Croatia considers real estate tax hikes and rental market reforms

Proposed legislative and tax changes in Croatia are sparking debate regarding their potential impact on the rental housing market. In Zagreb, a proposal currently under public consultation suggests increasing the real estate tax from 5 euros to a maximum of 8 euros per square meter starting in 2027.

While officials hope higher taxes will encourage owners of vacant apartments to enter the long-term rental market, real estate experts warn this may not be effective. Some owners may find it more economical to pay the tax rather than invest in renovations to make properties rentable.

Simultaneously, a new legislative framework for the rental market is being developed. The reform aims to increase legal certainty for both landlords and tenants, but has faced 264 critical comments during public consultation. Critics argue that certain provisions, such as tying rent increases to the annual rise in residential property prices or requiring compensation for unauthorized use of property, could infringe on private property rights and potentially decrease housing supply.