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Housing in Croatia


Popular area for the expatriate community is Zagreb. The availability of apartments and houses in the country varies. Most expatriates rent their apartment or house; some buy their homes. Both options are available but mainly depend on your company policy, income, and the length of your stay.

Cost of housing in Croatia varies from area to area and the size of the house or apartment. The local currency is Kuna (Kn).

Buying a Property

Real estate acquisition by foreign nationals is tedious and restrictive. The numerous restrictions on foreign ownership can not be easily be circumvented. The following are the restrictions:

real estate can only be acquired by nationals who have a reciprocity agreement with Croatia; that is when Croatian nationals can themselves freely buy property in the buyer’s home country, such as the EU countries (except Italy), the United States, Russia and Hungary. Nationals from Italy, Switzerland, and Bosnia & Herzegovina can only buy property if they plan to settle in Croatia permanently. In most cases, reciprocity is assumed until proven otherwise;

consent (in the form of an administrative act) must be secured from the Ministry of Foreign Affairs before the sale could be finalised. Securing the consent takes two to six months since the Ministry has to study the foreign laws (that of the applicant) to discern if a reciprocity agreement is in place. The Ministry of Foreign Affairs may seek the opinion of the Ministry of Justice, Administration, and Local Self-Government (Ministarstvo Pravosuda, Uprave i Lokalne Samouprave) before granting the consent;

foreigners, pursuant to the Law on Property Ownership and Other Real Rights, cannot acquire agricultural and forest land. Foreigners may not acquire properties considered protected cultural monuments, unless the local authorities waive their pre-emptive right to acquire the property.

Note that foreigners can only rent out through a company, which involves paying 22% VAT, which can be accounted as a business cost. However, VAT is waived on renting of housing premises. With accession to the EU forecast to occur in 2009-2010, a relaxation on the restrictions of foreign ownership is expected in two years’ time.

The following is the acquisition process:

pre-contract agreement between the buyer and vendor (seller). The buyer is expected pay a down payment equivalent to 10% of the selling price (This percentage may differ, depending on the contracting parties, and the down payment can be as high as 15%);

the buyer then should apply for the consent from the Ministry of Foreign Affairs(MOFA). Necessary documents include:

a.the purchase agreement,
b.the seller’s proof of title (land registry certificate: ZK izvadak),
c.certificate confirming that the property is within the construction zone envisaged by the zoning plan (Uvjerenje o namjeni),
d.proof of citizenship for the buyer,
e.proof of citizenship for the seller,
f.power of attorney, if an attorney is involved;

a binding contract is then prepared by a lawyer and signed by the notary. An official note of the contract should be made in the Land Registry. Once MOFA consent is granted, the contract needs to be registered in the Municipal Cadastral Department’s Land Books (Zemljišne Knjige), and the purchase tax needs to be paid. The 5% real estate transfer tax does not apply to new buildings. In this case, a 22% VAT is levied on the construction value of the building. New buildings are defined as properties built after 31 December 1997.

At pre-contract stage, the down payment is not returned if the buyer fails to fulfil the terms of the contract. In cases where the seller fails to fulfil his part of the contract, he is expected to compensate the buyer by paying double the sum of the deposit.

There is an issue concerning clean titles. A third of the population fled the country during the war. A big possibility exists that the ‘owner’ may not be the legal owner (especially if the rightful owner happens to be a Serb). The government does not allow purchase of properties with unclear ownership. It is advisable to establish the rightful ownership of the property, before getting to the pre-agreement stage.

Hence, title registration is a slow business in Croatia. It takes an average of 956 days to complete the five procedures necessary for property registration.

VAT is imposed on new dwellings, and is paid by the seller, who usually passes it on the buyer through an increased purchase price.

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