A Guide to Buying Property in Croatia
Located in the crutch where Central meets Southeast Europe, Croatia is known for its stunning access to the Adriatic Sea. A healthy mix of ancient and medieval architecture, chich cities, and spellbinding natural beauty, Croatia’s coastlines, islands, waterfalls, national parks, and thick culture are alluring to travelers from all over the world.
Enjoying a relatively warm and moderately wet climate, Croatia swings from just below freezing in the winter, up to around 65F in the summer. From snowy winter forests, to gleaming sunshine beaches, Croatia is a place to enjoy all manner of outdoor pursuits, from yachting to snorkelling to hiking, without forgetting the rich art and culture that underlies its bustling city life and distinct Roman undertones.
What This Guide Covers
What You Need to Know About Croatia
Key Info for Foreigners Buying Property in Croatia
- Types of Property for Sale
- Property Ownership
- Buying Process
- Financing Options
- Potential Property Buying Problems
What You Need to Know About Croatia
Croatia was the most recent member to join the EU in 2013. Croatia is a relatively wealthy country compared to its neighbors.
In 1991, it has somewhat of a hiccup when war broke out in the country, leading to a massive loss of nearly 40% GDP. Since this period, Croatia has managed to rebuild much of its economy, boosting employment rates – mainly through the service and industry sectors. In fact, unemployment dropped in the last year to just 9.6%, where previously it had sat at around 17%.
The service industry makes up around 59% of the country’s GDP and employs around 66% of the workforce. A great deal of this is due to the high levels of tourism that come into the country, with around 18 million visitors coming in each year.
The secondary sector makes up 21% of the GDP, while employing 27% of people. This industry sees the production of textiles, steel, aluminium, and food, with a large percentage dominated by the production of timber. Agricultural attributes to 3% of the GDP, but employs over 7% of the labor market.
Croatia’s economy seems to be improving, namely thanks to the government’s efforts to provide relevant programs to aid this growth. Last year, the government decided to focus on 3 main areas of reform for the Croatian people – improvements to economic competitiveness, sustainable public finances, and an education system that meets labor market needs.
The main problem that is affecting growth seems to be the massive government debt, which prevents necessary spending on education and public health – especially due to the underlying political volatility and government corruption that is still inherent.
The majority of Croatia’s trade is with the EU, with Italy being their major trade partners and Germany coming in second.
Croatia’s major export is in mineral fuels, including oil, which makes up 10.7% of their exports and is, of course, the most valuable export sector by far. The country is also known for its exports in machinery and electrical machinery, which make up 8.5% and 8.3% of the total exports respectively.
Interestingly, Croatia’s trade in vehicle parts has increased dramatically in recent years, soaring by 33.4% from 2017 to 2018, bringing in $809 million a year. Wood and timber products are also bringing in more capital than ever before, up 12.9% in the last year, bringing in $970.1 million a years.
In terms of politics, Croatia’s head of state is their President of the Republic, currently Kolinda Grabar-Kitarović, who acts as both the commander in chief of the armed forces and appoints the Prime Minister – currently Andrej Plenković.
Generally, Croatian politics are pretty stable, despite obvious corruption still apparent in parliament. The biggest issues tend to occur regarding land claims with countries like Slovenia.
Last year for example, there was a fracas concerning the Bay of Piran, which both states claim as their own. Croatia also has very taut relations with Serbia – despite attempts to sit across the table to discuss their differences, the Serbian/Croatian relationship is still fraught with tensions.
There are 9 major airports in Croatia, with Zagreb, Split, and Dubrovnik being the biggest players in the game. For those traveling from Europe, there are plenty of budget flights to Croatia, even if this means transferring to a closer European city and changing from there.
If you’re traveling from North America or other countries outside of Europe, you will most likely stop off in a major European city first – probably in Germany or Italy.
Another option is to fly into a major European city and access Croatia by bus or train. There are bus services from all the neighboring countries – Slovenia, Germany, Austria, Italy, Czech Republic and Switzerland – which bring you into Zagreb Bus Terminal.
Alternatively, you can grab an Interrail Pass to traverse Europe by train and head into Croatia.
In terms of getting around Croatia, you can fly, however as there is only one domestic airline – Croatia Airlines – which makes flying a little expensive.
If you’re looking to see the beautiful countryside, driving is a breeze. The roads are good thanks to the new major updates to the motorway network, making driving one of the fastest ways to reach your destination. Certain areas, such as Istria can only really be reached easily by driving yourself, so you may want to consider hiring a car.
Bus travel is pretty easy and cheap. You can pick up buses from nearly every town in the center – usually at the bus terminal but sometimes from smaller stops. Be aware that there are many bus lines and none of them run every line, so you’ll be chopping and changing between companies as you go. You can book online with Getbybus.
You can travel by train in Croatia, but the network is particularly extensive. You can go between major cities and some smaller destinations for a good price, but you’ll have to supplement travel in between with buses.
Tourism is a major part of Croatia’s economy, making up 20% of the overall GDP and ranked at the 18th most popular tourist destination in the world. Tourists mostly arrive from Germany, Austria, Italy, Poland, Slovenia, with a large portion of tourism being generated by Croatians themselves.
The majority of tourism takes place on the Adriatic coast supporting mainstream tourism, nautical tourism – with the high number of marinas – and cultural tourism – directed toward medieval towns and arts and music festivals.
Moving inland, tourists head for the hills to enjoy mountain resorts and agrotourism, as well as high-end spa resorts.
Interestingly, there is a large population of naturism tourists heading to Croatia. As the first European country to offer official naturist resorts, Croatia has now become world-famous for offering some of the top nude resorts in the world.
Key Info for Foreigners Buying Property in Croatia
Croatia’s general reputation has improved significantly after the last few years. Once considered the bottom of the barrel of European cheap property, the Adriatic destination now commands quite a considerable audience looking for upmarket coastal properties.
Despite a hard hit from the 2008 recession, the property market in Croatia seems to have regained its feet.
Equally, the new infrastructure improvements of a high-end motorway system around Zagreb have drawn more people to countryside properties in and around this area, where property can still be found for an extremely low price.
Interestingly, while properties in France and Italy tend to hold their value, Croatian properties are rising in value as infrastructure improves and tourism continues to rise.
Expensive new apartment complexes in cities like Dubrovnik have risen in price around 20-30% in the most recent years, but still offer affordable options in comparison to other European destinations such as Spain.
Recent growth has seen new areas of popularity emerging, such as Pula – a beautiful medieval town in Istria – with a 12% rise in value over the last year. One of the upcoming places to buy coastal property is in Zadar.
Types of Properties for Sale
The majority of properties available in Croatia are apartment buildings, unless you head into the deep countryside for a traditional Croatian farm house.. Luckily for the view, there are laws about how high buildings can be so you’ll rarely find anything over 4 floors in height.
One and two bedroom apartments are most common, with around 35-85 square meters of space. 3 bedroom apartments are usually considered luxury penthouses and there are very few on the market as they don’t really get built.
If you’re looking for more of a complex style, with a swimming pool, gym, and other amenities, you’ll find you can purchase apartments in new resort style buildings – usually only available in coastal areas. They’re relatively expensive in comparison to older communist era smaller apartment blocks, and tend to cost around 3500 EUR per square meter plus a maintenance fee.
While detached houses are available, they usually have an unusual set up as they are often geared to being rented. You’re likely to find houses with separate apartments built in, with a larger apartment for the owner, and smaller studio or one bedroom apartments for tourist lets.
If you’re searching out in the countryside, you’ll find a whole host of beautiful old stone farm and village houses. Many are renovation projects to ensure you understand how structurally sound the property is. You’ll find that even today, you can find farmhouses with land and a barn for less than $10,000. Remember you cannot buy agricultural property!
While foreign nationals can certainly buy property in Croatia, there are some restrictions on purchases. The process can also be quite slow because of this. Here is a rundown of the limitations:
- Firstly, in order to purchase property in Croatia, Croatians must be allowed to purchase property in your home country – known as a reciprocity agreement. If this isn’t the case, you won’t even be considered.
- Nationals from Italy, Bosnia and Herzegovina, and Switzerland can only buy property in Croatia if they plan to move there permanently.
- Property buyers need consent from the Ministry of Foreign Affairs to establish whether the reciprocity agreement is in place and sometimes to confer with the Ministry of Justice, Administration, and Local Government. This sometimes takes up to 6 months.
- Foreign buyers cannot purchase agricultural or forestry land.
- Foreign buyers cannot purchase any properties that may be considered as cultural monuments.
You’ll need to get yourself:
- Estate agent
- Independent Lawyer
- Structural Engineer (optional)
The buying process can take up to 6 months if all goes well. If there is a problem, it could take even longer, so be prepared for this.
As for what takes place during the buying process, once you’ve found a property and made an offer, here’s what you’ll need to do:
- Property buyers need to register for a Croatian tax number and a non-residential bank account.
- You will need to make sure you have a notarized copy of your identification documentation.
- Once you have found a property, the estate agent (or you as an individual) puts your offer to the seller.
- Following agreement of price and payment terms, your independent lawyer checks legal ownership status and legality of the property in question, before drawing up a contract.
- A pre-contract is signed to take the property off the market, and the buyer is expected to pay a non-refundable 10% deposit.
- Surveying is not common in Croatia, however you can find a structural engineer to check the property.
- When all conditions are met, the lawyer draws up the main sale-purchase contract, which is signed in the presence of a notary, and the signature is notarized.
- Payment is set up to be transferred to purchase the property in full.
- EU citizens can apply to register ownership straight after signing the contract, done on your behalf by a lawyer who submits the application to the local land registry. Non-EU citizens must wait until full payment is made.
You can purchase a property straight out for cash in Croatia, but make sure to look for a decent currency exchange company so you don’t lose money on the transfer.
While you may look to getting a second mortgage in your own country, or applying for a loan, you can also get mortgages in Croatia. Understand though, that Croatian lenders are far more conservative than say lenders in the USA or UK, offering only 50-60% of the property’s value.
Mortgages tend to be for a period of up to 15 years, and with maximum monthly payments of up to 35% of your net monthly income. You will need to have a Croatian bank account in order to get a mortgage. You will need to provide proof of income, and potential rental income does not count.
Fees and taxes vary for new and old build houses. New builds are house built after January 1st 1998, and old houses are those built before.
- Real Estate Transfer Tax – 4% but only on the land and infrastructure (not the building)
- VAT – 25%
- Real Estate Transfer Tax – 4% on the sale price
- No VAT
- Legal fees – 1 – 2%
- Registration – 0.01 – 0.05%
- Estate agent fee – 1.5 – 3%
Potential Property Buying Problems
There are a few potential pitfalls you need to consider to make sure you don’t make mistakes of fall foul to scamming processes.
- Know your rights. Private property rights are relatively established in Croatia, however there is corruption which can lead to ambiguity when it comes to the legalities. Be aware that the application process may take a long time because of this.
- Find the True Owner. When your lawyer cross-references the property ownership, make sure that they take into account both the Land Titles Office and the Registration Office.
- Ask About VAT. On new builds, VAT is added at the value of 25%. While this is often lumped into the property price, you need to ask this in advance.
- Choose an agent with insurance. By law, estate agents must have liability insurance. Ask to see this before making your choice.
If you would like to stay more than 90 days, you need to apply for a Temporary Stay Permit. This can be done at your local police station in Croatia.
If you would like permanent residency, you have to provide proof of uninterrupted stay in Croatia for a period of 5 years. You must be employed or self-employed, have sufficient funds and have adequate health insurance. You can also apply for this at the local police station.
You can remain in Croatia for 90 days in a 180 day period on a short-term stay; check out online if your country needs a visa or not, but most don’t.
For temporary residence, you need to apply to the Croatian consulate in your home country. You can apply for a number of reasons, including marriage, education, and work, but you need to make sure you’re applying for the right reason. You will need:
- Birth certificate
- Valid passport and a scanned copy
- Color photograph
- Proof of health insurance
- Proof of funds to sustain yourself
- Proof of justification for residency
- Proof of housing
- Proof of having paid consular tax if the application is done in your home country
- Police clearance certificate (sometimes)
While you can renew your temporary residence year after year at the police station, after 5 years you can apply for full permanent residence. This is valid for 10 years. You file the application with the police and the Ministry of the Interior will make a decision. This will only be granted if you have had temporary residence for 5 years.