Four new rulebooks soon in force; incentives for first-time home buyers

Hina - Construction, Physical Planning and State Assets Minister Branko Bačić on Tuesday presented four new rulebooks on housing support and building management ahead of their entry into force.

One of them introduces significant benefits for first-time property buyers, including full reimbursement of property transfer tax and a 50% VAT rebate.

The Rulebook on Subsidies for Acquiring a First Home will enable Croatian citizens under the age of 45 who are resolving their housing situation for the first time to claim financial support, the minister said.

"Applicants who have paid VAT on the purchase or construction of their first home are entitled to a rebate of up to 50% of the VAT paid. This applies to all transactions notarised after 1 January of this year," Bačić stated at a press conference.

The same applies to the property transfer tax, but in that case, the entire amount will be reimbursed.

To qualify for these benefits, two additional criteria must be met.

The first relates to the size of the property, which is defined in terms of the number of household members. For example, one person is entitled to a home of 50 square metres, with a tolerance of up to 50% - meaning up to 75 square metres is permitted.

"You can buy a property that is 50% larger and still be eligible for the subsidy, but the VAT refund will be calculated as if you bought a 50-square-metre property," Bačić explained.

Larger size allowances apply to houses. A single person, for instance, may purchase a house of up to 112.5 square metres.

"However, if the recipient sells, rents out or does not live in the property for five years, they must return the subsidy, to prevent misuse," Bačić warned.

The second criterion concerns the contract price per square metre, excluding VAT.

The ministry has set maximum eligible prices for each city, based on data from the Institute of Economics. For example, the average price for a flat in central Zagreb is €3,051. A tolerance of up to 50% is allowed, meaning buyers are ineligible if they paid more than €4,575 per square metre.

To increase the housing supply, 150 flats are currently being renovated in Dubrovnik, Zagreb, Zadar, Šibenik, Osijek and Karlovac, Bačić added.

In eight days, three additional rulebooks will come into force: the Rulebook on the Content and Maintenance of the Building Managers Register, the Rulebook on the Content and Maintenance of the Co-Owners' Register, and the Rulebook on House Rules in Residential Buildings.

These will provide access to basic information on building managers, contracts with co-owners' associations, details on flat owners and reserve fund contributors, co-ownership agreements, all decisions taken by co-owners, and more.

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