Preliminary objection rejected (ratione temporis);Violation of P1-1;Pecuniary damage - reserved;Non-pecuniary damage - financial award

Anna Wyrozumska;Christos Rozakis;Egbert Myjer;Françoise Tulkens;Giovanni Bonello;Ineta Ziemele;Javier Borrego Borrego;Jean-Paul Costa;Josep Casadevall;Khanlar Hajiyev;Kristaq Traja;Luzius Wildhaber;Matti Pellonpää;Mindia Ugrekhelidze;Nicolas Bratza;Peer Lorenzen;Rait Maruste;Snejana Botoucharova;Stanislav Pavlovschi;Sverre Erik Jebens;Viera Strážnická;Vladimiro Zagrebelsky

The applicant , who is a NORP national of NORP origin , was born in DATE . She lived for a long time in GPE , GPE . At present , she 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 is the result of many historical and recent factors . Legislative schemes restricting the rights of landlords and regulating increases in rent were already in operation before the Second World War . The description below of the general situation is 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 this 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 housing situation of 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 PERCENT of the actual costs of maintenance of the 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 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 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 the municipalities , which frequently use for that purpose surplus derived from letting commercial LOC .

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

In DATE the government , in the course of preparation of its bill amending the legislation on rent control ( see paragraphs CARDINAL et seq . below ) , collected a considerable amount of data describing the current general housing situation in GPE .

The situation is characterised by a serious shortage of residential dwellings . According to the DATE national population and housing census , the 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 to let .

Data collected by ORG ( PERSON ) on the overall financial situation of households , indicate that in DATE household expenses such as rent and electricity bills amounted to PERCENT of total expenses ( PERCENT in ORG households ) . During the same period , 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 paragraphs CARDINAL below ) limited the availability of flats to let . In the authorities’ view , the introduction of the so - called “ commercial lease ” ( najem komercyjny ) – in other words a market - related lease DATE by lifting restrictions on rent increases for privately owned buildings and freeing private landlords from their obligation to provide indigent tenants with alternative accommodation upon the termination of their lease , should encourage private investors to build tenement houses designated solely for letting .

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 Government indicated 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 home . It originally consisted of a duplex flat , a basement and an attic .

During the Second World War , the house was occupied by officers of the NORP army . In DATE it was taken over by ORG , which quartered some of its officers there for a while .

On DATE the head of the housing department of ORG ( PERSON Mieszkaniowego PERSON ) issued a decision assigning the first - floor level of the duplex flat to a certain ORG

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

On DATE the Decree of DATE on the ORG management of housing and lease control ( Dekret o publicznej gospodarce lokalami i kontroli najmu ) came into force . Under its provisions , the house became subject to the so - called “ ORG management of housing matters ” ( see 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 ” ) came into force . It replaced the ORG management of housing matters with the so - called “ special lease scheme ” ( see paragraphs CARDINAL above and CARDINAL below ) .

On an unknown date in DATE a certain ORG , who was at that time head of the housing department 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 renting 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 period . 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 paragraphs DATE below ) .

On DATE the head of the local management and environment office of ORG ( ORG i Ochrony Środowiska Urzędu PERSON w ORG ) ordered that the house become 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 ORG ’s death , her daughter ( PERSON ) and son - in - law ( PERSON ) had inherited the right to rent 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 she has been trying to make her house the seat of the foundation .

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 the applicant ’s 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 paragraph CARDINAL below ) , stipulated that a tenant had to vacate a dwelling only if the owner had offered him another flat he owned or the municipality had agreed to provide the tenant with 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 rent flats in privately owned houses had been conferred on them by administrative decisions ( see 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 dismissed 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 the housing department 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 paragraphs DATE and CARDINAL above ) .

On DATE ORG rejected her application . It noted that the impugned decision had been taken pursuant to the Decree on housing commissions issued by ORG ( Dekret Polskiego Komitetu Wyzwolenia Narodowego o komisjach mieszkaniowych ) , a provision 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 the Board 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 availed herself of 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 dismissed 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 ORG . By virtue of that decision , ORG had been granted the right to lease the ground - floor flat in the applicant ’s house ( see 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 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 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 the local management and environment office of ORG . By virtue of that decision , the applicant ’s house had become subject to ORG management ( see paragraph CARDINAL above ) . She further asked to have the decision declared null and void , submitting that it had lacked a 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 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 the housing department 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 GPE 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 effort to establish who had been the rightful successors to the owners of the house , while 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 rejected the application on DATE . It held that the matter was res judicata .

The parties gave differing information as to 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 done 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 m ; 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 m. The total surface area of the house was indicated as CARDINAL sq . m.

The applicant stated that the total surface area of the house occupied by the tenants and for which they paid rent was QUANTITY . m. 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 to determine 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 , later used as a drying room ) , which had previously been used by ORG without any legal title or authorisation and for which he had paid no rent , 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 dwelling on pain of being evicted .

At the hearing before the ORG on DATE , the Government informed the ORG that the rent paid by ORG and GPE on DATE was ORG .

Following a request by the ORG to produce evidence establishing the situation of the applicant ’s tenants , the Government supplied a certificate issued by FAC ( 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 a “ disability of the second degree ” , the disability and its degree being subject to a medical verification in DATE .

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

In reply to a question from the ORG 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 .

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

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

From DATE to DATE the relevant conversion index of the reconstruction value of the dwelling ( see paragraphs CARDINAL below ) was PLN CARDINAL . 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 mentioned 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 QUANTITY divided by DATE ( PERCENT x PLN CARDINAL = PLN CARDINAL.CARDINAL/CARDINAL ) . It accordingly amounted to MONEY CARDINAL per square metre . Having regard to the usable surface area of the house as indicated by the Government , the maximum DATE chargeable rent was GPE ( PLN CARDINAL.CARDINAL x QUANTITY m ) . Taking into account the surface area as indicated by the applicant , the relevant amount was ORG MONEY ( PLN MONEY x CARDINAL sq . m ) .

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 + USD CARDINAL ) . In DATE it would have been further 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 owing to its age and the decreasing demand and increasing supply of flats to let on the market .

In their referral request of CARDINAL DATE , the Government informed the ORG that CARDINAL of the applicant ’s flats had become vacant because ORG had moved out on DATE and PERSON and GPE had moved out on DATE . They also stated that PERSON had recently been offered a council flat by the authorities and was about to move out .

At the oral hearing , the Government said that PERSON was still living in the flat but that she was to move out in DATE .

On DATE the Government informed the ORG that PERSON had moved to a council flat on DATE .

LAW of DATE on the ORG management of housing and lease control ( Dekret z CARDINAL grudnia DATE r. 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 paragraph CARDINAL above ) .

DATE . Later , on DATE , the Decree of CARDINAL DATE on the lease of dwellings ( Dekret o najmie lokali ) came into force . Under its provisions , the ORG authorities administered all housing matters in the public and private sectors alike . The 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 of 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 . ) .

The Act came 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 .

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 LAW 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 .

( CARDINAL ) 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 .

( CARDINAL ) 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 .

( CARDINAL ) 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 .

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

( CARDINAL ) 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 .

( CARDINAL ) 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 . ”

DATE . 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 ” . Its relevant parts provided :

“ ( CARDINAL ) 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 the special lease scheme was introduced in a given locality , shall be treated as a contractual lease signed for an indefinite period under the provisions of this Act .

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

( CARDINAL ) If an owner referred to in subsection ( CARDINAL ) intends to dwell in his flat and with that intention has vacated the flat which he has hitherto rented ... from the municipality , the tenant shall be obliged to vacate the owner ’s flat and 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(CARDINAL ) .

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

( CARDINAL ) 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 LAW set out a detailed list of LOC 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 . The relevant parts of that section provided :

“ ( CARDINAL ) 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 proper functioning of lifts , the collective aerial , and other facilities in the building ;

( CARDINAL ) The landlord shall , in particular :

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 ;

NORP 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 repairing damage for which he is liable ;

carry out repairs in the dwellings , repair or replace installations and technical facilities and , in particular , carry out 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 ( including radiators ) , electricity , telephone and collective aerial installations – the latter , however , without fittings ;

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

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

If , following the termination of the lease agreement , the tenant did not vacate the flat ( which was very often the case , given the acute shortage of cheap dwellings for rent and the high costs involved in buying a flat ) , the landlord had to bring an action for eviction against him . If an eviction order was issued , the landlord , in order to have it enforced and the flat vacated , had to ask the relevant municipality to provide the tenant with “ substitute accommodation ” . As there was a very short supply of such accommodation , the enforcement of the eviction order and vacation of the LOC could take DATE . Once an eviction order had become final , the tenant , as long as he lived in the flat , was obliged to pay so - called “ compensation for extra - contractual use ” ( odszkodowanie za bezumowne korzystanie ) , equal to PERCENT of the current rent . If that sum did not cover the losses incurred by the landlord in connection with maintenance of the flat , he could sue the tenant for supplementary compensation .

On DATE ORG , ruling on a point of law referred to it by ORG , declared unconstitutional section CARDINAL(CARDINAL ) read in conjunction with , inter alia , section CARDINAL of LAW ( see paragraphs CARDINAL above ) . It found that those provisions were in breach of LAW ( admissible limitations on property rights ) read in conjunction with LAW rule of law and social justice ) and LAW ( principle of proportionality ) of LAW ( see paragraphs CARDINAL and CARDINAL - CARDINAL below ) , and LAW No . CARDINAL , because they 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 .

NORP 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 savings 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 the 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 .

Firstly , 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 persons 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 ORG 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 , under 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 wider 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 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 ORG considers that there are no constitutional considerations which 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 ‘ ORG 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 of even 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 certainty , 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 the event 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 a judgment of DATE , ORG held that section CARDINAL of the CARDINAL 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 , the PERSON of DATE on the protection of the rights of tenants , housing resources of municipalities and on amendments to LAW ( LOC o ochronie praw lokatorów , mieszkaniowym zasobie gminy i o zmianie LOC cywilnego ) ( “ the DATE LAW ) – came 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 , came into force on DATE ( see paragraphs CARDINAL - CARDINAL below ) .

Section DATE CARDINAL Act listed situations where a landlord could increase rent . The relevant parts of that provision , in the version applicable until DATE ( see paragraph CARDINAL below ) , read as follows :

“ ( 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 ;

( CARDINAL ) 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 ;

( CARDINAL ) 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 more than :

PERCENT – if the annual rent does not exceed PERCENT of the reconstruction value of the dwelling ;

PERCENT – if the annual rent is PERCENT but not PERCENT of the reconstruction value of the dwelling ;

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 subsection ] shall be communicated in official bulletins of the President of ORG ;

( CARDINAL) 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 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 ) and ( CARDINAL ) read in its relevant parts as follows :

“ ( 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 .

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

NORP 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 the common use of residents ; or if he or she has flagrantly or repeatedly disturbed the peace , thus severely upsetting [ czyniąc uciążliwym ] the use of other dwellings ; or

NORP 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

NORP the tenant has sublet the flat or part of it , or allowed it , or part of it , to be used free of charge by another without the landlord ’s authorisation ; or

NORP the flat used by the tenant has to be vacated in view of the impending demolition or substantial renovation of the building ...

Under section ORG ) , a landlord who received rent which was PERCENT of the reconstruction value of the dwelling could terminate the agreement if the 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 “ alternative accommodation ” ( lokal zastępczy ) or the tenant was entitled to a dwelling which met the conditions for “ alternative accommodation ” .

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

NORP However , section CARDINAL(CARDINAL ) 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(CARDINAL)(CARDINAL ) ( rent arrears unpaid despite the fact that a warning notice had been served and a further 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 .

As regards situations where , despite the termination of the lease agreement , the tenant did not vacate the flat , the landlord had to DATE as under the previous regulations – bring an action for eviction against him and , even if he obtained an eviction order , could not repossess the flat until the tenant had obtained a substitute dwelling from the municipality .

The CARDINAL Act , in the version applicable up to CARDINAL 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 ( 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 its relevant part :

“ 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 , in its relevant part , reads :

“ 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 to 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 . ”

The relevant part of LAW provides :

“ CARDINAL . In the event of a tenant ’s death , the following persons may 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 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 the maintenance of property .

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

ORG invited organisations of landlords and tenants to take part in the proceedings and submit 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 . m , the average DATE rent amounted to ORG CARDINAL . That amount , they stressed , represented PERCENT of the average gross income , whereas , according to them , in 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 .

NORP 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 questions from the judges , the President of 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 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 of its judgment , ORG extensively cited its judgment of DATE ( see paragraphs CARDINAL - 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 ORG ’s view , the contested provision has not only ‘ frozen’ the disadvantageous position of landlords subsisting LAW , 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 came 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 levels 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 rents at low levels .

The deterioration of the situation of 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 reasonable levels 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 rents 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 ORG 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 the 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 ORG ’s findings in respect of section CARDINAL(CARDINAL ) of the CARDINAL Act . 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 rents . As shown above , in practice the rent increase mechanism adversely affects the first group of landlords and , at 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 of 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 , it 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 requires restrictions on the rights guaranteed therein to be necessary . In respect of the rent [ control scheme ] , ORG qualified as ‘ necessary’ DATE at least during the transitional period – 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 ORG . A reduction below that minimum was seen by this ORG 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 ORG . 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 rents . 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 ORG and the measure was considered to have been necessary from the point of view of public order – at least in the transitional period . The need to protect tenants against unduly high rents is justified by the housing situation 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 are inherent in many pecuniary rights , including the right to a lease . The contested section has set a maximum ceiling on rents 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 . ”

Article CARDINAL of the 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 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 square metre 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 per square metre . Levels of freely determined contractual rent are still higher : sometimes , especially in large towns , the difference may even reach PERCENT .

At DATE the government started to prepare a bill amending the CARDINAL Act . The bill 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 the rights and obligations of the landlord and the tenant in order to strengthen the protection of the weaker party ” ; “ to introduce new rules for the protection of tenants against excessive increases 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 ” .

NORP 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 rent - control scheme , despite the fact that the end of its operation had been set by the legislature at 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 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 government 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 ” ) ORG submitted a bill proposing amendments to the CARDINAL Act .

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 LAW and 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 ( the lower house of the NORP parliament ) 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 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 LAW . The bill was tabled by a group of deputies and contained CARDINAL proposal , namely to add another subsection to section DATE CARDINAL Act ( 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 Act of DATE on amendments to the DATE Act on the protection of the rights of tenants , housing resources of municipalities and on amendments to LAW and amendments to certain statutes ( LOC o zmianie ustawy o ochronie praw lokatorów , mieszkaniowym zasobie gminy i o zmianie LOC cywilnego oraz o zmianie niektórych ustaw ) ( “ the DATE Amendment ” ) came into force on DATE .

Section CARDINAL(CARDINAL ) of the DATE introduced a new section CARDINAL into LAW . This new provision 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 .

Section CARDINAL reads , in its relevant parts :

“ ( CARDINAL ) 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 DATE [ and ] in compliance with the terms for giving notice .

( CARDINAL ) 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 ;

( CARDINAL ) An increase whereby rent or other charges for the use of the dwelling would exceed 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 .

( CARDINAL ) 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 .

( CARDINAL ) The provisions of subsections ( CARDINAL ) to ( CARDINAL ) shall not apply to increases

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

NORP concerning charges that do not depend on the landlord . ”

Pursuant to section CARDINAL(CARDINAL)(a ) of the DATE , section CARDINAL of the CARDINAL Act was reworded in its subsections ( CARDINAL ) and ( CARDINAL ) 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 .

( CARDINAL ) NORP If charges that do not depend on the landlord have been increased , he or she shall give the 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 ] . ”

Section CARDINAL(CARDINAL)(a ) of the CARDINAL DATE Amendment introduced certain changes in respect of the termination of leases by individual landlords . However , the new LAW differs only slightly from the previous provision on termination of leases ( see paragraphs CARDINAL above ) .

Section CARDINAL(CARDINAL ) now reads , in its relevant parts , 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 ) to ( 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 :

“ The landlord of a dwelling for the lease of which the rent is lower than 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 present section CARDINAL ) provides 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 respectively ) remain unchanged .

Under section CARDINAL ) the termination of a lease in respect of a tenant who on the date of giving notice is DATE and who , after the expiry of the applicable three 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 .

The DATE , in its section CARDINAL , introduced a new provision – section CARDINAL – setting out a list of the landlord ’s duties under the tenancy . In essence , it repeats the provision of section CARDINAL of LAW ( see paragraph CARDINAL above ) .

Section CARDINAL , introduced by the same section CARDINAL of the DATE , lays down the tenant ’s duties . Its relevant part reads as follows :

“ ( CARDINAL ) 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 ] LOC and the surroundings of the building . ”

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

The Act of DATE on amendments to the DATE Act on the protection of the rights of tenants , housing resources of municipalities and on amendments to LAW ( “ the DATE Amendment ” ) came into force on DATE . Its section CARDINAL read :

“ 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 the Constitutional Court challenging the constitutionality of the DATE and DATE Amendments ( “ the 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 rent increases .

On DATE the Prosecutor General made an application to the Constitutional Court 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 .

ORG invited the Speaker of the PERSON , acting on behalf of ORG , ORG and ORG to take part in the proceedings and submit their written observations . The Speaker of the PERSON and ORG fully supported ORG application . The association submitted detailed calculations of levels of rent that would be necessary to cover the maintenance costs of residential buildings . It maintained that in respect of most such buildings there was a “ repair shortfall ” ( luka remontowa ) amounting to PERCENT of the costs necessary for the reconstruction of the value of dwellings through major repairs and that , in order to secure sufficient means for such purposes , the levels of rent should reach PERCENT of the reconstruction value per year .

ORG considered that the current possibility of increasing rents set at the level of PERCENT of the reconstruction value by PERCENT per year already imposed an excessive burden on tenants . It submitted that the landlords’ association had given exaggerated figures in respect of the costs of necessary repairs . In the context of rent increases , it also stressed that the ORG ’s financial assistance to tenants was practically non - existent .

The Constitutional Court heard ORG application on DATE . It repealed section CARDINAL(CARDINAL)(a ) of the DATE in so far as it made any increase in rent PERCENT of the reconstruction value subject to a maximum DATE ceiling of PERCENT of the current rent and section CARDINAL of the CARDINAL DATE Amendment in its entirety .

In its judgment , it made an in - depth analysis of the housing laws as applicable from DATE and their historical and social background . It referred to its previous judgments repealing the successive defective legal provisions and to their implications .

The judgment contains extensive reasoning and a thorough assessment of the various social , political and economic circumstances affecting the current state of the NORP housing legislation . The gist of ORG arguments is summarised in the following paragraphs .

The Constitutional Court first analysed the impugned provisions from the point of view of the principle of the rule of law as laid down in LAW ( see paragraph CARDINAL above ) :

“ In the opinion of the [ ORG ] , the introduction of the contested legal provisions clearly violated the principle of proper legislation , which necessarily leads it to declare those provisions incompatible with the principle of the rule of law as expressed in LAW . The amendments , contrary to the intentions of the legislature itself – as is confirmed by the content of the PERSON ’s written observations [ filed in this case ] – eliminated a market mechanism in a situation where the actual purpose of introducing restrictions on rent increases was to be the protection of tenants , that is to say , persons who in a given case do not accept the proposed increase . There is a distinct inconsistency between the provisions of the amendment in the initial bill and the provisions introduced following the parliamentary debate . In consequence , none of the declared aims of the [ legislation ] has been attained . Rents were not relaxed within rational limits encompassing the requirements of justice and of protection of landlords’ rights and nor were effective and precisely determined procedures introduced to protect the rights of tenants against abuse of [ landlords’ right to ] determine rent freely .

The new version of section PERSON ) has also violated the principle of ... confidence in the ORG and the law made by it . Thus , as already mentioned , there is no doubt whatsoever that until the adoption of the DATE Amendment the legislation of DATE consistently assured society , and especially persons directly interested in the situation of landlords and tenants , that rents that were controlled and at the same time limited to the level of PERCENT of the reconstruction value of the dwelling exclusively in respect of a certain category of LOC would apply for the transitional period , that is , up to DATE . This period ... was [ set ] to make it possible for the government and the legislature to develop a new , comprehensive and multi - faceted system governing the relations between landlords and tenants , fully taking into consideration the justified interests of the parties and also realistically allowing those same parties to prepare themselves for surviving the most difficult period and to accept fully the new state of affairs , so that mutual relations between the parties to a lease ( or an analogous relationship ) could be shaped in a rational manner and above all with due consideration for the concrete conditions determining rent . The date of DATE as the deadline for the transition period was also confirmed in LAW , which further strengthened the conviction that after that date the mechanism for determining rent would be compatible with the principle of freedom of contract .

This societal conviction was further supported by the unambiguous case - law of ORG , which on many occasions underlined the transitional character of the rent - control scheme . It thus follows that in DATE the unambiguous ‘ rules of the game’ were established , whose period of validity was clearly indicated by LAW ( section CARDINAL(CARDINAL ) ) and then in some sense confirmed by section CARDINAL(CARDINAL ) of the CARDINAL Act . ...

In its case - law ORG has frequently expressed the opinion that the legislature must not fail to meet deadlines for those ‘ rules of the game’ that it set itself . This opinion was expressed , inter alia , in ... the reasoning of [ its judgment of CARDINAL DATE ] . In its judgment ... , ORG expressed the opinion that setting aside the principle of controlled rent for a DATE transitional period would be acceptable only under exceptional circumstances , for otherwise there would be a violation of the principle of legal certainty expressed in LAW .

These considerations lead to the conclusion that the adoption of the contested Act and its publication on DATE , with its entry into force on DATE , violated the ‘ rules of the game’ which were laid down in the previous legislation and which were subject to an unambiguous time - limit[. This happened in a situation where ] there were no exceptional circumstances or events that could justify or explain the extension of [ those rules ] for a longer period .

The breaking of what amounted to a promise laid down in a statute must be regarded as a particular kind of irresponsibility on the part of the public authorities , and hence an exceptionally jarring violation of the principle of confidence in the ORG and the law made by it , a principle constituting one of the foundations of the rule of law . ”

ORG next referred to the principle of the protection of property and the principle of proportionality :

“ LAW and CARDINAL of the LAW guarantees the protection of ownership and other property rights on an equal basis for all . Among these ‘ other property rights’ are the right to lease residential LOC and other rights relating to LOC serving to satisfy housing needs . Each of these rights , whether accruing to landlords or to tenants , enjoys constitutional protection , but in different ways . As a rule these rights collide but , as has been pointed out [ in one of ORG previous judgments ] , it would be a simplification to treat this conflict in linear terms , and to presume that providing a certain degree of protection to CARDINAL of these rights must necessarily result in a weakening of the degree of protection afforded to the other .

Section CARDINAL(CARDINAL ) and ( CARDINAL ) and section PERSON ) ... were based on the unjustified conviction that relations between landlords and tenants always have an antagonistic nature , which inevitably leads to the ‘ CARDINAL - sum game’ . In reality , however , this does not have to be the case ; on the contrary , properly determined relations between the parties to a lease agreement are of service both to landlords and tenants , provided that neither of the parties abuses its rights , since everyone is obliged to respect the freedoms and rights of others ( LAW ) .

ORG is fully aware of how difficult it is to balance the legitimate interests of both landlords and tenants and to create the best possible ways of organising their relations . This is particularly true in the NORP situation , in which the rights of landlords were not respected for a long time and housing matters were subject to ORG management for entire decades[. This ] , combined with other systemic and economic factors , resulted in a degradation of housing supply unheard of in the countries of western LOC , and the consequences of which affected and still affect not only landlords but , ultimately , also tenants . Stepping back from this abyss will be difficult and will take DATE , and the effective change of the present state of affairs will probably not be possible without committing public funds adapted to concrete situations ( see the ORG judgment [ of CARDINAL DATE ] ) .

It is therefore the legislature ’s duty to strive to form a harmonious legal situation for landlords and tenants , so that their relations can be seen as desirably complementary rather than characterised by inevitable antagonism . Charges for the use of the LOC , including rent , are a special element of those relations . They should ensure that the landlord not only covers the costs of building maintenance and repair , but also obtains a return on invested capital ( amortisation ) and a decent profit because no legal provisions may extinguish one of the basic components of the right to property , namely the right to derive profit from property ... This was possible , as found by ORG [ in its earlier judgment ] , in the transitional period , during which it was considered reasonable to restrict profit [ by fixing ] such levels of rent as only covered the costs of maintenance and upkeep . Now complete regulations , fully and precisely determining the elements of rent , are required . LAW specified what are to be regarded as charges that do not depend on the landlord ... but it did not indicate ... the elements of rent as such . As a result , judicial control of reasons for rent increases is to a large extent illusory . ...

At the same time , ORG considers it necessary to take into account the legitimate interests of tenants , and to establish effective mechanisms to protect them against abuse of their rights by landlords . It is also necessary to develop a set of instruments that would make it possible to support tenants finding themselves in difficult financial and living circumstances . This must not be done , as has been the case hitherto , mainly at the cost of landlords , but mostly through the deployment of special public resources . Thus , the duties inherent in social solidarity and the duty to help the underprivileged are incumbent on society as a whole . ...

Over DATE or so , attempts have been made in GPE to protect the legal interests of ... tenants through the statutory determination of percentage rent increase indicators , or of rent ceilings , or through the introduction of certain stronger control measures after a certain limit was exceeded , but in fact this has always been done in isolation from the concrete circumstances of given landlords and given tenants . An exception in this respect is the duty to determine officially the so - called ‘ conversion ORG , which of course adjusts the calculation of rent , but only locally , and , furthermore , is highly formalised and mechanical in nature .

The end of the transitional period for controlled rents must mean a real break with the statutory automatism in respect of setting levels of rent , determining the rent ceilings or imposing restrictions on rent increases . One should expect the establishment of a system providing flexible solutions , adapted to the requirements of a modern housing market , which – stressing the parties’ freedom to determine rent levels – would also ensure effective control in order to prevent arbitrariness and abuse of that freedom .

The contested provisions allow the parties ... a very small margin of freedom , which does not take into consideration concrete circumstances , such as the technical condition of the LOC and the building , the personal and financial situation of the tenants or local factors . The legislature believes that the elimination of irregularities in increasing rent , apart from rent being subject to an arithmetical ceiling , will be effected through a special procedure for judicial control laid down in section QUANTITY combined with the mechanism restricting rent increases as laid down in section CARDINAL of the CARDINAL Act , in particular section CARDINAL(CARDINAL ) and ( CARDINAL)(a ) .

The legislature , declaring that controlled rents would be abolished in the future , never promised that from DATE the levels of rent determined by the parties would not be controlled at all . However , judicial control to this end would be effective if the law clearly determined elements of rent and formulated precise criteria for its evaluation . But this did not happen . LAW does not indicate at all how rent should be determined ( because rent increases as such are a different matter ) , even in such a fragmentary way as section DATE CARDINAL Act did . It thereby deprived a court assessing an increase in rent of the possibility of objective verification , on the basis of concretely enumerated elements of rent and clear criteria for their evaluation , whether or not the increase was justified ( section CARDINALa(CARDINAL ) of the CARDINAL Act ) , and hence created a risk of divergence between judicial decisions . It should also be noted that in certain situations the limiting mechanism introduced by section CARDINAL(CARDINAL ) and ( CARDINAL)(a ) either excludes judicial control of rent altogether , or makes it completely illusory ...

In consequence , ... both the contested amendments amounted to a breach of the principle of proportionality expressed in LAW , [ notably ] through defective formulation of the rules determining [ rent ] , which do not give adequate protection either to landlords or to the rights of tenants . ”

In the context of the principle of proportionality ORG also referred to this ORG ’s Chamber judgment in the following terms :

“ ORG paid particular attention to ORG Rights’ judgment of DATE in the case of ORG v. GPE . ...

Given the date of this judgment , [ considerations ] of ORG were already based on the legal situation obtaining on DATE . Hence they encompassed both DATE Amendments to LAW and the Prosecutor General ’s application . In ORG view , the opinion expressed by ORG provides additional arguments in favour of finding that these amendments , in their parts contested in the application , violate the principle of maintaining confidence in the ORG and in the law made by it as laid down in LAW and undermine in an inadmissible manner the standards of property protection common to the member ORG . ”

It then went on to analyse the general situation :

“ ORG still holds the view ( expressed in its judgment of CARDINAL January CARDINAL ... ) that

‘ it is in conformity with the contemporary perception of a “ social ORG ” to demand some sacrifice from all members of society for the benefit of those who can not provide subsistence for themselves and their families ... In the circumstances obtaining in GPE , under LAW [ of 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.’

The latter remark was particularly significant for the assessment of legislation during the transition period , but it can not be seen as having fully lost its relevance with the end of that period .

Thus , GPE which , like GPE , are undergoing radical systemic and economic transformation must create legislative tools that make it possible for them to overcome the consequences of historical events ( arbitrary and peremptory interference with private property by the ORG ) and to ensure the transition to conditions appropriate for democratic , liberal GPE governed by the rule of law . This is a very difficult task , especially given the absence of well - tried models of proceeding in such cases . The scale of the phenomenon far surpasses the post - war experience of western NORP States . Changes in this area are being introduced by trial and error ; they are slow and not effective enough – as has been pointed out by ORG in the judgments cited above .

It is therefore not possible , in respect of the rights of landlords , who were formerly deprived of the possibility of fully enjoying their property , simply to give this possibility back to them in the form of unrestricted market - related rent . Such a measure , in a situation where private houses , previously taken in connection with the so - called ‘ public management of housing ORG , have depreciated and require very major investments in repairs and high running maintenance costs , would mean imposing on tenants an excessive burden undermining their existence . ...

It must be kept in mind that the fact that landlords’ rights were infringed over DATE did not result from any acts by tenants , but was first and foremost caused by defective legislation . Removing , after DATE of neglect , all those harmful consequences may not therefore be done at the expense of tenants , and certainly not at their expense alone , but must above all stimulate the public authorities themselves to take appropriate action . ”

In its final considerations ORG stressed that , given that its judgment was inherently limited by the scope of ORG application , it could not resolve comprehensively and definitely the fundamental systemic issues arising from the operation of the rent - control scheme . In particular , it could not address the mechanism for balancing the interests of landlords and tenants , a mechanism which was still missing in the existing legal system .

Having regard to the fact that sections CARDINAL and DATE CARDINAL Act ( in so far as they were still in force following the repeal ) did not provide for any satisfactory and consistent mechanism and no appropriate legislative initiative to that effect had been envisaged , ORG decided to prepare recommendations ( sygnalizacja ) for ORG , whose object would be to formulate clear demands to create a mechanism making it possible to formulate precise criteria for judicial control of rent and related charges .

On DATE the ORG gave a decision ( postanowienie ) setting out the recommendations for ORG ( “ the DATE Recommendations ” ) referred to in the judgment of DATE . In its relevant parts , the decision reads as follows :

“ CARDINAL . Starting - point

... Under the present legislation , as amended by ORG judgment [ of DATE ] , landlords may increase rents or other charges for the use of the dwelling not more often than DATE but an increase in rent or other charges , apart from those which do not depend on a landlord , whereby rent would exceed PERCENT of the reconstruction value of the dwelling within DATE may take place only in justified cases . ... [ T]he tenant may challenge the increase by bringing a court action to have the increase declared unjustified , or justified but in a different amount , or may refuse to accept the increase with the effect that the contract is terminated at the end of the term of notice .

However , judicial control of increases in rent and the procedure for such increases do not apply if an increase does not exceed PERCENT of the current rent or current charges .

Lack of statutory criteria for judicial control

[ LAW ] does not indicate , and this is its fundamental shortcoming , the criteria on the basis of which the courts are to control increases in rent or other charges for the use of the dwelling . This situation is detrimental to both landlords and tenants . Accordingly , judicial control , lacking statutory criteria , certainly becomes very difficult and unforeseeable , if not illusory . This may lead to quite arbitrary decisions . It is likely that in this legal situation the courts would be forced to create an ad hoc set of criteria for the future assessment [ of increases ] rather than to review legal grounds for increases . It should be stressed that removing from the judicial control increases in rent and charges that do not exceed PERCENT will , in many instances , deprive tenants of the necessary protection and will , within DATE , lead to rents being hauled up to an objectively unjustified level .

The above considerations lead to the conclusion that the statutory system of fixing the maximum ceiling of rents and other charges and of controlling increases determined algorithmically , which was justified in the transitional period ... , can neither satisfactorily serve the interests of landlords nor protect the justified interests of tenants . It is therefore necessary to regulate in a complex manner those matters , maintaining at the same time flexible solutions . ....

Factors influencing the level of so - called ‘ basic rent’ [ czynsz początkowy ]

The question of determining rents and charges for the use of the dwelling can not be seen only from the perspective of the criteria and rules for their increase . First of all , it is necessary to set a statutory starting - point – in other words , elements of rent that would adequately take into account the rights of landlords .

At the same time , not losing sight of the necessarily complementary relationship between a landlord and a tenant , one should have regard to the fact that the essential duty of the tenant is to pay an economically justified level of rent , i.e. not too high but related to the justified economic interest of the landlord .

The point of departure for determining such ... rent should be an indication that its elements can not be [ fixed without relation to ] running repairs and maintenance , an adequately determined depreciation and a decent profit . ...

The need to include the costs of repairs and maintenance does not require any further explanation – it is obvious . Likewise , a decent profit derived from the exercise of the right of property is an indispensable element of the genuine protection of property rights . Without profit , there are no investments or even modernisation works , which are dictated by technological progress and which are also beneficial for the interests of tenants . The future detailed legal solutions should , however , pay due regard to the fact that the aims pursued by the public authorities ( ORG , other ORG authorities and municipalities ) are different from those pursued by private individuals and bodies ( such as housing cooperatives ) and that the expectations of [ those CARDINAL groups ] in respect of a decent rent should be established at different levels . ...

It is also necessary to include among the elements of rent a return on landlords’ investments in the construction or modernisation of the building in due time , it being understood as a basis for an adequately established depreciation level . ...

DATE Additional instruments for monitoring the level of rent

An auxiliary instrument , enabling the courts to assess thoroughly the basis of the determination of , and increase in , rent could entail , among other things , the setting up by the authorities , in the process of a true social dialogue with organisations of landlords and tenants , a system for monitoring the levels of rent in all municipalities which would , for example , disseminate information on the average level of rent in a given region . Such systems are known in some NORP countries as a ‘ rent GPE . ...

Housing benefits

The justified ‘ basic rent’ , determined in the manner indicated above in respect of each residential building , might often be incompatible with the tenants’ financial situation . ... In such cases the poorer tenants should be included in a system of individual benefits , justified by their [ individual ] circumstances , from the public funds , which would genuinely help them to fulfil their duty to pay rent regularly up to a certain determined amount .

Instruments for the necessary support of landlords

In certain situations ( especially in respect of buildings regarded as part of the national heritage ) it may happen that [ even ] properly determined rent will still not be sufficient to cover all the costs required for the necessary expenses involved in normal maintenance , in particular the necessary repairs or modernisation . In such precisely determined cases the system of public finances should provide for forms of individual support for landlords obliged to cover the extra costs involved in the maintenance of the buildings . Such support may take various forms , from housing subsidies , through loans on preferential terms for specific investments and , finally , to tax exemptions . ...

Inconsistent regulation of the rights and obligations of parties to a lease agreement

ORG considers it necessary to point to inconsistencies , as regards the setting out of a catalogue of GPE and tenants’ duties , between the new sections CARDINAL to CARDINAL of the DATE Act and the provisions concerning the lease of a dwelling contained in ... LAW . It is against the rules of proper legislation to include the provisions governing the lease of dwellings not in LAW , which contains a full set of regulations on lease relations , but in a law whose object is to protect tenants generally , not to regulate the lease relationship .

[ Final remarks ]

ORG present recommendations are concerned with shortcomings and lacunas to which it has pointed in DATE either in its judgments or documents providing information about its activities . ... Removing them in the near future is necessary also in view of the principle of the social market economy , which has particular importance in the present context . Now it is no longer possible to regulate these matters in a fragmentary or provisional manner . It should once more be stressed that they should be resolved through comprehensive solutions pursuing clearly defined aims which are compatible with the LAW . ”

On DATE the ORG made an application to ORG for certain provisions of the DATE Act to be declared unconstitutional . He asked , inter alia , that section CARDINALa ( CARDINAL ) of the DATE LAW as amended in DATE ) be found to be incompatible with Article QUANTITY ( principle of the protection of property rights ) read in conjunction with LAW ( principle of proportionality ) and LAW ( principle of protection of consumers against dishonest market practices ) . He further asked that section CARDINAL(CARDINAL ) of the DATE Act be found to be incompatible with LAW ( principle of the rule of law ) .

The ORG first referred to ORG judgment of DATE , stating that this judgment left no doubt whatsoever that the legislature ’s essential duty was to set up a legal mechanism balancing the constitutionally protected rights of landlords and tenants . Indeed , the attempts that had hitherto been made had proved to be unsuccessful mostly because of the authorities’ choice to give priority to current political interests rather than to the law , as demonstrated by many earlier judgments of ORG .

As to the contested provisions of section CARDINAL , the ORG stressed first their internal inconsistency , submitting that , on the CARDINAL hand , subsections ( CARDINAL ) and ( CARDINAL ) made increases in rent PERCENT of the reconstruction value per year subject to “ judicial control ” and required them to be “ justified ” but that , on the other hand , the latter subsection read a contrario meant that any other increases did not need to be justified . He further referred to ORG recommendations , pointing out that there were no statutory criteria for what was to be considered a “ justified increase ” . In fact , he maintained , from the point of view of the landlord every rent increase was justified as it either increased his profit or reduced the losses involved in proper maintenance , while from the point of view of the tenant every such raise was “ unjustified ” as it involved greater expense on his part .

As regards section CARDINAL(CARDINAL ) , the ORG submitted that it was unclear and incompatible with the principle of proper legislation ensuing from the rule of law in that , for instance , it did not specify when the DATE period – relevant for determining the point from which a given increase in rent had applied DATE was to start . In the ORG ’s view , this lack of clarity could not be removed simply by interpretation of that provision and created a possible source of conflicts between landlords and tenants .

On DATE of the adoption of the ORG ’s judgment , the application was pending before ORG . The case was listed for a hearing on DATE .