New rules for buying apartments take effect tomorrow, one practice goes into history

Croatia's real estate market is entering a new, more regulated phase with the implementation of amended laws governing property transactions, effective July 7. These changes aim to enhance transparency and bolster security for citizens involved in buying, selling, or renting properties.

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For those who have adhered to the law so far, not much changes, while for those who have violated it, this is a clear signal that they must align with the new rules.

The updated legislation introduces stricter penalties for illegal intermediation and mandates higher liability insurance for real estate agencies. Lana Mihaljinec Knežević from the Croatian Chamber of Economy's Real Estate Business Association highlighted that while the core principles remain for compliant agencies, the new rules signal a clear directive for those operating outside the law to align with stricter standards. The previous law had been in effect since 2007.

Key among the new provisions are significantly increased fines for unauthorized intermediation and clearer contractual terms for all parties. Mihaljinec Knežević advises citizens to verify an agency's presence in the official registry before engagement. Additionally, individuals who have passed professional exams can no longer act as independent intermediaries unless employed by an authorized agency.

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Significantly stricter penalties for illegal intermediation have been introduced, the amount of liability insurance has been increased, and contracts between all participants have been clarified.

Regarding market conditions, Mihaljinec Knežević anticipates further price increases, though she expects growing divergence between different regions and property types. She noted a decline in sales transactions, attributing it partly to buyers' inability or unwillingness to meet current prices, influenced by historically low interest rates and rising wages that have benefited a shrinking pool of buyers. Tourism continues to significantly impact the market, particularly on the coast, reducing the availability of apartments for locals while attracting investors.

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Many owners of used properties compare their apartments to new construction nearby and neglect the actual characteristics of their property. Because of this, fewer and fewer such properties manage to be sold.