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Croatia’s housing headache: Balancing tourist accommodations and long-term rentals

Croatia has many headaches. There’s the demographic one, the (chronic) political one, the economic one and the most pressing one of late – the housing one. Being a country so reliant on tourism means that plenty rent out their “spare” properties to tourists when summer rolls around. Easy cash for little effort is alluring. In a country where most of the properties people own are inherited, there are a lot of asset rich people in Croatia, even if there’s not much in the bank.

This trend has been a thorn in the side of Croatia’s battle with mass tourism.

As the country turns towards making things more sustainable, new laws have come into force in 2025 to curb the rise in tourist rentals. These new laws also hope to solve Croatia’s housing headache. That headache is contributed to by landlords preferring to rent their properties in the short term to tourists to make more quick cash than enter into a longer-term, usually less lucrative situation with a local.

Big changes

This choice for a more favourable renting situation has transformed into real rentierism from which landlords make a nice living indeed. The authorities only began curbing it when it led to the collapse of infrastructure in tourist resorts and a step down in terms of quality.

Five new laws are now in force, and around 100,000 registered landlords with 650,000 beds under their names are affected. Let’s look at how things are set to change as Croatia attempts to tackle its housing and private tourist accommodation issue at once.

• First of all, the annual flat tax for landlords has gone up.

• As of the turn of the new year, those landlords became “hosts” if they’re renting their properties located within the borders of the county in which they themselves live.

• Apartment owners who rent out their properties in residential buildings to tourists no longer fall into this category. They’re now “rentiers”.

• Over the next five years, they’ll need to obtain the consent of their neighbours in the building if they want to continue doing business.

The preparation of the new laws was accompanied by dissatisfaction among landlords. This was especially the case among those who rent their apartments in residential buildings to tourists. Small protests were even held.

A bumpy road lies ahead

Raising taxes and tightening regulations is rarely met with a smile, especially after decades of enjoying the benefits of preferential taxation and an admittedly lax system. As I mentioned above, Croatia’s rentierism is a lucrative business to be in. Since 2016, Croatian has seen 175,000 beds pop up like mushrooms in registered private accommodation units.

That has threatened not only sustainability, but the country’s entire actual housing stock.

A bumpy road lies ahead, and these new parameters are far from perfect. Croatia’s desire to kill not only two but multiple birds with one stone is ambitious. The desire is to end rapidly growing apartment development, ensure proper order in residential buildings and encourage long-term rental situations and ensure a more realistic taxation system than before is a steep one.

There has been some government response to landlord pushback. The previously proposed rule that a landlord who rents out their apartment inside a residential building must obtain 80 percent of their neighbours’ consent to continue the practice has been scrapped. They’ll now need just 66 percent of their neighbours to agree.

A bizarre situation

For some, this is still a huge issue.

It’s likely that there will still be wiggle room and alterations as 2025 progresses, but with a severe housing stock shortage and overtourism, things couldn’t remain as they were. The increasing number of what should be regular apartments turning into private accommodation units is to blame for the insufferable crowds of summer and the pressure on typically ancient infrastructure.

With around 200,000 beds on offer to tourists and not enough properties available for long-term rent, Croatia ended up in a bizarre situation which had begun to devour itself. Young people from Croatia struggled to find anywhere to live, while foreign visitors were inundated with options for a week or two in the sunshine.

With greed comes a price to pay, and Croatia simply cannot afford to juggle a demographic crisis as well as a housing one for the people who remain at the same time.

Lauren Simmonds
+ posts

Lauren Simmonds is the editor of Total Croatia News, the largest English language portal in Croatia. She lives in Zagreb, Croatia, and is a translator, content writer, interpreter and the co-author of "Croatia - A Survival Kit for Foreigners," which was published in 2022.

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