Tourism takes backseat: Croatia targets apartment rentals to solve housing shortage

Dubrovnik and beyond: Croatia’s new rental regulations shake up tourism scene

Croatia is seeking to tackle a housing shortage in the European Union nation by effectively curbing the rental of private apartments in the crucial tourism industry to make living space more affordable for families.

Tourism takes backseat: Croatia targets apartment rentals to solve housing shortage (REUTERS/Antonio Bronic)

Tourism makes up about 20% of Croatia’s economy, while low property taxes and minimal inheritance levies encourage people to invest in rental properties. But that’s helped drive a scarcity of apartments for sale, causing a surge in prices for both purchases and rentals, with Deputy Prime Minister and Construction Minister Branko Bacic saying about a million apartments, or 40% of the total housing fund, is used for commercial purposes.

A government proposal published late Thursday targets short-term rentals in apartment blocks as it stipulates that 80% of a building’s owners would have to approve such activity. The measure, which would largely affect urban tourist centers such as Dubrovnik, Split and the capital Zagreb, also limits the number of tenants in rental apartments.

“The aim is to have these apartments returned to their original use,” Bacic said. “These apartments should be on the market, increasing the offer and becoming more affordable to our young families and citizens for purchasing and renting.”

The Adriatic nation of 3.9 million people has about 100,000 registered renters and the number has been growing in recent years.

The move, which needs needs to be approved by parliament, mirrors measures of tourism centers such as Barcelona, which earlier this year said it plans to ban all short-term rentals to curb mass tourism and make housing more affordable to citizens.

Neighboring Slovenia is venturing down a similar path, working on a law that would curb short-term rentals through platforms to as low as 30 days per year. The new bill has yet to be formally proposed by the government before being sent to parliament.