Property in Croatia
You’ve heard of the beauty of Croatia, but worry that it’s maybe a bit too Balkan and east European? Well, it’s time to cast those prejudices aside and see what this gorgeous, easy-to-get-to country has to offer. That includes pretty, Italianate towns, their narrow alleyways choc-a-block with cool restaurants beneath red roofs – but instead of being on Tuscan hilltops, these are on their own little islands. It means rocky cliffs where you clamber down steep paths to reach a sandy bay, with just a taverna and fish restaurant to sustain you between swims. It also means affordable property.
The most well-known options for holiday homes include Dubrovnik, down south on the Dalmatian coast. Although property in the Old Town will be prohibitively expensive for most of us – albeit with great rental appeal – there are modern developments nearby, including Dubrovnik Sun Gardens.
When buying individual resale properties away from the resorts you need to be careful that your property is legal, as ever, but particularly in Croatia which has been making great efforts to improve its regulation since joining the EU in 2013.
Croatia is a relatively small country, around 40 per cent of the size of England, but it has nearly 6,000 kilometres of coastline just across the Adriatic from Italy.
It’s roughly 'r' shaped, with a long wide stretch poking into Eastern Europe and borders with Hungary and Serbia, among others. That’s useful for scoring points in Eurovision, but most buyers are more interested in the coastal section, stretching south like a finger, and with large islands just a short ferry ride away, including the popular holiday-home island Brac.
Croatia’s main airports on the coast are at Zadar, Rijeka, Pula, Dubrovnik and Split, but most flights are spring and summer only. Fortunately this is also a country you can drive to – 1,500km from the Channel ports – or travel by train via London, Munich and Ljubljana in two (long) days. You can also fly into Venice, for example, all year, then get the ferry across to Croatia.
The north of Croatia is the romantic sounding Istrian peninsula. It looks pretty dreamy too, specializing in drop-dead gorgeous Italianate coastal towns like Rovinj and Novegrad. Travel is easy to Istria via Pula Airport, which has summer flights with easyJet.
Outside of the peninsula, tucked into the Kvarner Gulf, is the city of Rijeka, also with an airport served by budget airlines. From here you can get ferries to the islands of Krk and Cres.
Where to Buy Property in Croatia
An alternative to the more classic Mediterranean destinations but with a twist of Italian, Croatia offers a breathtaking coastline dotted with family-friendly resorts. With thousands of unspoilt islands and waterside Venetian architecture – Croatia has always been popular with sailing enthusiasts and also very fashionable for its music festivals.
Since 2009, though, the country has welcomed foreign house-hunters to its shores too, after it changed its restrictive ownership laws to allow people from all EU countries to own property there.
In recent years there have been new laws to legalize illegal construction. Croatia has worked hard to become a regulated country, although there are limited amounts of new build homes aimed at the overseas market and the lack of good-quality homes frustrates buyers. The official Croatian currency is still the KUNA, with the adoption of the euro once in the pipeline – but perhaps not now.
In south Dalmatia, the most well-known destination is Dubrovnik, that needs little introduction, already a popular long weekend destination packed full of history, culture, fashionable bars and boutique hotels. Properties within the walls of the Old Town come up very rarely and command a hefty premium, though it is wonderfully atmospheric and would have huge rental appeal. Apartments cost €3,000-10,000 psm.
However if you drive a little way down or up the coast prices are very different and for around €350,000 you might get a renovated two-storey house with full documentation. In the planning process (which is frustratingly slow in Croatia) is also a 350-acre golf and holiday resort project at Srd near Dubrovnik, worth about a billion euro, which will complement another resort project along the nearby coast, Dubrovnik Sun Gardens.
Istria and Kvarner
Istria wasn’t dubbed the “New Tuscany” for nothing, and it was its proximity to the Italian border combined with its distinctive – and familiar – Italian feel, that first attracted British buyers to buy in Croatia at all. It also has many cultural, musical and sporting events, from fashionable pop festivals and concerts to biking, riding, skydiving, hiking and scuba diving.
Starting from the Croatian border on the north of the Istrian peninsula, there are few well known locations worth a visit. On the west side there is Umag city which hosts the ATP tennis tournament. Close to there is the new Adriatic Golf Club, an 18-hole course at Savudrija, Crveni Vrh.
Then there are the famous truffle centres of Buzet and Motovun, the latter a beautiful hill-top town also known for its film festival. Great food is typical of this region, and it is very Italian in style. In foodie hostpots such as Oprtalj and Livade you definitely have to book a table to avoid disappointment.
If you are looking to buy a property, Novigrad is a charming resort half an hour's drive from the Italian border, and a good starting point in northern Istria.
Properties range from traditional homes overlooking the Adriatic to large villas on the edge of town, priced from around €350,000.
Heading south along the Istrian west coast takes you to the resorts of Porec and then beautiful Rovinj (a 'mini Venice'), both with similar appeal and buying opportunities to Novigrad.
But prices differ. In Poreč you can buy a sea view apartment from €1,800 psm but in Rovinj Old Town you can expect to pay from €3,000-6,000 psm. It is relatively expensive but if you don't need a sea view and go a few miles from the centre, you can find apartments from €1,000 psm.
If you want to be closer to the airport in southern Istria there is Pula - the biggest and oldest town in Istria, best known for the Roman amphitheatre that hosts many events in summertime including pop concerts, the Pula film festival, opera and ballet.
Or the seaside town of Premantura has much to offer, including Kamenjak - a popular park with beaches and dinosaur tracks. Close by there is also family-friendly Medulin with shallow waters and sandy beach.
In southern Istria there is also Fazana, a traditional fishing village where you can always eat fresh seafood. It is located as opposed to the national park of Brijuni islands where is another golf course, safari with some wild animals and ancient Roman remains. Down the east side of Istria there are Ližnjan, Krnica, Labin, Rabac, Lovran and Opatija where nice properties can be found.
North Dalmatia is reached by low-cost airlines going into Zadar International Airport. Zadar city itself offers a nice promenade and ancient remains and close to Zadar there are few national parks: Plitvica lakes, Kornati islands, Paklenica.
From here you can go also by bridge to the the island of Pag, known for cheese, salt and lacework. There is one of the best-known tourist destinations for young people – Zrce.
Another interesting area is the middle Dalmatian Coast, specifically a stretch that takes in the resorts of Vodice, Primosten - built on a peninsula and regarded as Dalmatia’s most picturesque resort, and Rogoznica, 30 km from Split’s airport (which is actually at Trogir).
Vodice is typical of all three – a family resort set around a historic centre of old stone buildings, with a marina, small harbour and long promenade. High-rise blocks are not allowed, so property available includes villas €200,000 and small apartment complexes with homes from €1,400 psm.
In this region there is also a very nice national park - Krka waterfalls; and near Sibenik is held in the Terraneo music festival that expands every year.
Split and the nearby islands have also become popular in recent years, with the islands of Hvar and Brac especially fashionable. Apartments in grand renovated buildings around the beautiful old Diocletian Palace of Split were once more affordable than comparables in Dubrovnik’s Old Town but are now beginning to over-take them, especially on Split’s seafront promenade.
There are hundreds, of which Brac, Hvar, Korcula (near Split) and the Elephati Islands (near Dubrovnik) are the most well known isles. Each have their own small property markets, with sea-front properties commanding a premium but usually affordable options inland.
How to Buy Property in Croatia
Sometimes you may need to be patient, as getting the necessary permissions to buy a property in Croatia can take up to few months in some cases.
In straightforward cases the purchase process can take only few days or weeks but in some cases it can take longer up to the fact you need some extra permissions: when properties are considered part of a town's heritage (similar to listed status) you need some special documents to became the owner of a cultural property.
Non-nationals can't buy agricultural land till 1st July 2020, but it can be bought through a company registered in Croatia if they want it for investment. The European Commission already has plans in the third year of membership to reconsider the meaning of the ban and, if deemed necessary, it will be completely abolished after the 1st July 2016.
Currently, EU buyers of non-agricultural land need a document to confirm the land is in an area suitable for development. It is a procedure that can take some time but if you buy through a licensed real estate agent they can check official documents in few days.
You must always ask them to check what you can be built on the plot, and ask to see the territorial plan.
Since EU membership, there is a new law in Croatia about energy efficiency. As per in Spain this year, all finished houses and apartments need to have an energy performance certificate prior to the purchase contract, and specialised assessors need to perform these.
The onus is on the seller to provide this, and they can be penalized later if they skip this obligation. You can request it but don't need to be afraid as you can sign in the ownership also without that. When the seller show you the certificate, make sure the energy class is exactly specified.
In most property purchases you will be required to give a 10 per cent deposit along with the preliminary contract. Otherwise you can also sign the main contract with a deadline of a few days for payment.
In Croatia it is the licensed realtor's (estate agent's) responsibility to check all the documents for the client – unlike the UK where we use a solicitor – but of course you can use your own lawyer.
The final contracts must be verified by a public notary who can also request for you the OIB (personal identification number in Croatia). All that can be done in one day.
Buying costs in Croatia include agent’s fees, typically around 2 per cent, property tax of 5 per cent and notary costs of around €50 and another €40 duty stamp for registering ownership.
Legal services for drawing up contracts depend on the value of the property and are about 1 per cent. Some realtors include that in their commission, others you need to pay extra.
The 5 per cent property tax is sometimes calculated just on a part of the price, especially in cases where you are buying directly from a Limited company investor. That's because in the price is already VAT included and double taxation is not allowed.
When you are buying from an individual owner you will pay always 5 per cent on total amount (VAT cannot be added on top). There is no double taxation and property tax is calculated on the whole amount.
* Croatian bureaucracy has a bad reputation. It is wise to engage a licensed real estate agent that can help you through the procedure. You can check the website of the Croatian chamber of economy (or have your lawyer do it) to check that a real estate agency is licensed.
* Beware of under-declaring the sales price to evade tax.
* As mentioned above, Croatia is working hard to become a regulated country and to legalise construction but it is advisable to get expert guidance rather than try to navigate the market alone. It's a licensed realtor's job to check all documentation for you – make sure this is done.
* Rentals: Seek specialist advice as you will need to meet certain criteria and pay a yearly tax on the number of beds you let out. You can do this yourself or engage tourist agencies and local companies to manage it for you.