Real Estate in Croatia: Buying Property on the Island of Hvar
A perfect holiday on an idyllic island leads to thoughts of buying a holiday home. How easy is it to buy a home on Hvar and what are the property pitfalls?
The price of real estate in Croatia is a common discussion topic for holidaymakers as they saunter through the picturesque cobbled streets of the various stone towns of Dalmatia, daydreaming about buying a waterside ruin to turn into the perfect holiday home. As the country's premier island, looking at property on Hvar has been especially popular.
The Croatian Property Boom of 2004
Fortunes were made on Hvar in 2004, as foreign buyers stepped off the ferry and bought what they could. Croatia was seen as the next property hot spot and prices were cheap, as the country emerged from the damage of the war in Yugoslavia. Stone ruins in hilltop villages which had been seen almost as a burden were selling for tens of thousands of euros, while prime coastal building land turned some locals into millionaires.
In one example on the Rudine Peninsula, a stone ruin in the pretty hamlet of Mala Rudina sold three times in 18 months, with the sales price increasing from 43,000 to 85,000 and finally to 150,000 euro. Such price rises were not atypical, but just as prices rose quickly, the property crash caused several distress sales, leaving general price levels not too far from prices in 2004.
The Buying Process
The basic advice is the same when buying property anywhere - get a good lawyer. Croatian property titles are complicated, and it is not uncommon for there to be more than fifty owners, with the registered owner on the paperwork having died fifty years ago.
The essential documents that you need are the title deed (vlasnicki list) and the catastar map. The title deed gives information on the plot number and size, the list of registered owners and a list of any mortgages or charges on the property, while the catastar map pinpoints the plot. It is common to pay a deposit (usually 10%) against a notarised pre-contract, with the balance on completion.
Prior to February 2009, all foreign buyers were required to apply to the Ministry of Justice for permission to own the property they had just bought, a formality which caused anguish and frustration due to the length of time it took to process (up to seven years). This restriction has been lifted for many countries, including members of the EU and some states in America.
Title issues apart, there are several additional things to check before purchasing property on Hvar:
Any property built after 1968 should have a usage permit. This is in addition to the location and building permits required to legally build a house. All illegal buildings built prior to 1968 were legalised in a general amnesty, and so the usage permit requirement only exists for later properties.
Check the registered use of the property on the building permit. A recent law change means that a rental licence is required for properties rented to tourists. Currently only properties which have commercial use listed in the building permit can apply for these licences. As most permits 20-30 years ago were issued for residential use, it may not be legally possible to rent the property.
Land purchase should be thoroughly researched. There are different grades of building land and it is a minefield for the uninitiated, with building permissions rarely granted. Buy land with permission already granted where possible.
Hvar is a beautiful island and, although by no means overrun with foreigners, a sizable number have bought and renovated property. With the appropriate due diligence, now is an extremely affordable time to buy real estate in Croatia.