without notice and without payment are problems that apartment owners face on a daily basis. In turn, tenants and lawyers point out that contracts often include provisions for various types of illegal contractual penalties.
This is the reality of the rental market, and if you have several apartments on the market and stay in business for many years, you will statistically face an unreliable tenant. Fortunately, the market is stabilizing, normalizing, and there are fewer and fewer pathologies. As for provisions in contracts that have no legal value, of course, I am aware that this is the case. Nevertheless, I take the side of the landlord here, and I can understand that they want to protect themselves as much as possible.
Often, especially when the law is more protective of the scammer, such provisions work on the subconscious. What is written evokes a certain discipline and is more respected than if it is merely said. The tenant reads it and thinks: I gave my data, PESEL number, identity card, data from my university, employer, I agreed to this and that, and I will think twice if I want to scam. And when someone has a financial problem, they will inform the landlord on the fourth day of the month that they will pay only on the tenth. Such a tenant begins to think how to be fair.
In our survey, landlords indicated that the average loss they suffered as a result of the actions of rogue tenants was 9 thousand zlotys, with the majority of responses in the range of 4-5 thousand zlotys. As many as 74% of landlords do not take it to court. What is the reason for this?
It is very simple. If we are talking about four thousand zlotys, and sometimes even less, it doesn’t really pay to get your hands dirty with court issues. It will take time, it is a distraction from work, and such an amount can be recovered even in the first month of rental. That is why people don’t go to court, because such small amounts are not worth their time. If someone follows our rule No. 4, which is immediate action, they will have a month or two of losses and no more. The application of this principle is very important. A problem arises, the tenant becomes insolvent; you need to react immediately.
You manage the Mieszkanicznik association, which brings together people who make money in the rental market. How big is the market today?
In the market, according to various studies, there are about one million one hundred thousand people who earn income from rent. 700 thousand people apply a flat rate tax. It is a good option if you have one or two properties. About 300-400 thousand people operates a rental business. There remains a grey area, probably about 10% of people in the industry, who I would encourage to educate themselves on how to do their accounting properly, especially as the Tax Office has five years to check the payer and, with current IT systems, operating in the grey area can be dangerous and unprofitable.
And how big is the Mieszkanicznik Association against this backdrop?
When we started creating our structures 10 years ago, there were a dozen of us. We have modelled our association on large organizations operating in the UK, New Zealand and Australian markets. Today, we have 22 thousand active members and 20 branches in Poland and around the world. On average, each of our members has about 4-5 properties, making a total of about 100 thousand properties. Even if we assume the price for each property so low as 200 thousand zlotys, the total is an asset worth 20 billion zlotys. But the important thing is that whether you have one property or a dozen in your portfolio, you can become a member of Mieszkanicznik and together with us take part in civilizing the Polish rental market.
I have a final question ready for advice for someone who wants to start in the market as a landlord. I expect that it may be a reiteration of the five golden rules of Mieszkanicznik…
Not entirely, because I would give the following recommendation to a beginner: be among the people who are involved in it, get to know them. If you want to get into this business, spend three to six months meeting, talking to and getting to know people, and only then will you learn these five principles in practice. Don’t rely solely on books, YouTube and the Internet, but get to know real people who are practitioners of this business. If you have a problem, you’ll have someone to call, because you know these people have cut their teeth in this market. These people are able to help you, they often become your friends, later even business partners. Nothing helps like real people; if you call a few persons and everyone tells you the same thing, you are sure it will work.
The interview with Jacek Kusiak, president of the Mieszkanicznik Association was conducted by Piotr Kula | Rendin Polska