Zagreb - Construction Minister Branko Bačić said on Tuesday, while presenting amendments to the Act on Socially Supported Housing in Parliament, that various housing policy measures will be implemented to accelerate the construction of new apartments and attempt to limit the rise in property prices.
"We have adopted the National Housing Policy Plan, which is the first comprehensive medium-term strategic document in the past 35 years of Croatian statehood. It was adopted because access to affordable housing, especially for young people, has become more difficult," Bačić said while presenting the draft amendments to the members of Parliament.
In Croatia, of the 2.39 million housing units, 958,000 are not used for residential purposes, which is 40%, he added.
"Through numerous measures that we will adopt in the Sabor this year, we will accelerate the construction of new apartments, and by bringing empty apartments onto the market and increasing supply, we aim to limit the rise in prices, and hopefully halt the increase in property prices. Whether prices will decrease, that remains to be seen," said the minister.
The National Plan envisages the amendment of eight laws and a number of regulations with the aim of ensuring affordable and sustainable housing and ensuring space for residential use.
This includes changing the Act on Socially Supported Housing, which the Ministry seeks to pass as an urgent matter in order to, first, increase the maximum selling price of apartments built under the subsidised housing scheme (POS) from €1,792.50 per square metre to €1,912, aligning it with the average selling price on the market in 2024.
"A significant increase in construction costs and in selling prices of apartments has led to the inability to contract construction works within the POS scheme. Public procurement procedures are often cancelled because contractors, given the legally set maximum prices, have no economic interest in participating in these procedures," states the draft.
Bačić notes that the state-owned Real Estate Agency (APN) already has building permits for 732 apartments, whose construction will start with the increase in the maximum selling price.
Tax refund for eligible first home buyers under 45
Another key aspect of the changes to this law is the support for those under 45 years who buy or build their first property, in the form of a refund of 50% of Value Added Tax (VAT) if they purchase a newly built apartment from a legal entity, or in the form of the full amount of the property transfer tax if they buy a used apartment from a private individual, explained Bačić.
"This will also apply to the purchase of land and the construction of family homes," he added.
The right to receive the support will not be granted if the agreed price of the residential property is 30% higher than the average price per square metre of an apartment defined by this law, or if the usable area of the residential property is 30% larger than the area specified by the law. Additionally, beneficiaries of the support will be required to repay it if they sell or rent out the property within five years, or deregister their residence and no longer use the property.
Affordable rent programme for tenants who spend more than 30% of monthly income on housing
The third most important aspect is the launch of an affordable rental programme for those who spend more than 30% of their monthly income on housing, along with compensation for property owners with apartments that have been vacant for more than two years.
The APN will acquire properties from the state, local governments, and legal and physical entities through public calls, and these properties will be rented out for at least three years, with the possibility of an extension for up to ten years. The APN will pay property owners 60% of the total anticipated rent for the agreed rental period upfront, with the remaining 40% paid halfway through that period, explained the minister.
For example, according to rental prices in the City of Zagreb, for a 65-square-metre apartment, if the owner rents it to the APN for a period of seven years, they will receive a total of €55,146 from the Croatian government. They will receive 60% upfront, and the remaining amount after three and a half years, Bačić explained.
"There are about 1,200 vacant residential units owned by the Croatian government that are not suitable for habitation and need to be renovated. Around 150 of them are already undergoing this process, so they can be put on the rental market for our citizens in need of affordable housing. This includes those families or individuals who spend more than 30% of their monthly income on housing," he said.
Opposition doesn't believe proposed measures will lead to lower property prices
Opposition MPs, on the other hand, do not believe that these measures will have any significant impact on the property market.
"Today in Croatia, we have a huge influx of speculative capital into our real estate market, which is almost not taxed at all. Taxes on empty properties are low, there is no control over rental prices, rents are skyrocketing, and as long as this continues, unfortunately, laws and measures will not have a long-term effect," said MP Marin Živković of the We Can! party.
SDP MP Mišo Krstičević sad that the price per square metre increased by 12.4% just last year.