Construction and housing in 2025 – new legislative package and ensuring affordable housing

The year drawing to a close was marked by the legislative package regarding physical planning and construction, the issue of affordable housing, as well as the fire at Vjesnik, which destroyed the high-rise to such an extent that demolition is required.

The end of the year brought the most significant changes to the sector of physical planning and construction. On December 15, the Croatian Parliament adopted the Physical Planning Act, the Building Act and the Act on Energy Efficiency in Building Construction. All three acts enter into force on January 1, 2026.

Existing building areas cannot expand as long as they entail areas which are not equipped with basic infrastructure. All spatial plans will be developed digitally in ePlans, according to the same standard, they will be transparent and publicly available, and they will also be linked to ePermits. The issuance of building permits should not take more than 30 days. This mostly refers to family houses - which comprise 90% of all building permits in Croatia.

After 11 years, the law reinstates the instrument of urban land consolidation. The Act enables the investor to request that a local self-government unit adopts an urban development plan within three years in order to be able to build on land designated as building land by the local self-government unit. If the urban development plan is not adopted within the deadline, the investor can contact the Ministry of Physical Planning, Construction and State Assets.

The Act also almost completely bans condominium conversion of tourist buildings, except in the zones of high-class hotels. It also regulates the status of mobile homes, which will not be allowed to be placed within 25 metres from the coastline in camps in settlements or within 100 metres from the coastline in camps outside settlements.

The Building Act introduces a complete digitisation of procedures through the ePermit system, the introduction of the BIM model, faster issuance of permits and mandatory building management plan. In addition, for the first time, the Act prescribes the obligation to develop a Building Management Plan.

Based on the new Act on Energy Efficiency in Building Construction, all buildings should be zero-emission buildings by 2050.

Public call for affordable rental and new housing policy

At the end of the year, the first public call was published for owners of vacant properties who wish to enter the Affordable Rental Programme, and it will be open until February 15. The call is open to owners of residential properties who can prove the property has not been used for at least two years, for which they must submit energy and water bills.

In March, the Government adopted the first strategic planning document which systematically and comprehensively addresses the issue of housing - the National Housing Policy Plan until 2030, as well as the Action Plan to implement the National Plan for the period 2025-2027, for which nearly 2 billion and 28 million euro is planned.

The Government was encouraged to act by alarming trends: 40% of the housing stock is not used for housing, while there is also a shortage of 230,000 apartments. Moreover, a significant increase of prices of real estate and rental properties is still noticeable.

Through an urgent procedure, the Act on State-Subsidised Housing Construction (POS) was amended to ensure a 50% VAT tax refund to young people under the age of 45 who wish to purchase or build their first residential property, as well as to pay a subsidy in the form of a tax refund for the construction of their first residential property. A total of 15.3 million euro in subsidies was paid to 1970 families.

2025 once again accelerated the construction of POS apartments following the decision that the reference construction price should be increased to 1,315 euro per square metre, VAT included. Currently, a new construction cycle is underway in Trogir, Novalja, Osijek, and the construction of additional apartments will soon begin in Karlovac and Vrlika. In assisted areas, the construction of 493 housing units is planned, i.e. 50 multiapartment buildings and 115 family houses.

The Act on Building Management and Maintenance also introduces a series of changes this year - with regard to regulating the rights and obligations of co-owners and multiapartment buildings management. By the end of the year, every building should have a personal identification number for the purpose of collecting the reserve fund or participating in maintenance and renovation projects. Building managers who fail to submit the request by the end of the year could face penalties ranging from 700 to 5,500 euro.

Furthermore, short-term rentals have now been limited, tax on housing units not used for housing has been imposed and additional measures from the National Housing Policy Plan will follow.

Fire at Vjesnik and demolition plans

On the night of November 17 to 18, the public was shocked by the fire which destroyed one of the symbols of Zagreb - the Vjesnik high-rise. The fire was so devastating that the building will require demolition.

There are two possibilities: mechanical removal or mining. The Ministry of Physical Planning, Construction and State Assets initiated the negotiation procedure for public procurement with companies that will demolish the high-rise based on the model “design and demolish”. The decision on the contractor should be made by January 15, after which the contract would be signed and demolition works prepared.

Post-earthquake reconstruction

In the post-earthquake reconstruction process so far, the reconstruction has been fully completed at 14,254 locations - 13,459 referring to private buildings and houses and 795 to public use buildings and infrastructure.

A total of 494 replacement family houses has been built, while 207 are under construction. Moreover, 80 subsidies were paid for the purchase of a housing unit instead of building a replacement house.

In addition, 45 multiapartment buildings have been built. By now, out of the contracted 1,309 projects, 1,167 projects of public property and infrastructure have been completed, including hospitals, kindergartens, schools, bridges and roads.

In December, the first reconstruction stage of the Zagreb Cathedral was completed, for which 47 million euro was spent. For the first time after the earthquake, masses were served at Christmas Eve and Christmas.

In total, 4.23 billion euro has been spent on reconstruction - 2.46 billion referring to the Zagreb earthquake and 1.77 billion referring to the Petrinja earthquake.

Statileo case

After 11 years, the Council of Europe lifted enhanced supervision over the Republic of Croatia in cases “Statileo and Others v. the Republic of Croatia”. For years Croatia had been under special supervision due to the complexity and lengthiness of the implementation process in order to protect owners’ rights and resolve the issue of protected tenants.

A Register of owners of private apartments that house protected tenants has been established, and apartment owners have been receiving fair rent since January 1, 2025. Protected tenants allocate no more than 25% of their income for rent, while the rest is covered by the Republic of Croatia.

Since the implementation of the Act, 266 protected tenants have moved out of the apartment under programme measure 2, while 6 protected tenants have moved into apartments owned by the Republic of Croatia. If we also add protected tenants who have left their apartments voluntarily while awaiting an apartment owned by the Republic of Croatia, as well as other ways of ending the protected tenant status, a total of 291 cases have been resolved in such a way that the apartment was returned to the owner (21.4% of the overall number of cases).

Inter alia, the restoration of the housing stock owned by the state and the construction of new housing units are underway. Currently, a building comprising 58 apartments is under construction in Split, and it should be completed in the second quarter of 2026, a building comprising 152 apartments in Zagreb is in the public procurement procedure and land for the construction of 50-60 apartments in Dubrovnik is in the purchase process. Moreover, Državne nekretnine d.o.o. renovate 239 state apartments, out of which the first 20 apartments should be renovated and offered to protected tenants in the following weeks.

Energy renovation of buildings

In the field of energy performance, national programmes for energy renovation of buildings have been developed for the period of 2014-2020 and for the period up to 2030. In the last financial period of 2014-2020, nearly 1,400 energy renovation projects were completed - 850 energy renovation projects of public buildings, including 380 schools, 95 kindergartens and 90 healthcare and social welfare facilities, and over 540 energy renovation projects of multiapartment buildings, which entail over 15,000 households. The total worth of these projects is 531.94 million euro, out of which 264.25 million euro refers to grants from the European Regional Development Fund.

The interest in energy renovation continues to grow - all available allocations for calls have been exceeded several times, while out citizens’ awareness of the necessity of energy renovation and its benefits is continuously growing.

NRRP 2021-2026 - Energy renovation of 308 undamaged multiapartment buildings is in progress, for which 198 million euro of grants have been allocated, and it entails 14,827 households. At the same time, energy renovation of 244 undamaged public buildings is underway, with allocated funding of 188 million euro. In addition, an energy renovation project of public buildings through the ESCO model is underway, for which 66.4 million euro has been secured, and it will entail at least 208,000 m2. Energy renovation of 70 multiapartment buildings damaged by the earthquake is also underway, for which 39.9 million euro of grants have been secured.

As part of the Programme Competitiveness and Cohesion 2021-2027, a call has been published for energy renovation of public buildings with an overall allocation of 106 million euro. An HBOR financial instrument for energy renovation of multiapartment buildings has been established, whose overall worth is 195 million euro, and it is funded by the European Union, national resources and resources of commercial banks.

In 2024 the Environmental Protection and Energy Efficiency Fund published a public call for energy renovation of family houses with an allocation of 120 million euro, which received 11,926 applications, and 8,751 projects were approved. The overall worth of the approved projects is 213.5 million euro. Moreover, a new public call for households at risk of energy poverty is planned, together with an allocation of 25 million euro.

The new Act on Energy Efficiency in Building Construction enters into force on January 1, 2026, and it is completely in line with the European Union Directive on Energy Performance of Buildings. The National Building Renovation Plan is also in development, whose final adoption is envisaged by the end of 2026.

Green measures

Within the framework of implementing green policies, interactive workshops for representatives of local self-government units have been conducted, with the aim of encouraging citizens to participate in the decision-making process. A green skills programme in the construction sector has also been adopted, and it is focused on developing sustainable construction and integration of foreign workers in the job market. In the field of urban green renovation, 93 strategies worth 2.5 million euro have been developed, 15 pilot projects worth 14.6 million euro have been contracted, and within PCC, a new public call with an allocation of 71 million euro has been announced.

Plans for 2026

Along with continuing the projects initiated in 2026, primarily the reconstruction of buildings damaged by the earthquake, energy renovation, green infrastructure projects and circular space and building management, as well as ensuring affordable housing to young people and young families, further resolution of the transitional issue of protected tenants will also continue.

One of the most important sectoral projects include:

• National Housing Policy Plan of the Republic of Croatia until 2030
• Act on Building Management and Maintenance - implementation of the Programme for renovating facades and the Programme for installing elevators
• Post-earthquake reconstruction of private and public buildings with a significant increase of the housing stock in Sisak-Moslavina County (59 multiapartment buildings comprising 1,024 housing units)
• New legislative framework:
  • Lease Act
  • Affordable Housing Act
  • Act on Proceeding with Illegally Built Buildings 
• Adoption of the Strategy on Management of Immovable and Movable Property Owned by the Republic of Croatia for the period 2026-2035
• Adoption of the Spatial Plan of the Exclusive Economic Zone of the Republic of Croatia in the Adriatic Sea
• Digitisation - transforming new generation plans and converting analogue plans to digital plans 

Source: HINA/MPGI

 
 

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