Violation of P1-1;Just satisfaction reserved;Costs and expenses partial award

The applicant , who is a NORP national of NORP origin , was born in DATE and lives in GPE , GPE . She owns a house and a plot of land in GPE , GPE . The property previously belonged to her parents .

NORP legislation on rent control has been the result of many historical and recent circumstances . Legislative schemes restricting rights of landlords and regulating increases in rent were already in operation before the Second World War . The description below of the general situation was based on the findings of ORG ( PERSON ) , which , on DATE , in CARDINAL of its judgments concerning the constitutionality of certain aspects of the legislation on rent control gave thorough consideration to the historical background of such legislation and the factors contributing to the preservation of restrictions dating back to an early stage of the communist regime in GPE .

The rent control scheme was the consequence of the introduction of the so - called “ ORG management of housing matters ” ( publiczna gospodarka lokalami ) by the former communist authorities ( see paragraphs CARDINAL below ) . It was accompanied by provisions drastically restricting the amount of rent chargeable . The applicable provisions originated in the exceptionally rigid distribution of housing resources which characterised DATE of the communist regime in GPE .

The circumstances did not change significantly after the end of the communist rule in DATE ; indeed , at DATE the situation of housing in GPE was particularly difficult , as was demonstrated , on the one hand , by a shortage of dwellings and , on the other hand , by the high cost of acquiring a flat . The ORG - controlled rent , which also applied to privately owned buildings , covered merely PERCENT of the actual cost of maintenance of buildings .

In DATE those social and economic factors prompted the legislature not only to maintain elements of the so - called “ special lease scheme ” ( szczególny tryb najmu ) ( see also paragraph CARDINAL below ) in respect of ORG - owned dwellings but also to continue to apply that scheme DATE temporarily , for a period of DATE expiring on DATE to privately owned buildings and dwellings . In short , the system was a combination of restrictions on the amount of rent chargeable and of limitations on the termination of leases , even in respect of tenants who did not comply with the terms of the contract .

The material collected by ORG in DATE included a report prepared by ORG ( PERSON i PERSON ) . According to that report , in DATE , after DATE of the operation of the DATE rent control scheme , the average rent as fixed under that scheme covered PERCENT of the costs of maintenance of residential buildings . The shortfall was to be covered by landlords . The scale of the problem was considered to have been very large since at that time CARDINAL dwellings ( PERCENT of the country ’s entire housing resources ) were let under the rent - control scheme ; that number comprised CARDINAL flats in buildings owned by private individuals . The total number of flats in GPE was estimated at CARDINAL . Flats in privately owned buildings subject to the rent - control scheme constituted PERCENT of the country ’s housing resources .

The report stated , among other things :

“ Before ... [ DATE ] , statutory rent determined by the ORG covered PERCENT of running maintenance costs . At present , after DATE of the operation of the [ DATE ] rent control scheme , municipalities set levels of rent covering on average PERCENT of maintenance costs . ...

In respect of buildings owned by municipalities , the shortfall is covered by municipalities , which frequently use for that purpose surplus received by means of letting commercial LOC .

As regards privately owned buildings , where tenants pay controlled rent , the shortfall is covered by owners of buildings . ”

NORP In DATE the Government , in the course of the preparation of their bill amending the legislation on rent control ( see paragraphs CARDINAL et seq . below ) collected considerable material describing the present general situation of housing in GPE .

The situation is characterised by a serious shortage of residential dwellings . According to the DATE National Population and Housing Census , the relevant deficit , defined as the difference between the number of households and the number of flats , amounts to CARDINAL flats . There is a particularly acute shortage of flats for lease .

In the light of data collected by ORG ( PERSON ) on the overall financial situation of households , in DATE household expenses such as rent and electricity bills amounted to PERCENT of total expenses ( PERCENT in ORG households ) . At the same time PERCENT of NORP households were in rent arrears ( DATE : PERCENT ; DATE : PERCENT ; DATE : PERCENT ; DATE : PERCENT ; DATE : PERCENT ) .

In DATE PERCENT of the population lived below the poverty line , of which PERCENT were below the abject poverty line . In DATE PERCENT of the population lived below the poverty line , of which PERCENT were below the abject poverty line .

Various reports received by ORG confirmed that the provisions relating to the protection of tenants as applicable until DATE ( see also paragraphs CARDINAL below ) limited the supply of flats available for lease . In the authorities’ view , the introduction of the so - called “ commercial lease ” ( najem komercyjny ) – in other words a market - related lease DATE by removing restrictions on the increase of rent for privately owned buildings and freeing private landlords from their obligation to provide indigent tenants with an alternative accommodation upon the termination of their lease , should encourage private investors to build tenement houses designated solely to be let .

The Government gave various figures to indicate the number of persons potentially affected by the operation of the rent - control scheme . They stated that according to information supplied by ORG , the operation of the relevant legislation affected CARDINAL landlords and CARDINAL tenants . Other sources cited by the ORG stated that the total number of persons concerned was CARDINAL landlords and CARDINAL tenants .

The applicant ’s house was built in DATE as a CARDINAL - family house . It originally consisted of a duplex apartment , basement and attic .

During the Second World War , officers of ORG lived in the house . In DATE ORG took it over and placed its officers there for some time .

On DATE the Head of ORG of ORG ( Kierownik Wydzialu Mieszkaniowego Magistratu Miasta Gdynia ) issued a decision assigning the first - floor part of the duplex apartment to a certain ORG

In DATE ORG ( Sąd Grodzki ) ordered the return of the house to the applicant ’s parents . They began renovation of the house but , shortly afterwards , were ordered to leave their property . In DATE ORG moved into the house .

On DATE the Decree of DATE on ORG ( Dekret o publicznej gospodarce lokalami i kontroli najmu ) entered into force . Under its provisions , the house became subject to the so - called “ ORG management of housing matters ” ( see also paragraph CARDINAL above ) .

In DATE , at a public auction , the authorities unsuccessfully tried to sell the house to ORG , who was at that time employed by ORG , an authority responsible for the ORG management of housing matters at the material time . At about the same time , the applicant ’s parents , likewise unsuccessfully , tried to recover their property .

On DATE LAW ( Prawo lokalowe ) ( “ the DATE LAW ” ) entered into force . It replaced the ORG management of housing matters with the so - called “ special lease scheme ” ( see also paragraphs CARDINAL above and CARDINAL below ) .

On an unknown date in DATE a certain ORG , who was at that time the Head of ORG of ORG ( PERSON Lokalowych Urzędu PERSON ) , tried to buy the house from the applicant ’s brother .

On DATE the Mayor of GPE issued a decision allowing ORG to exchange the flat he was leasing in another building under the special lease scheme for the ground - floor flat in the applicant ’s house . That decision was signed on behalf of the Mayor of GPE by a civil servant who was subordinate to ORG On DATE ORG issued a decision confirming that under the provisions governing the special lease scheme the flat had been let to ORG for an indefinite time . Later , in DATE , the applicant tried to have that decision declared null and void but succeeded only in obtaining a decision declaring that it had been issued contrary to the law ( see also paragraphs CARDINAL below ) .

On DATE the Head of ORG of ORG ( ORG i Ochrony Środowiska Urzędu PERSON w ORG ) ordered that the house became subject to ORG management ( przejęcie w zarząd państwowy ) . That decision took effect on DATE .

On DATE ORG ( Sąd Rejonowy ) , ruling on an application by ORG ’s relatives , gave judgment , declaring that , after the ORG ’s death , her daughter ( PERSON ) and son - in - law ( PERSON ) had inherited the right to lease the first - floor flat in the applicant ’s house .

On DATE the ORG gave a decision declaring that the applicant had inherited her GPE property . On DATE ORG entered her title in the relevant land register .

On DATE the Mayor of GPE issued a decision restoring the management of the house to the applicant . On DATE , acting through her representative , she took over the management of the house from ORG . Shortly afterwards , she began to refurbish the house .

On an unknown date in DATE the applicant set up a private foundation called ORG ( ORG ) . Since DATE then , she has been making unsuccessful efforts to locate the seat of the ORG in her house .

After taking over the management of the house , the applicant initiated several sets of proceedings DATE civil and administrative – in order to annul the previous administrative decisions and regain possession of the flats in her house .

On DATE the applicant asked ORG to order the eviction of her tenants . In DATE , on an application by the defendants , those proceedings were stayed . On DATE her claim was dismissed .

In DATE the applicant asked ORG ( Sąd Wojewódzki ) to order ORG to relocate the tenants living in her house to dwellings owned by the municipality . She also asked the court to award her compensation , inter alia , for the fact that the authorities had deprived her parents and herself of any possibility of living in their own house , for damage to the property and arbitrary alteration of its use , and for mental suffering . On DATE ORG ruled that , under LAW of DATE ( LOC o najmie lokali mieszkalnych i dodatkach mieszkaniowych ) , ( “ the DATE LAW ) the defendant authority had no obligation to relocate the tenants to accommodation owned by the municipality . It dismissed the remainder of the claims . The applicant appealed .

On DATE ORG ( Sąd Apelacyjny ) heard , and dismissed , her appeal . It observed that no provision of the DATE Act obliged the municipal authorities to relocate the applicant ’s tenants or , at her request , to provide them with alternative accommodation ( lokal zastępczy ) . The relevant provisions of LAW , namely section CARDINAL ) and ( CARDINAL ) ( see also paragraph CARDINAL below ) , stipulated that a tenant had to vacate a dwelling only if the owner had offered him another flat owned by him or the municipality had agreed to provide the tenant with an alternative accommodation owned or administered by it . As regards the applicant ’s claim for damages for financial loss sustained as a result of the administrative decisions , ORG observed that such claims could be determined by the courts of law only if a claimant had first applied for compensation to the administrative authorities and the outcome of the relevant administrative proceedings had been unfavourable . It referred the applicant to LAW ( Kodeks postępowania administracyjnego ) , which set out the rules governing the liability of public authorities for issuing wrongful decisions .

In so far as the applicant sought compensation for damage to the house and for the alteration of its use , ORG considered that the defendant authority could not be held liable for the consequences of the laws which had previously been in force . In particular , it was not liable for the enactment of the post - war legislation which had introduced restrictive rules concerning the lease of dwellings in privately owned houses and the ORG management of housing matters . Nor was it liable for the implementation of the special lease scheme introduced by LAW and the operation of LAW , which incorporated certain similar rules for the protection of tenants whose right to lease flats in privately owned houses had been conferred on them by administrative decisions ( see also paragraphs CARDINAL below ) . Lastly , the court noted that the defendant could not be liable for any damage caused by the applicant ’s tenants .

Subsequently , the applicant lodged a cassation appeal ( kasacja ) with ORG ( Sąd Najwyższy ) . On DATE ORG rejected that appeal on procedural grounds . The court held that the applicant had not complied with the relevant formal requirements ; in particular , she had not specified the errors of substantive civil law allegedly committed by the lower courts .

In DATE the applicant asked ORG ( PERSON ) to declare null and void the decision of the Head of ORG of ORG of DATE . By virtue of that decision , the first - floor flat in the house had been assigned to ORG It had also formed a basis for granting the right to lease that flat in the applicant ’s house to ORG ’s successors ( see also paragraph CARDINAL above ) .

On DATE ORG rejected her application . It noted that the impugned decision had been taken pursuant to the provisions of ORG issued by ORG DATE ( Dekret Polskiego Komitetu Wyzwolenia Narodowego o komisjach mieszkaniowych ) , a law which had at the relevant time governed all housing matters . It found that the decision had not been issued by the competent public authority and , in consequence , had not been lawful . Yet ORG could not declare the decision null and void ( stwierdzić nieważność decyzji ) because , pursuant to LAW , if DATE had elapsed from the date on which the unlawful decision had been made , ORG could only declare that the decision “ had been issued contrary to the law ” ( została wydana z naruszeniem prawa ) .

The applicant appealed to ORG ( PERSON ) . On DATE the court dismissed her appeal because she had not exhausted an obligatory legal remedy in that she had not made an application to ORG for the matter to be reconsidered ( wniosek o ponowne rozpatrzenie sprawy ) .

The applicant subsequently made such an application . On DATE the ORG upheld its decision of DATE . The applicant appealed to ORG . ORG ( Prokurator Wojewódzki ) joined the proceedings and lodged an appeal on the applicant ’s behalf .

On DATE ORG rejected both appeals . It confirmed that the impugned decision had been unlawful . It added that there had been several procedural shortcomings ( for instance , the applicant ’s parents had not been notified of the proceedings and had never had any opportunity to challenge the decision ; in addition , no legal basis had been given for it ) ; however , in accordance with LAW , the court could not annul the decision but could only declare that it had been issued contrary to the law . In passing , the court observed that the above - mentioned procedural shortcomings could be rectified by means of reopening the proceedings .

In DATE the applicant asked ORG of Appeal to declare null and void the decision of the Mayor of Gdynia of DATE . By virtue of that decision , ORG had been granted the right to lease the ground - floor flat in the applicant ’s house ( see also paragraph CARDINAL above )

On DATE the ORG rejected her application . The applicant appealed to ORG .

On DATE the court dismissed her appeal . It found that the flats in the applicant ’s house had been let under the special lease scheme introduced by the DATE LAW and that , accordingly , the mayor had been competent to issue the decision in question . It further observed that , despite some procedural errors committed by the Mayor of GPE ( which could be rectified by means of reopening the proceedings ) , the decision had had a legal basis and could not , therefore , be declared null and void .

On DATE the applicant asked the Mayor of GPE to reopen the relevant proceedings and to declare the impugned decision null and void . The mayor rejected her application as being lodged out of time .

On DATE the ORG of Appeal , of its own motion , reopened the proceedings . It found that the contested decision had been made on behalf of the Mayor of GPE by a civil servant who had been ORG subordinate and that that fact had in itself constituted a sufficient ground for reopening the proceedings , pursuant to Article CARDINAL § CARDINAL ( CARDINAL ) of LAW . That fact had also rendered the decision unlawful . However , since DATE had elapsed from the date on which the decision had been given , ORG could not annul it . It could merely declare that it had been issued contrary to the law , as laid down in LAW .

The applicant appealed to ORG , alleging that the decision had never been served on the owners of the house and that it should have been declared null and void . On DATE her appeal was dismissed .

On DATE the applicant asked ORG to reopen the administrative proceedings that had been terminated on DATE by the decision of the Head of ORG of GPE . By virtue of that decision , the applicant ’s house had become subject to the ORG management ( see also paragraph CARDINAL above ) . She further asked to have the decision declared null and void , submitting that it had lacked any legal basis . In particular , the house had incorrectly been classified as a “ tenement house ” ( dom wielorodzinny ) , whereas in reality it was , and always had been , a CARDINAL - family house and , as such , should not have become subject to the ORG management . The decision , the applicant added , had been made solely for the personal benefit and gain of ORG , who had at that time been the Head of ORG of ORG . In her view , it had been made to sanction DATE and likewise unlawful – decision of CARDINAL DATE whereby ORG had acquired the right to lease the flat in her house .

On DATE the Mayor of GPE rejected her application , finding that she had lodged it outside the prescribed time - limit . On DATE the ORG of Appeal upheld the mayor ’s decision . Subsequently , the applicant appealed to ORG . On DATE the court quashed both decisions because the Mayor of Gdynia had not been competent to rule on the application .

On DATE the ORG of Appeal reopened the proceedings terminated by the decision of DATE . On DATE ORG declared that that decision had been issued contrary to the law because the owners of the house had not been notified of the proceedings . It found that ORG had not acted with due diligence . In particular , it had made no efforts to establish who had been the rightful successors to the owners of the house . Indeed , at the material time the applicant and her brother had - on a regular basis - paid the relevant taxes on the property to ORG . Relying on LAW , the ORG refused to annul the decision because DATE had elapsed from the date on which it had been given .

On an unspecified date in DATE the applicant asked the Governor of GPE ) to declare the decision of DATE null and void . The application was referred to ORG , a body competent to deal with the matter . ORG refused the application on DATE . It held that the matter was res judicata .

The parties gave differing information on what was the actual usable surface area of the flats in the applicant ’s house , a factor relevant for the determination of the chargeable rent .

The Government submitted that the usable surface area of the applicant ’s house was QUANTITY . They produced an inventory made on DATE in connection with the transfer of management of the house from ORG to the applicant ( see also paragraph CARDINAL above ) . The usable surface area of the house was estimated at QUANTITY ; no net living area was indicated . There were CARDINAL flats and no commercial LOC . The number of habitable rooms in the flats was CARDINAL . The surface area of those flats was estimated at QUANTITY . The total surface area of the house was indicated QUANTITY .

The applicant stated that the total surface area of the house occupied by the tenants and for which they paid rent was QUANTITY . In that connection , she supplied a declaration of CARDINAL DATE , issued by ORG and Managing Agents ( GPE i PERSON ) , an agency that apparently administered her property . According to the declaration , since DATE the applicant ’s house had been divided into CARDINAL flats leased by means of the agreements originating in the administrative decisions described above .

The usable surface areas of those flats for the purposes of fixing rent were as follows : flat no . CARDINAL = QUANTITY . m ; flat no . CARDINAL = QUANTITY . m ; and flat no . CARDINAL = CARDINAL sq . m. Accordingly , the total usable surface area occupied by the tenants was QUANTITY . m.

On an unspecified date in DATE ORG asked ORG for a judgment determining the amount of the rent to be paid by him . On DATE the ORG gave judgment and determined the amount of rent at MONEY ( PLN ) per month . It ordered the applicant to pay costs in the amount of PLN MONEY .

According to ORG and Managing Agents’ declaration of CARDINAL DATE ( see paragraph CARDINAL above ) , the amounts of rent to be paid by the applicant ’s tenants were as follows : for flat no . CARDINAL ( usable surface area of QUANTITY . m ) , occupied by GPE and GPE , ORG CARDINAL ; for flat no . CARDINAL ( usable surface area of QUANTITY m. ) , occupied by ORG , PLN MONEY ; for flat no . CARDINAL ( former attic ; usable surface area CARDINAL sq . m. ) , occupied by GPE , PLN MONEY . Dwelling no . CARDINAL ( apparently originally the bedroom of the applicant ’s parents , which was later used as a drying room ) , which had previously been used by ORG without any legal title or authorisation and for the use of which he had paid no fee , was at that time locked and sealed by the managing agent . ORG was served with a notice ordering him to pay PLN MONEY for the unauthorised use of the flat on pain of being evicted .

At the oral hearing the Government informed the ORG that the rent paid by ORG and GPE on DATE ( DATE ) was ORG .

At the ORG ’s request to produce evidence demonstrating the situation of the applicant ’s tenants , the ORG supplied a certificate issued by ORG ( ORG Społecznej ) on DATE . The certificate stated that ORG had received assistance from the centre as from DATE . He was to obtain a periodical social welfare benefit for DATE and DATE . In DATE he had received assistance for housing purposes . The certificate further stated that ORG had earlier been assessed as having the “ second degree of disability ” , the disability and its degree being subject to a medical verification in DATE .

On DATE , in reply to an enquiry by ORG in connection with the present case , FAC ( Miejski Ośrodek Pomocy Społecznej ) stated that the applicant ’s tenants , ORG , J.P , GPE and GPE , were not receiving any assistance from the FAC and they had not received any assistance from social services for DATE , i.e. from DATE .

In reply to the ORG ’s question as to the amount of controlled rent received by the applicant from DATE , the ORG stated that they had no details of the rent received by the applicant at the relevant time . However , they supplied indicators relevant for the fixing of a controlled rent , as determined by ORG for similar houses .

DATE . According to this information , in DATE the rent per square CARDINAL was CARDINAL old Polish zlotys ( PLZ ) ; from DATE ORG CARDINAL ; from DATE to DATE PLN MONEY ; from DATE to DATE ORG ; from DATE to DATE PLN MONEY ; from DATE to DATE PLN CARDINAL.CARDINAL ; from DATE PLN CARDINAL.CARDINAL , and from DATE to DATE PLN MONEY .

On DATE , following the entry into force of ORG judgment of DATE , it became possible for landlords to increase the rent PERCENT of the reconstruction value of the dwelling ( see also paragraphs CARDINAL , CARDINAL - CARDINAL and CARDINAL below ) .

From DATE to DATE the relevant conversion index of the reconstruction value of the dwelling ( see also paragraphs CARDINAL and CARDINAL below ) was PLN MONEY . From DATE to DATE it amounted to ORG CARDINAL,CARDINAL.CARDINAL .

In DATE , the conversion index was fixed at ORG . The Government submitted that the reconstruction value of the dwellings in the applicant ’s house was calculated on the basis of the following CARDINAL elements : PERCENT as above , the usable surface area of the flats and the relevant conversion index ( ORG ) . The DATE rent per square metre in the applicant ’s house corresponded to PERCENT of the conversion index of the reconstruction value of square metre divided by DATE ( PERCENT x PLN DATE PLN CARDINAL.CARDINAL/CARDINAL ) . It accordingly amounted to MONEY per square metre . Having regard to the usable surface of the house as indicated by the Government , the maximum DATE chargeable rent was ORG MONEY ( PLN QUANTITY ) . Taking into account the surface as indicated by the applicant , the relevant amount was ORG MONEY ( PLN MONEY x QUANTITY ) .

According to the applicant , in DATE the free - market rent for the CARDINAL flats in her house would have amounted to MONEY ( ORG ) DATE ( MONEY respectively , depending on the size of the flat ) . In DATE the rent would have decreased to ORG CARDINAL,CARDINAL per month ( USD CARDINAL + USD CARDINAL + ORG CARDINAL ) . In DATE it would have further been reduced to ORG ( MONEY ) . She stated that her prognosis as to the decrease in rent was based on such factors as the devaluation of the house due to its age and the decreasing demand and increasing supply of flats available for rent on the market .

The Cabinet Decree of DATE on ORG ( Dekret z CARDINAL grudnia DATE ORG o publicznej gospodarce lokalami i kontroli najmu ) , which came into force on CARDINAL DATE , introduced “ ORG management of housing matters ” , which also applied to dwellings or commercial premises in privately owned buildings ( see also paragraph CARDINAL above ) .

Later , on DATE , the Decree of CARDINAL DATE on ORG ( Dekret o najmie lokali ) entered into force . Under its provisions , the ORG authorities administered all housing matters in the ORG and private sector alike . The public authorities were given power to issue a decision assigning to a tenant a particular flat in a privately owned building . Those provisions also laid down rules concerning rent control .

LAW introduced the “ special lease scheme ” , which replaced “ ORG management of housing matters ” , although it did not significantly change the principles on which the right to lease was based . For instance , the right to lease a flat in a building subject to “ ORG management ” did not originate in a civil contract but was conferred on a tenant by an administrative decision . The owner of such a building had no say as to who could live in his or her house and for how long . The special lease scheme applied to residential and commercial LOC .

Decisions on “ allocation to a dwelling ” ( przydział lokalu ) were , for all practical purposes , tantamount to “ granting ” a right to lease a dwelling ( or commercial LOC ) under the special lease scheme . They were issued by the relevant departments of the local council ( depending on which of the many reforms of the system of public administration was being carried out , those departments were called variously “ housing departments ” , “ departments of local management and environment ” , “ dwelling departments ” , etc . ) .

This Act entered into force on DATE . It was intended to bring about a reform of the law governing the relationship between landlords and tenants . Although it abolished the “ special lease scheme ” and relaxed the control of rent by , for instance , allowing rents of commercial premises to be market - related and determined freely , as well as allowing rents for residential dwellings to be fixed freely in civil contracts between landlords and tenants , it maintained the control of rent of residential dwellings in which the right to lease a flat had earlier been conferred on a tenant by an administrative decision .

DATE . The DATE Act introduced the system of “ controlled rent ” ( czynsz regulowany ) and set out detailed regulations on the calculation of rent for residential dwellings which had so far been subject to the “ special lease scheme ” . The provisions concerning controlled rent , the ratio legis of which was to protect tenants in a difficult financial situation during the transition from a ORG - controlled to a free - market housing system , were to remain in force until DATE .

The DATE Act maintained , albeit with slightly modified wording , the rules concerning the protection of tenants against the termination of leases continued on the basis of previous administrative decisions and the right of succession to a lease .

Section CARDINAL(CARDINAL ) of the Act read :

“ CARDINAL . In the event of a tenant ’s death , his or her descendants , ascendants , adult siblings , adoptive parents or adopted children or a person who has lived with a tenant in de facto marital cohabitation , shall , on condition that they lived in the tenant ’s household until his or her death , succeed to the tenancy agreement and acquire the tenant ’s rights and obligations connected with [ the lease of ] the flat , unless they relinquish that right to the landlord . This provision shall not apply to persons who , when the [ original ] tenant died , had title to another residential dwelling .

NORP In cases where there is no successor to the tenancy agreement , or where the successors have relinquished their right , the lease shall expire . ”

Section CARDINAL set out the following :

“ CARDINAL . Under the lease agreement the tenant is obliged to pay the rent .

NORP In the cases provided for by the present statute , the rent shall be determined in a manner specified in this LAW ( controlled rent ) . In other cases the rent shall be determined freely .

NORP The rent shall be determined with reference to the physical state of the building in question , its surface area and the condition of the flat and other factors which increase or reduce the flat ’s value .

The parties shall specify the rent in their agreement . ”

Section CARDINAL , which , pursuant to section CARDINAL(CARDINAL ) ( see paragraph CARDINAL below ) , also applied to privately owned flats subject to the previous special lease scheme , provided :

“ CARDINAL . Subject to the reservation set forth in CARDINAL , controlled rent shall be paid by tenants of dwellings belonging to municipalities , ORG , ORG legal entities or legal entities administering dwellings for non - profit - making purposes , except for housing cooperatives .

NORP The maximum controlled rent must not exceed PERCENT of the reconstruction value of the dwelling ( wartość odtworzeniowa lokalu ) per annum .

NORP The reconstruction value of the flat shall be the product of its usable area and the conversion index of QUANTITY of the usable area of the building .

The [ relevant ] Governor shall , by means of an ordinance issued DATE , determine the conversion index of QUANTITY of the usable surface area of the residential building . ”

Under the transitional provisions of the LAW the right to lease a flat conferred on a tenant by an administrative decision was to be treated as a lease originating in a lease agreement , concluded under the relevant provisions of LAW . Tenants of such flats were to pay controlled rent until DATE .

Under LAW of the LAW the lease of a flat on the basis of an administrative decision issued under LAW was to remain in force .

Section CARDINAL laid down further regulations in respect of such “ administrative leases ” . It provided , in so far as relevant :

“ CARDINAL . NORP Under this law , a lease which originated in an administrative decision on the allocation of a flat , or had another legal basis [ that existed ] before ORG management of housing or special lease scheme was introduced in a given locality , shall be treated as a contractual lease signed for an indeterminate time under the provisions of this law .

NORP Until DATE inclusive , the rent for flats let in the manner specified in paragraph CARDINAL in dwellings owned by natural persons shall be determined in accordance with the provisions concerning controlled rent .

NORP If an owner referred to in paragraph CARDINAL intends to dwell in his flat and with that intention has vacated the flat which he has hitherto let ... from the municipality , the tenant shall be obliged to vacate the owner ’s flat and to move into the flat [ offered to him ] , provided that the [ condition of ] the flat in question complies with the requirements laid down by this law in respect of alternative accommodation . If such is the case , the owner may terminate the lease under section CARDINAL ) .

If the owner ’s adult child or parents are to dwell in his flat , subsection CARDINAL ... shall apply by analogy .

If the landlord has offered the tenant alternative accommodation which he or she owns himself or if , at the owner ’s request , such alternative accommodation has been provided by the municipality , subsection CARDINAL shall apply by analogy . ”

Section CARDINAL of the Act set out a detailed list of landlords’ duties under a tenancy . It applied both to landlords letting flats for a freely determined , market - related rent and to landlords receiving controlled rent . It also listed the types of maintenance work to be carried out by landlords under lease agreements . That section provided , in so far as relevant :

“ CARDINAL . NORP The landlord shall ensure that the existing technical facilities in the building are in working order ; shall enable the tenant to use lighting and heating in the dwelling ; shall ensure that the dwelling is supplied with cold and hot water and shall ensure the use of lifts , collective aerial , and other facilities in the building ;

NORP The landlord shall , in particular :

( CARDINAL ) maintain in working order and keep clean any shared LOC and facilities in the building ; the same should apply to the vicinity of the building ;

( CARDINAL ) carry out repairs in the building and its dwellings and facilities , and restore any building which has been damaged , regardless of the cause of such damage ; however , the tenant shall bear the costs of restoring damage for which he is liable ;

( CARDINAL ) carry out repairs in the dwellings , repair or replace installations and technical facilities and , especially , carry out such repairs for which the tenant is not responsible ; in particular , he shall :

a ) repair and replace the water supply installation in the building and the gas and hot water supply installations , and repair and replace the sewage , central - heating ( together with radiators ) , electricity , telephone and collective aerial installations – the latter , however , without fittings ;

( b ) replace or repair furnaces , window and door woodwork , floors , floor linings and plasterwork .

In practice , if such a tenant had not fallen into CARDINAL CARDINAL months’ arrears of controlled rent , the lease could not be terminated unless he or she had used the flat “ in a manner inconsistent with its function ” , damaged the flat or the building , repeatedly and flagrantly disturbed the peace and upset order or had sublet the flat without obtaining the prior consent of the landlord ( sections CARDINAL and CARDINAL of the DATE Act ) .

However , even if a tenant had fallen into rent arrears exceeding DATE , a landlord was obliged to notify him in writing of his intention to terminate the lease agreement and to allow him a DATE time - limit to pay off both the arrears and DATE rent .

On DATE ORG , ruling on a legal question referred to it by ORG , declared unconstitutional section CARDINAL(CARDINAL ) read in conjunction with , inter alia , section CARDINAL of LAW ( see paragraphs CARDINAL and CARDINAL above ) . It found that those provisions were in breach of LAW ( protection of property rights ) read in conjunction with LAW rule of law and social justice ) and LAW ( principle of proportionality ) of the LAW ( see also paragraphs CARDINAL and CARDINAL - CARDINAL below ) and LAW No . CARDINAL to the Convention because they had placed a disproportionately heavy and , from the point of view of the permitted restrictions on the right of property , unnecessary financial burden on the exercise of property rights by landlords owning flats subject to rent control .

The court ruled that the unconstitutional provisions should be repealed on DATE . That in practice meant that by that date ORG had to enact new , constitutional legislation dealing with the matter .

Before giving its judgment , ORG asked the President of ORG ( Prezes PERSON i PERSON ) for information concerning the implementation of the CARDINAL Act and , more particularly , the manner of determining the “ conversion index of QUANTITY of the usable surface area of the residential building ” as referred to in section CARDINAL of the Act . According to the information received , levels of controlled rent had never reached the statutory PERCENT of the reconstruction value referred to in section GPE ) but were determined by the municipalities at PERCENT of that figure . As a result , the levels of controlled rent covered merely PERCENT of the maintenance costs of residential dwellings . The rest had to be covered by landlords from their own resources . That did not allow them to put aside any sums for repairs .

In the judgment ORG attached much importance to the fact that the relevant regulations concerning controlled rent had brought about a situation whereby the expenses incurred by owners of dwellings were much higher than the rent paid by tenants and that the former “ had no influence on how the rates of controlled rent were determined ” . In its view , that shortfall of the rent actually received had resulted in the progressive reduction of the value of tenement houses and this , with the passage of time , entailed consequences similar to expropriation .

The judgment contains extensive reasoning , the gist of which can be summarised as follows .

“ CARDINAL of the essential elements of the right of property is the possibility of deriving profit from the object of ownership , which is of particular importance in a market economy . The legislature may regulate and limit this right in view of , among other things , the social context of enjoyment of property and duties towards the community that are inherent in ownership . In exceptional cases , ... it is even [ acceptable ] to exclude temporarily the possibility of ... deriving an income from goods that are the subject of ownership . However , if the limitations on a property right go even further and the legislature places an owner in a situation in which his property necessarily inflicts losses on him , while , at the same time imposing on him a duty to maintain property in a specific condition , it can be said that there is a limitation which impairs the very essence of that right . ...

ORG observes that the applicable provisions very seriously limit the possibility for a landlord to use and dispose of his dwellings , as referred to in section CARDINAL(CARDINAL ) of the CARDINAL Act . In particular , under this section all earlier tenancy relationships , in so far as they originated in administrative decisions on the allocation of a dwelling ... were transformed into contractual leases for an indefinite period . ...

ORG will not assess the compatibility of those regulations with LAW , as this is not the object of its ruling . It merely observes that , against that background , the owner of a building is practically deprived of any influence on the choice of tenants in his building and on whether the lease relationships with those persons should continue . ...

Thus , the possibility [ for a landlord ] to enjoy and dispose of property is very considerably limited . While it is not totally extinguished , as he may still sell his building ( dwelling ) or take out a mortgage on it and there are no restrictions on succession rights , the exclusion of the owner ’s right to dispose of dwellings subject to the provisions of the DATE Act results in the depreciation of the market value of the building . By the same token , other attributes which have so far not been taken away from the owner , such as the possibility of enjoying and disposing [ of his property ] , are substantially reduced and his property right becomes illusory .

At the same time , the legal provisions impose on the owner of the building a number of onerous duties ... Not only do most of the applicable laws impose specific duties on the owner but they also provide for specific penalties for failure to comply with those duties or to discharge them properly . ...

ORG considers that LAW and , especially , its practical application have not secured a sufficient mechanism for balancing the costs of maintaining a building , its equipment and surroundings and the income from controlled rent . ...

ORG considers it necessary to draw attention to CARDINAL further points which are relevant for the situation of the landlord .

First , the inadequacy of controlled rent vis à vis real expenses for maintenance of a building does not allow ... [ landlords ] to put aside savings for repairs and for keeping the building in a good condition . As a result , the tenement houses are gradually losing value . In terms of property rights , this should be perceived as a process of gradual deprivation of this right , leading , with the passage of time , to results similar to expropriation . Also , it has a general impact on the community because many tenement houses are approaching the time of their ‘ technical ORG and , in consequence , not only will the owner lose his property but tenants will also lose the possibility of housing , which will hardly be compatible with LAW .

Secondly , the inadequacy of controlled rent vis à vis real expenses for maintenance of a building has not been duly recognised by the tax laws ... [ Under those laws ] , landlords are treated in the same way as businessmen or a person letting dwellings for a profit and must bear the financial consequences of all losses caused by the lease of their dwellings . ...

[ As regards the principle of proportionality laid down in LAW ]

... it may be justified to fix rent in such a way that it will not be disproportionate to the financial standing of tenants , so that it will be possible for them to maintain a decent standard of living ( or at least a minimum standard ) after paying the rent . Thus , it is in conformity with the contemporary perception of a “ social state ” to demand some sacrifice from all members of society for the benefit of those who can not provide subsistence for themselves and their families . By the nature of things , the extent of that sacrifice depends on the level of income and imposes a heavier burden on those who are better off . By the nature of things , the owners of property may be required to make sacrifices , according to the general principle that ‘ ownership entails ORG . However , the distribution of burdens among specific members of society can not be arbitrary and must maintain rational proportions .

In the circumstances obtaining in GPE , pursuant to LAW , it may be justified to maintain the provisions limiting landlords’ property rights and , more particularly , excluding unrestricted freedom in fixing rates of rent and other charges collected from tenants . ... It may still – in any event in the transitional DATE be justified to impose further - reaching restrictions on property rights , precluding the freedom to derive profit by fixing levels of rent in such a way as to cover only the costs of maintenance and upkeep of the building .

However , an assessment of the DATE Act leads to the conclusion that the applicable restrictions do not stop there . The present regulations deliberately set the levels of controlled rents below the costs and expenses actually incurred by owners . That , in itself , would not necessarily have had to be considered unconstitutional had there been any parallel legal mechanism compensating for incurred losses . No such mechanisms have been set up . In consequence , the applicable provisions are based on the premise that property must – until DATE entail losses for the owner and that , at the same time , the owner has a duty to incur expenses to maintain his property in a particular condition .

That means that LAW placed the main burden of the sacrifices that society had to make for tenants , or at least for tenants in a difficult financial position , on the owners of property . Besides , other remedies – such as , for instance , subsidising from the public funds the costs of maintaining and repairing buildings referred to in section CARDINAL ) , ensuring full recognition in the tax regulations for losses and expenses incurred by landlords and making the level of rent dependent on the tenant ’s income – have not been employed . Instead , the simplest means ( being apparently the cheapest in social terms ) have been applied , namely setting a low maximum level of rent and allowing the municipalities to make exceptions to that level . Consequently , it has been assumed that owners will cover the remaining costs of maintaining their property out of their own pockets . No proportionality whatsoever has been maintained in respect of the distribution of burdens ( sacrifices ) among the owners and the other members of society .

ORG would stress once again that in the present context there is a constitutionally acknowledged necessity to protect the rights of tenants ... and this may be reflected in , among other things , provisions fixing a maximum level of rent . However , there is no constitutional necessity to afford them such protection mostly at the expense of private individuals – the owners of dwellings DATE because the duty to help the underprivileged and [ the duties inherent in ] social solidarity are incumbent not only upon those persons . It is possible to adopt other legal solutions so as to secure at the same time the necessary protection to tenants and the minimum financial means needed to cover the requisite costs to the landlords . ... It is not for ORG to indicate concrete solutions and to determine the ratio of costs to be incurred by tenants , landlords and the community as a whole . However , this court considers that there are no constitutional considerations to justify imposing the greater part of those costs on the landlords . ...

Consequently , section CARDINAL(CARDINAL ) is incompatible with the LAW . A limitation on the right of property ... which is not ‘ ORG does not satisfy the constitutional requirements of proportionality .

[ Other considerations ]

The finding that section CARDINAL(CARDINAL ) infringes the principle of proportionality makes it unnecessary for ORG to determine whether that provision also infringes the very essence of the right of property since [ a further finding to that effect ] will not affect the merits of the ruling . It should merely be noted in passing that the question whether the “ essence ” of the right of property has been preserved must also be assessed ... against the background of the combination of existing limitations on this right . ... The manner in which [ rent control ] has been effected by section CARDINAL(CARDINAL ) , taken together with other provisions regarding privately owned buildings has [ resulted ] in the owners being deprived even of the slightest substance of their property rights .

It is ORG opinion that , in consequence , the right to derive profit from property , which is an important element of the right of property , has been destroyed and , at the same time , the second element , the right to dispose of CARDINAL ’s property , has been stripped of its substance . In consequence , the right of property has become illusory and unable to fulfil its purpose in the legal order based on the principles listed in LAW [ principles of social market economy , economic activity , private ownership , solidarity , dialogue and cooperation ] .

[ As regards the constitutional aspects of the situation of tenants ]

A kind of obligation has been placed on the legislature to ensure that up to DATE tenancy relationships concerning municipal dwellings and [ privately owned ] dwellings should retain their present form , including the level of rent [ PERCENT of the reconstruction value of the dwelling ] ... ORG considers that , having regard to the principle of maintaining ORG confidence in the ORG and the law made by it and the principle of legal security , which ensue from the rule of law laid down in LAW and are binding on the legislature , renouncing that obligation will be admissible only in case of exceptional public necessity . At present , there is no such necessity ... It should be noted in passing that setting a time - limit for the operation of the rent - control scheme in buildings owned by natural persons also places an obligation on the legislature – for the benefit of landlords – to repeal the scheme in its present form by DATE . This obligation should also be seen from the perspective of the principle of maintaining ORG confidence in the ORG .

[ Final considerations ]

The constitutional inadmissibility of setting the income received by landlords below a certain minimum does not automatically mean that the rent chargeable to tenants has to be increased , because that problem can be resolved by allocating public financial resources . ”

In its judgment of DATE ORG held that section CARDINAL of LAW ( see paragraph CARDINAL above ) , laying down landlords’ obligations , was incompatible with the constitutional principles of the protection of property rights and social justice because , in particular , it placed a heavy financial burden on them , a burden which was in no way proportionate to the income from controlled rent . ORG ruled that that provision should be repealed by DATE .

Following ORG rulings of DATE and DATE , ORG adopted a new law governing housing matters and relations between landlords and tenants . The relevant statute DATE that is to say , LAW of DATE on the protection of the rights of tenants , housing resources of municipalities and amendments to LAW ( LOC o ochronie praw lokatorów , mieszkaniowym zasobie gminy i o zmianie LOC cywilnego ) ( “ the DATE LAW ) entered into force on DATE . It repealed the DATE Act and replaced the previous scheme of controlled rent with another statutory rent - control mechanism that restricted the possibility for landlords to increase levels of rent .

The DATE Act was then successively amended . The most important amendments , adopted by ORG on CARDINAL and DATE , entered into force on DATE ( see paragraphs CARDINAL below ) .

Section DATE CARDINAL Act listed situations where a landlord could increase rent . That provision , in the version applicable until DATE ( see paragraph CARDINAL below ) , read , in so far as relevant :

“ CARDINAL . Increases in rent or other charges for the use of a dwelling , apart from charges that do not depend on the landlord [ e.g. those for electricity , water , central heating , etc . ] may not be made more often than once DATE ;

NORP If a landlord increases other charges that do not depend on him , he shall be obliged to provide the tenant with a table of charges and the reasons for the increase ;

NORP In DATE the increase in rent or other charges , except for charges that do not depend on a landlord , shall not exceed the average general DATE increase in prices for consumer goods and services in DATE in relation to DATE by :

( CARDINAL ) PERCENT - if the annual rent does not exceed PERCENT of the reconstruction value of the dwelling ;

( CARDINAL ) PERCENT - if the annual rent is PERCENT but not PERCENT of the reconstruction value of the dwelling ;

( CARDINAL ) NORP PERCENT - if the annual rent is PERCENT of the reconstruction value of the dwelling .

Information on the increase in prices referred to in the first sentence [ of this paragraph ] shall be communicated in official bulletins of the President of ORG ;

NORP The reconstruction value of a dwelling shall be the product of its usable area and the conversion index of the reconstruction cost of QUANTITY of the usable area of the residential building . ... ”

A further restriction on rent increases by landlords followed from section CARDINAL ) of the CARDINAL Act , which provided that controlled rent could not exceed PERCENT of the reconstruction value of the flat . That provision was in force until DATE , the deadline that had already been set under LAW ( see also paragraph CARDINAL above ) .

Section CARDINAL(CARDINAL ) read :

“ Until DATE in all tenancy relations subsisting before the date of entry into force of this law , the level of rent in respect of dwellings that were subject to the controlled rent scheme on the date of the entry into force of this law , may not exceed PERCENT of the reconstruction value of the dwelling per year . ”

Section CARDINAL of the DATE Act listed situations in which a landlord could terminate a lease agreement that originated in an administrative decision .

Section CARDINAL(CARDINAL)-(CARDINAL ) read , in so far as relevant :

“ CARDINAL . If a tenant is entitled to use a dwelling for rent , the landlord may give notice only for reasons listed in this provision ... Notice should , on pain of being null and void , be given in writing .

NORP The landlord may give DATE notice effective at the end of a calendar DATE , if :

( CARDINAL ) the tenant , despite a reminder in writing , still uses the dwelling in a manner contrary to the terms of the agreement or in a manner inconsistent with its function , thus causing damage ; or if he or she has damaged equipment designed for common use of residents ; or if he or she he has flagrantly or repeatedly disturbed order , thus severely upsetting ( czyniąc uciążliwym ) the use of other dwellings ; or

( CARDINAL ) the tenant has fallen into CARDINAL months’ arrears of rent or other charges for the use of the dwelling and , despite being informed in writing of the landlord ’s intention to terminate the agreement and given DATE to pay off both the arrears and the current DATE ’s rent , has not paid those amounts , or

( CARDINAL ) the tenant has sublet the flat or part of it , or allowed it , or part of it , to be used fee of charge by another without the landlord ’s authorisation ; or

( CARDINAL ) the tenant uses the flat which has to be vacated in view of the impending demolition or substantial renovation of the building ...

Pursuant to section ORG ) , a landlord who received rent which was PERCENT of the reconstruction value of the dwelling could terminate the agreement if a tenant had not lived in the flat for DATE or if he had title to another flat situated in the same town .

Section CARDINAL(CARDINAL ) provided that a landlord could terminate the agreement with CARDINAL months’ notice if he intended to dwell in his own flat and had provided the tenant with “ substitute accommodation ” ( lokal zastępczy ) or the tenant was entitled to a dwelling which met conditions for “ substitute accommodation ” .

Under section CARDINAL(CARDINAL ) , a landlord could terminate the agreement upon DATE notice if he intended to dwell in his flat but had not provided the tenant with any “ substitute accommodation ” .

However , section ORG ) further limited the possibility of terminating leases . It stated that if a landlord intended to terminate a lease on the grounds mentioned in section CARDINAL ) ( rent arrears unpaid despite the fact that a warning notice had been served and an extra time - limit had been set for payment ) and if the tenant ’s income would entitle him to obtain a lease on “ social accommodation ” ( lokal socjalny ) belonging to the municipality , no notice could be given unless the landlord had proposed a settlement to the tenant concerning the arrears and running charges .

The CARDINAL Act , in the version applicable up to DATE , did not contain any specific provisions setting out the duties of landlords and tenants with regard to maintenance and repairs of dwellings and residential buildings . Those issues were governed partly by the relevant provisions of LAW ( which applied in so far as a given matter had not been addressed by LAW ) and partly by LAW of DATE on ( Prawo budowlane ) ( “ the LAW ” ) , which lays down the general duties of owners of buildings .

Article CARDINAL of LAW , which lays down a general rule , reads , in so far as relevant :

“ CARDINAL . NORP The landlord should give the object [ of a lease ] to the tenant in a usable state and should keep it in such a state for the duration of the lease .

NORP Minor repairs related to the normal use of the object [ of the lease ] are incumbent on the tenant . ”

LAW reads , in so far as relevant ;

“ CARDINAL . After the termination of a lease , the tenant shall be obliged to return the object [ of the lease ] in a condition not worse [ than when he took possession of it ] ; however , he or she shall not be responsible for any deterioration of the object caused by reasonable wear and tear . ”

Article CARDINAL lists minor repairs for which a tenant is responsible . It reads as follows :

“ Minor repairs for which the tenant is responsible are , in particular : minor repairs of floors , doors and windows , painting of walls and floors and the inner side of the flat ’s entrance door , as well as minor repairs of installations and technical equipment that enable the use of lighting , heating , the water supply and the sewage system . ”

Section CARDINAL of LAW provides :

“ The owner or manager of a building shall be obliged to maintain and use the building in accordance with the rules set out in section CARDINAL(CARDINAL ) . ”

Section CARDINAL(CARDINAL ) states :

“ The conditions for use of a building shall be secured in accordance with its purpose , in particular in respect of :

( a ) the water and electricity supply and , if need be , the supply of heating and fuel , regard being had to their effective use ;

( b ) sewage , waste disposal and rainwater drainage . ”

Article CARDINAL of the Civil Code provides , in so far as relevant :

“ In the event of a tenant ’s death , the following persons shall succeed to the tenancy agreement : his or her spouse if the latter has not been a party to that agreement , his or her children , his or her spouse ’s children , any other persons to whom he was obliged to pay maintenance , and a person living with the tenant in de facto marital cohabitation .

NORP The persons referred to in paragraph CARDINAL shall succeed to the tenancy agreement if they lived in the tenant ’s household until his or her death .

NORP If there are no persons in the categories referred to in paragraph CARDINAL , the lease agreement shall expire . ”

On DATE the Ombudsman ( PERSON ) made an application to ORG and asked , inter alia , that section CARDINAL(CARDINAL ) of the CARDINAL Act ( see paragraph CARDINAL above ) be declared incompatible with the constitutional principle of the protection of property rights . The ORG referred to numerous complaints that he had received from landlords , who claimed that levels of rent as determined under that section did not cover the basic maintenance costs of residential buildings . He also submitted that the recent rules for the determination of rent put landlords at a bigger disadvantage than the rules which had been laid down in the DATE Act and which had already been repealed as being unconstitutional .

He criticised the legislation on the ground that it was exceptionally inconsistent . He referred , in particular , to DATE in his view erroneous – statutory correlation between rent increases and the increase of prices for consumer goods and services , which were not related in reality to the costs of maintaining a building . He added that there were still no provisions to allow the landlords to recover losses incurred in connection with expenses for maintenance of property .

NORP The representatives of ORG ) asked ORG to reject the application .

The court invited organisations of landlords and tenants to take part in the proceedings and submit their observations in writing . ORG , ORG ( ORG ) and ORG ( Ogólnopolskie ORG ) filed their pleadings on CARDINAL , DATE and DATE respectively .

GPE Owners supplied considerable statistical material , showing that the level of controlled rent represented on average PERCENT of the reconstruction value of the building , which in turn amounted to PERCENT of the costs of maintenance of residential buildings . They presented a sample calculation of DATE rent based on the average reconstruction value , the average size of a flat and the average gross income .

Assuming that the average reconstruction value was ORG , that PERCENT of that value was the average maximum reached by controlled rent and that the average flat had a surface area of QUANTITY , the average DATE rent amounted to ORG CARDINAL . That amount , they stressed , represented PERCENT of the average gross income , whereas , according to them , in the ORG countries rent accounted for PERCENT of the average gross income .

The All - Polish ORG submitted , among other things , that the impugned legislation was in breach of the constitutional principle of proportionality because a group of CARDINAL landlords had to bear the main burden of social protection afforded by ORG to CARDINAL tenants , without any financial support from CARDINAL NORP taxpayers .

ORG considered that the contested provisions were compatible with the LAW . It drew attention to the fact that a large group of tenants , especially those who had been granted the right to a lease by means of administrative decisions , were in a poor financial position . It stressed that during the period of ORG management of housing matters those tenants had made investments and had thereby contributed to the maintenance costs of buildings , even though they had not been legally obliged to do so . At the hearing , in reply to the questions from the judges , the President of the ORG admitted that tenants paying controlled rent also included well - off persons , in respect of whom an increase in rent would be justified .

On DATE ORG , sitting as a full court , declared section CARDINAL(CARDINAL ) of the DATE Act unconstitutional as being incompatible with LAW and CARDINAL and LAW ( see also paragraphs CARDINAL and CARDINAL below ) . The provision was , accordingly , repealed . The repeal took effect on DATE , the date of the publication of the judgment in ORG ) .

In the reasoning for its judgment , ORG extensively cited its judgment of DATE ( see paragraphs CARDINAL above ) .

In conclusion , it held that the fact that LAW had abolished the scheme of rent control had not improved the situation of landlords because , instead , it had introduced a defective mechanism for controlling increases in rent . In its opinion , section GPE ) had not only “ frozen ” the disadvantageous position of landlords , a situation which had already been found to be incompatible with the LAW , but had also , owing to the changing economic circumstances , significantly reduced any possibility of increasing rent to cover expenses incurred by them in connection with the maintenance of property .

The court repeated what it had already stated in its judgment of DATE , namely that the relevant provisions placed the main burden of the sacrifices that society had to make for the benefit of tenants in a difficult financial position on the owners of property . It went on to find that section GPE ) perpetuated the state of a violation of property rights that had subsisted under LAW , especially as landlords had not been relieved of any of their previous duties in respect of maintenance of property .

The main thrust of ORG reasoning was as follows :

“ During the transition from controlled rent to contractual rent it is necessary to control the increase in rent . ... In most NORP countries legislative bodies exercise control over rent increases . The introduction of such a mechanism into NORP law seems to be particularly justified and the need for it follows quite evidently from the shortage of flats and the absence of a lease market which would influence rates of rent . This very low supply of flats for rent has caused a situation in which tenants are exposed to undue demands from landlords . Hence there is a need to regulate rent increases .

While recognising this necessity , ORG is convinced that the mechanism introduced by the impugned provision is defective and is objectively inappropriate for accomplishing the aims pursued by the legislature . ...

To begin with , ORG will examine the impact of the operation of section CARDINAL(CARDINAL ) of the DATE Act on landlords who were subject to controlled rent under LAW . In this court ’s view , the contested provision has not only “ frozen ” the disadvantageous position of landlords subsisting QUANTITY , a situation which was already found to have been incompatible with the LAW , but has also actually aggravated that situation on account of changing economic circumstances . ...

At the time when the present legislation entered into force , tenants paid rent determined by the municipalities . [ The rent paid ] , according to the information supplied by ORG , covered merely PERCENT of the costs of maintenance of residential buildings . LAW did not increase rent to the level that could have been established according to the principles set out by ORG in [ the judgment of DATE ] . Nor did the legislature give landlords an opportunity to increase rent to a level ensuring recovery of their expenses . LAW has frozen rates of rent and fixed them as a reference level for the calculation of future increases . ...

In ORG opinion , in order to arrive at reasonable level of rent it is necessary to take CARDINAL of the following CARDINAL measures : either a CARDINAL - off increase in deflated rates of controlled rent , accompanied by a restrictive protection of tenants against further increases or , while freezing the applicable rates , permitting considerable increases in relatively rapid succession until an acceptable level has been reached . However , the legislature fixed an unreasonably low basic rent and allowed only strictly regulated increases , correlated with the inflation rate . The legislature did not take into account the fact that the rate of inflation was constantly declining , which means that permissible increases have been insignificant , amounting merely to a few percentage points of the basic rent and giving no opportunity , for purely mathematical reasons , to reach levels that would ensure profitability , or at least recovery of maintenance costs . The decrease in the inflation rate , although a generally positive sign of economic stability , has resulted in the stagnation of rent at low levels .

The deterioration of the situation of the landlords receiving controlled rent is also shown by a comparison of rent increases under LAW with increases permissible under LAW . As transpires from information supplied by ORG [ in respect of the operation of the DATE Act ] , at the relevant time municipalities raised controlled rent DATE to a significant extent : in DATE , when the inflation rate was PERCENT , by PERCENT on average , but in DATE , when the inflation rate was PERCENT , by PERCENT . The pace of transition to a reasonable level of rent was faster than at present , if only because municipalities , themselves owning residential buildings , had a strong interest in securing genuine increases in rent . Finally , the previous regulations gave landlords the hope of relaxing rent policy . Irrespective of the rates of controlled rent imposed on them by municipalities , they knew that from DATE they would be able to negotiate rent freely . However , that encouraging prospect was wiped out by section CARDINAL(CARDINAL ) of the CARDINAL Act . Even though the ceiling of PERCENT will no longer apply after [ DATE , given the provision of section GPE ) , this ceiling will not be reached in reality .

In ORG view , the above circumstances give sufficient grounds to find that the situation of landlords who formerly received controlled rent is now unquestionably less favourable than it used to be under LAW . ... [ O]n the contrary , section GPE ) has perpetuated the violation of the right of property . At this point , it is necessary to determine how the landlords’ situation looks in other respects , apart from the restrictions on rent increases . If , following the ... judgment of CARDINAL January CARDINAL , the legislature had significantly changed any aspect of the legal position of landlords , thereby compensating for losses resulting from reduced rent , the evaluation of levels of rent in the present case would have had to be based on other criteria than those referred to by this court in DATE .

Since DATE there have been no changes to legislation , apart from the enactment of the CARDINAL Act , which seriously aggravated the situation of landlords . They still bear the burden of obligations imposed by LAW , whose non - fulfilment , as stressed by the ORG , is subject to penalties . There have been no changes to regulations on income tax , at least in respect of deductions from tax ( or from taxable income ) of amounts spent on maintenance of buildings in which flats are let to tenants . Nor has the legislature introduced preferential loans for repairs . ... ORG also points out that LAW has not materially improved the situation of landlords in respect of termination of leases . ...

Accordingly , it is fully justified to rely on this court ’s findings in respect of section CARDINAL(CARDINAL ) of LAW . Even though the provisions under consideration have changed , and the ORG is now considering completely different legal instruments ( control of rent increase as opposed to the scheme of rent control under LAW ) , the core of the dispute and the issues under consideration remain essentially the same , namely the situation of landlords on whom the legislature has imposed reduced levels of rent . In addition , section GPE ) leads to a difference in the treatment of landlords , depending on whether they are parties to lease relationships formerly governed by the rent control scheme , or to lease contracts based on freely determined rent . As shown above , in practice the rent increase mechanism adversely affects the first group of landlords and , and the same time , unjustifiably and at the tenant ’s expense , favours the second group .

In view of the foregoing , the Constitutional Court finds that the [ operation of ] the contested provision is tantamount to the continued violation of the right of property vested in a specific group of landlords , namely those who entered into a lease relationship by virtue of administrative decisions on the allocation to a dwelling , or on another basis , prior to the introduction of ORG management of housing matters in a given municipality . Not only did the legislature fail to adjust rates of controlled rent , despite their having been found to be unconstitutional , but in fact , through the introduction of restrictive provisions on rent increases , practically froze such rents at levels that can not be regarded as consistent with constitutional guarantees of the right of property . ...

It is worth reiterating , having regard to the [ judgment of DATE ] , that the restrictions in question are undoubtedly guided by the need to protect public order and the rights of other persons , namely tenants . However , according to ORG case - law , LAW implies that restrictions on the rights guaranteed therein are necessary . In respect of the rent [ control scheme ] , ORG qualified as “ necessary ” – at least during DATE the restriction on the right of property “ precluding the freedom to derive profit , by fixing levels of rent in such a way as to cover only the costs of maintenance and upkeep of the building ” . A reduction below that minimum was seen by this court as unconstitutional . Placing the financial burden of subsidising rent on a single social group , namely landlords , was also considered to have been unconstitutional since “ the duty to help the underprivileged and [ the duties inherent in ] social solidarity are incumbent not only upon those persons ” . ORG envisaged and still envisages the possibility of applying other legal solutions ... which would result in a more uniform social distribution of the burden linked to the necessity to satisfy housing needs . It is therefore unnecessary to place the entire burden on the single group of landlords . Consequently , ORG considers that the restriction resulting from section CARDINAL(CARDINAL ) ... does not meet the criteria established by the principle of proportionality and goes beyond the tolerable extent of limitations on the right of property set out in LAW .

ORG is not competent to fix minimum levels of rent ... [ However , ] from the point of view of the protection of landlords’ rights , [ it ] stresses again the crucial importance of the correct determination of the costs of maintenance and upkeep of residential buildings . This constitutes the absolute minimum rate . ...

As regards the implementation of the constitutional rights of tenants , ORG stresses that , although in the present judgment section CARDINAL(CARDINAL ) of the CARDINAL LAW has been found unconstitutional , the LAW still imposes significant restrictions on the freedom to increase rent . The most important of them is definitely section CARDINAL ) , which remains in force and which provides that ... up to DATE inclusive the annual rent may not exceed PERCENT of the reconstruction value of the dwelling . ”

On DATE the Constitutional Court heard a constitutional complaint lodged by a certain PERSON , challenging the constitutionality of section CARDINAL(CARDINAL ) and section CARDINAL(CARDINAL ) of LAW ( see paragraphs CARDINAL and CARDINAL above ) . He submitted that those provisions were incompatible with LAW protection of property rights ) of the LAW read in conjunction with LAW ( principle of proportionality ) .

In their written pleadings , ORG and representatives of ORG asked the court to discontinue the proceedings in so far as they concerned the constitutionality of section CARDINAL(CARDINAL ) since it had already been repealed by the judgment of DATE , and to hold that section DATE ) was compatible with the LAW .

At the oral hearing , ORG stated that he intended to pursue his complaint only in so far as section DATE ) was concerned .

ORG held that section DATE ) was compatible with the LAW and found :

“ As emerges from [ ORG judgments of DATE and DATE ] , the question of maintaining the maximum ceiling on rent has already been examined by this court and the measure was considered to have been necessary from the point of view of public order DATE at least in the transitional period . The need to protect tenants against unduly high rent is justified by the situation of housing in GPE , which is the consequence of ORG management of housing and has resulted in a commonly experienced shortage of flats .

A limitation on levels of rent – such as the one introduced by the contested provision – does not impair the essence of the right of property because it does not deprive owners of essential elements of that right . It has to be stressed that the right to a lease is one of the pecuniary rights protected by LAW and that restrictions on the right of property is inherent in many pecuniary rights , including the right to a lease . The contested section has set a maximum ceiling on rent with a clear time - frame – up to DATE and this also may have an impact on whether a temporary restriction on the right of property may be regarded as not impairing its essence .

It also has to be stressed that the setting of a clear time - frame in section DATE ) implies an obligation of the legislature towards landlords , which must be assessed from the point of view of the principle of ORG confidence in the ORG and the law made by it . ”

DATE LAW states :

“ GPE shall be a democratic ORG ruled by law and implementing the principles of social justice . ”

Article CARDINAL lays down the basic principles on which GPE ’s economic system is founded . It reads :

“ A social market economy , based on freedom of economic activity , private ownership , and solidarity , dialogue and cooperation between social partners , shall be the basis of the economic system of GPE . ”

Article CARDINAL § CARDINAL reads :

“ Any limitation on the exercise of constitutional freedoms and rights may be imposed only by statute , and only when it is necessary in a democratic ORG for the protection of its security or public order , or for the protection of the natural environment , health or public morals , or the freedoms or rights of other persons . Such limitations shall not impair the essence of freedoms and rights . ”

Article CARDINAL protects the right of property in the following terms :

“ CARDINAL . Everyone shall have the right to ownership , other property rights and the right of succession .

Everyone , on an equal basis , shall receive legal protection regarding ownership , other property rights and the right of succession .

The right of ownership may be limited only by means of a statute and only to the extent that this does not impair the substance of such right . ”

Article CARDINAL refers to the protection of tenants . It reads as follows :

“ CARDINAL . NORP The public authorities shall pursue policies conducive to satisfying the housing needs of citizens , in particular combating homelessness , promoting the development of low - income housing and supporting activities aimed at acquisition of a home by each citizen .

Protection of the rights of tenants shall be established by statute . ”

Article CARDINAL provides :

“ The public authorities shall protect consumers , customers , hirers or lessees against activities threatening their health , privacy and safety , as well as against dishonest market practices . The scope of such protection shall be specified by statute . ”

After DATE , as a result of ORG judgment , it became possible for landlords to increase rent to PERCENT of the reconstruction value of the dwelling . At DATE levels of rent generally increased . According to the Government , in GPE , where the previous rate was PLN MONEY per square metre , the rent quadrupled , reaching around PLN CARDINAL.CARDINAL per QUANTITY in DATE . According to reports published in the NORP press , in most other towns PERCENT of the reconstruction value of the dwelling corresponded to ORG DATE for QUANTITY . Levels of freely determined contractual rent are still higher ; sometimes and , especially , in large towns , the difference may reach even PERCENT .

At DATE the Government started to prepare a bill amending the CARDINAL Act . The Government PERSON was submitted to ORG on DATE .

The explanatory memorandum on the bill stated that the aims of the proposed amendments were , among other things , “ to specify rights and obligations of a landlord and tenant in order to strengthen the protection of the weaker party ” ; “ to introduce new rules for the protection of tenants against the excessive increase in rent and other charges for the use of dwellings ” ; and “ to reduce the disproportion between the constitutionally guaranteed protection of tenants and the constitutional rights of landlords ” .

The Government proposed a number of changes to the existing provisions . The most important and controversial provision was the proposed LAW , pursuant to which ( subsection CARDINAL ) the scheme of rent control , despite the fact that the deadline for its operation had been set by the legislature for DATE , was to be maintained until DATE in respect of all lease agreements in force before DATE under which the tenants paid controlled rent . That in practice meant all leases originating in administrative decisions regarding privately owned buildings .

The provision was to be applied mostly to all individual landlords , its operation in relation to public housing entities and housing cooperatives being of a minimal effect . The explanatory memorandum stated that the repeal of the rent - control scheme in its entirety “ could cause a dramatic increase in rent ” after DATE and that the limitation “ would allow a smooth transition from the levels of rent at DATE to levels fixed in accordance with general principles ” .

The Government therefore proposed that controlled rent be frozen at the maximum level of PERCENT of the reconstruction value of the dwelling DATE ; PERCENT up to DATE ; PERCENT up to DATE ; PERCENT up to DATE and PERCENT up to DATE .

The effects of the proposed rent freeze on the property rights of individual landlords have received considerable media attention and have given rise to heated public debate . The proposal was severely criticised by all organisations of landlords .

Eventually , on DATE , the ORG submitted to ORG an amendment to their bill . They withdrew their original proposal to freeze levels of rent after DATE . They still maintained the proposal to limit the increase in rent for leases originating in previous administrative decisions .

On DATE a group of deputies from the “ PERSON and ORG ( “ Prawo i PERSON ” ) party submitted a bill proposing amendments to LAW .

The general thrust of the proposed changes , as set out in the relevant explanatory memorandum , was :

“ to secure the effective protection of the rights of tenants , as guaranteed by ORG CARDINAL § CARDINAL and CARDINAL of the LAW , by :

( a ) preventing the overuse by landlords of the right to terminate a lease agreement under section CARDINAL(CARDINAL ) of the DATE Act ;

b ) preventing the dysfunction resulting from non - fulfilment by landlords of the duties incumbent on them in leasing dwellings ( even in cases where the landlords are unknown and the municipality does not manage the property ) . ”

Parliament decided to work on both bills simultaneously . The first reading took place on DATE . The second reading , following the report of ORG , ORG and Regional Policy and the adoption of amendments , was on DATE . After the third reading , which took place on DATE , the bills were adopted by the PERSON and transmitted to the ORG and the President of GPE on DATE .

On DATE the ORG proposed several amendments , the most significant being the amendment to section DATE CARDINAL Act , restricting the maximum increase in rent to a level of PERCENT per year in situations where the rent paid exceeded PERCENT of the reconstruction value of the dwelling .

On DATE the PERSON accepted some of the ORG ’s amendments , most notably the amendment to section CARDINAL . On DATE the Act of ORG was transmitted for signature by the President of GPE . The President signed it on DATE .

On DATE , following , among other things , press reports stating that the new provision of section CARDINAL of the CARDINAL Act did not exclude the possibility of a CARDINAL - off increase in rent even where the rent was equal to , or PERCENT of the reconstruction value of the dwelling , ORG passed , in an accelerated procedure , another bill amending the CARDINAL LAW . The bill was tabled by a group of deputies and contained only one proposal , namely to add another subsection to section CARDINAL of the CARDINAL LAW ( see paragraph CARDINAL below ) . On DATE the bill was transmitted to , and accepted by , the ORG . The President of GPE signed the Act of ORG on DATE .

The DATE entered into force on DATE .

New section CARDINAL was drafted with a view to implementing both ORG ruling of DATE and the constitutional principle of the protection of tenants’ rights . It subjects the increase in rent to various restrictions . It reads , in so far as relevant :

“ CARDINAL . NORP The landlord may increase rent or other charges for the use of the dwelling , giving [ the tenant ] notice of the rent increase , not later than by the end of a calendar DATE [ and ] in compliance with the terms for giving notice .

NORP The term for giving notice of an increase in rent or in other charges for the use of the dwelling shall be DATE , unless the parties have stipulated a longer term in their contract ;

An increase in rent exceeding PERCENT of the reconstruction value of the dwelling within DATE , may take place only in justified cases . At the tenant ’s written request , the landlord shall , within DATE , give reasons for the increase and its calculation in writing .

NORP The tenant may , within DATE following the notice of the increase , challenge the increase referred to in subsection CARDINAL by bringing a court action to have the increase declared unjustified or justified but in a different amount [ ; he or she may also ] refuse to accept the increase , with the effect of the contract being terminated by the end of the term of notice . The burden of proof in respect of the justification of the increase shall rest with the landlord .

Provisions of subsections CARDINAL shall not apply to increases :

( CARDINAL ) not exceeding PERCENT of the current rent or current charges for the use of the dwelling within DATE ;

( CARDINAL ) concerning charges that do not depend on the landlord . ”

In DATE CARDINAL LAW were reworded as follows :

“ CARDINAL . Increases in rent or other charges for the use of the dwelling , apart from charges that do not depend on the landlord [ e.g. those for electricity , water , central heating , etc . ] may not be made more often than DATE but , if the level of the annual rent or other charges for the use of the dwelling , apart from charges that do not depend on the landlord , exceeds PERCENT of the reconstruction value of the dwelling , a yearly increase can not be PERCENT of the current rent or current charges for the use of the dwelling [ ; such an increase ] shall be calculated without charges that do not depend on the landlord .

NORP If charges that do not depend on the landlord have been increased , he or she shall give a tenant a written statement listing charges and reasons for their increase . The tenant shall be obliged to pay the increased charges only up to such a level that is necessary for the landlord to cover costs of supply of utilities referred to in section CARDINAL(CARDINAL ) [ e.g. electricity , water , heating ] . ”

As regards the termination of leases by individual landlords , the new LAW differs only slightly from the previous provision on termination of leases ( see paragraph CARDINAL above ) .

Section CARDINAL(CARDINAL ) now reads , in so far as relevant , as follows :

“ If a tenant is entitled to use a dwelling for rent , the landlord may give notice only for reasons listed in subsections CARDINAL - CARDINAL .... Notice should , on pain of being null and void , be given in writing .

Subsections ( CARDINAL ) , ( CARDINAL ) and ( CARDINAL ) of LAW remain unchanged . Subsection ( CARDINAL ) now reads :

“ NORP The landlord of a dwelling for the lease of which the rent is PERCENT of the reconstruction value of the dwelling in DATE may terminate the lease :

( CARDINAL ) with CARDINAL months’ notice if the tenant has not lived in the flat for DATE ;

CARDINAL ) with DATE notice , expiring at the end of a calendar DATE , in respect of a person who has been entitled to another dwelling in the same or nearby locality and provided that dwelling meets the requirements for substitute accommodation . ”

As regards cases where the landlord , his adult descendants or a person in respect of whom he is obliged to pay maintenance intend to dwell in the landlord ’s flat ( see also paragraph CARDINAL above ) , the provision of the present section CARDINAL(CARDINAL ) is that the notice to quit given to the tenant should , on pain of being invalid , indicate the person who is to dwell in the flat . The terms for giving notice ( DATE and DATE respectively ) remain unchanged ) .

NORP Under section CARDINAL(CARDINAL ) the termination of a lease in respect of a tenant who on the date of giving notice is more than DATE and who , after the expiry of the applicable CARDINAL years’ notice will have no title to another dwelling and will have no persons obliged to maintain him or her will take effect upon his or her death .

Section CARDINAL sets out a list of the landlord ’s duties under the tenancy . In essence , it repeats the provision of section CARDINAL of the CARDINAL Act ( see paragraph CARDINAL above ) .

Section CARDINALb lays down the tenant ’s duties . It reads , in so far as relevant :

“ CARDINAL . NORP The tenant shall be obliged to keep the dwelling in a proper technical , sanitary and hygienic state as prescribed by other separate provisions and to comply with the rules of good conduct in the building . He or she shall also be obliged to take care , and ensure protection against damage or devastation , of parts of the building designed for common use , such as lifts , staircases , corridors , chutes , other [ similar ] premises and the surroundings of the building .

Subsection ( CARDINAL ) sets out a detailed list of repairs and works involved in upkeep of a flat .

The DATE entered into force on DATE . It reads , in so far as relevant :

“ In section CARDINAL(CARDINAL ) [ of LAW ] the following subsection CARDINAL(a ) shall be included :

‘ The provisions of subsection CARDINAL shall also apply in the event of an increase in rent or other charges for the use of a dwelling , except for charges that do not depend on the landlord if , after the increase , the level of the DATE rent or other charges for the use of the dwelling , except for the charges that do not depend on the landlord , is to exceed PERCENT of the reconstruction value of the dwelling.’ ”

On DATE ORG made an application to ORG , challenging the constitutionality of the DATE and DATE Amendments ( “ DATE Amendments ” ) . The ORG alleged , in particular , that the provisions extending ORG control over increases in rent for dwellings owned by private individuals were incompatible with the constitutional principles of protection of lawfully acquired rights and ORG confidence in the ORG and the law made by it .

In that context , they stressed that the NORP authorities , in breach of their obligation to terminate the operation of the rent - control scheme by DATE that they had taken upon themselves by virtue of CARDINAL successive laws , namely LAW and LAW , had failed to abolish the impugned scheme and had simply replaced it by further restrictions on increases in rent .

On DATE ORG informed the ORG that the Prime Minister of GPE intended to make an application to ORG in order to contest the constitutionality of certain provisions of DATE .

On DATE the Prosecutor General made an application to ORG , challenging the constitutionality of DATE . In particular , he contested the provisions restricting increases in rent to PERCENT and submitted , inter alia , that those restrictions constituted an unjustified interference with landlords’ property rights . He further alleged that ORG was in breach of its duty to “ legislate decently ” ( zasada “ przyzwoitej legislacji ” ) , especially the duty to formulate legal provisions in a correct and coherent manner .