Croatia introduces new real estate rules to protect buyers

Croatia is set to introduce significant changes to its real estate market regulations on July 7, aiming to bolster protection for buyers, sellers, and tenants. The updated law on real estate brokerage introduces stricter rules for agencies and seeks to curb illegal intermediation, thereby increasing transparency in a market where property prices remain at record highs.

According to Lana Mihaljinec Knežević from the Association for Real Estate Business at the Croatian Chamber of Economy, the new regulations provide a much more precise framework for relationships among all market participants. Key among the changes are substantially increased fines for illegal intermediation and higher mandatory liability insurance for real estate agencies. Rules concerning contracts between agencies and clients are also being clarified.

Potential buyers and sellers are urged to verify that any chosen agency is officially registered with the Croatian Chamber of Economy before signing agreements. The new law prohibits individuals who have passed the professional exam from acting as independent intermediaries unless they are employed by an authorized agency. Advertising properties without a signed brokerage contract with the owner is also forbidden, a measure intended to reduce dubious listings and enhance the reliability of offers.

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So far, there has been a lot of illegal intermediation. Therefore, we also expect the help of citizens so that they use the services of legal agencies. Penalties have been tightened, and individuals with a criminal past will not be able to perform activities or manage real estate agencies.

Commission rules have also been revised. Agencies can no longer condition property viewings on upfront commission payments; fees are only chargeable after a brokerage contract is finalized. If an agency represents both the buyer and the seller, it may charge commission to both parties. Furthermore, the new legislation imposes stricter conditions for operating an agency, barring individuals with criminal records from managing them. An ethics code will become mandatory for all real estate agents.

Dubravko Ranilović, president of the Association for Real Estate Business, emphasized that these changes are crucial for combating illegal intermediation. He anticipates that the stricter penalties and vetting processes will encourage greater use of legal agencies. Despite these regulatory efforts, Knežević does not expect prices to stabilize soon, forecasting continued market segmentation with varying price increases depending on the region and property type. Transaction volumes are declining as fewer residents can afford current housing prices, partly due to sellers holding unrealistic expectations for older properties compared to new constructions.

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We do not expect prices to calm down. We estimate that the market will continue to segment; prices will grow differently depending on the region and the type of real estate.