As a potential buyer of an apartment under the POS housing programme, contact the municipality or the city
The POS programme was launched with the aim of enabling citizens to solve their housing issues at considerably more favourable conditions than those on the market.
The average interest rate is about 3.3 percent with a repayment period of 30 years + 1 year grace period without guarantors. During the first 15 to 20 years, the loan is repaid to the commercial bank and the maximum interest rate (variable) may be 3.8 to 5 percent (average 4.4 percent), with a foreign currency clause linked to the euro (depending on the bank you have chosen). For the remaining 10 to 15 years, the funds provided by the Agency for Transactions and Mediation in Immovable Properties (APN) are repaid (repayment of this loan begins upon full repayment of the commercial bank loan).
The interest rate is fixed and amounts to three percent, with one percent annual interest rate during the grace period of the commercial bank loan, and applies to all apartments under construction and sale for which no apartment purchase contracts have been concluded. For apartments whose purchase was realized until the amendment of the POS Act (Act on Amendments to the Act on Socially Stimulated Housing Construction, which entered into force on March 10, 2015), the interest rate is also fixed and amounts to five percent, with two percent annual interest during the grace period of the commercial bank loan.
Procedure for the purchase of a POS apartment
The procedure for choosing and buying an apartment consists of several steps:
- As a potential buyer interested in purchasing an apartment under the POS programme you should contact the municipality or town in the territory of which you are interested in buying an apartment, since local self-government units (hereinafter referred to as LSGU) carry out surveys on housing needs.
- After having established that there is sufficient interest in purchasing a POS apartment, the LSGU provides the land for housing construction, and agrees and contracts with the APN the further realization of the programme.
- A commission, made up of LSGU and APN representatives, establishes a priority ranking list, and APN presents the POS programme to the citizens.
- LSGU and APN conclude an agreement on the transfer of the land ownership right to the APN.
- The APN and LSGU commission conducts tenders for the design and construction of apartments. After the project has been built, APN presents it to buyers from the priority rank list.
- Potential buyers then check their creditworthiness and APN obtains the building permit.
- APN and LSGU sign an agreement on mutual rights and obligations, and APN concludes a contract on construction and supervision.
- During construction, you choose the apartment and sign a pre-sale agreement and thereupon the loan agreement with the commercial bank.
- Upon building completion, the use permit is obtained and division into condominium units is carried out, and thereupon you sign the apartment purchase agreement with APN.
- At the end of the procedure, you get the keys of the apartment and can move in.
Registration of ownership rights
At the time of conclusion of the purchase agreements, the apartments are not registered as condominium property because the whole process of division into condominium units is carried out after the use permit for the multi-apartment building has been issued. Once the use permit has become final and effective, application forms for registration of the building shall be submitted to the cadastre together with the use permit. After registration of the building in the cadastre (the decision obtains final force and effect after 15 days), the application for registration of the building is forwarded ex officio to the land registry.
After the decision on the registration of the building has become final, the building subdivision plan shall be verified by the office that issued the use permit and then submitted to the court. Upon the implementation of the building subdivision plan, the APN submits to the court proposals for registration of ownership rights for all apartment buyers.
Development of the building’s surroundings
The development of the area around the building depends on the spatial planning documentation and on the size of the plot on which the building is being built. The plot is developed by the investor and the LSGU, in accordance with the agreement on mutual rights and obligations.
The seller is responsible for failures of compliance with contractual and legal provisions. The guarantee is issued according to the terms of the purchase contract, as well as with the applicable construction regulations. The guarantee for construction, craft and installation work is provided by the contractor for a two-year period.
Who can participate in the POS programme
The right to buy an apartment under the POS programme is available to all citizens - nationals of the Republic of Croatia, with precedence given to those citizens who acquire a property for the first time and whose housing issue is not appropriately settled, i.e., they do not own a living space that is adequately equipped with utility infrastructure (water, sewerage) and that meets the hygienic and technical conditions for a healthy living, of the size of about 35 square meters of usable floor area for one person, and about ten square meters for each further person.
Size and characteristics of the apartments
As a future buyer of an apartment you cannot have an impact on the layout of the rooms in the apartment. When designing these apartments, the maximum utilisation of the space is taken into account by applying the provisions of the Ordinance which, among other things, prescribes the characteristics of an apartment of a certain size.
In residential buildings with four to seven floors there must be built space for an elevator, while in buildings with eight or more floors, there must be built space for at least two elevators.
The average apartment surface area that fulfils the needs of a single person is about 40 square meters, whereas a city/municipality or APN can also pass a different decision. Thus, on 21 January 2013 the City of Zagreb passed the decision that a single person can buy an apartment of up to 47 square meters of net usable floor area.
A single person can buy an apartment larger than 50 square meters if apartments of such size remain unsold.
A single parent with one child can buy an apartment of 50 square meters and smaller according to his/her ranking on the priority list.
A family of four members is considered to be appropriately provided with housing if they purchase an apartment of an average size of 60 square meters.
A family of three members can also choose a smaller apartment than the one they are entitled to, according to their ranking on the priority list.
If circumstances change until the selection of an apartment (the applicant gets married or a child is born to him/her), the APN must be provided with the respective evidence (wedding/birth certificate) up to the time of selection when new members of the family household are taken into account, but the ranking on the priority list remains unchanged.
If a particular apartment remains unsold, the APN will offer it to an interested buyer regardless of the floor area to which he/she is entitled based on the number of household members.
Net useful floor area
The net useful floor area of an apartment is the total floor area of the apartment or some other room, minus the width of the dividing walls, and it is calculated by using the coefficient of 1.00. When calculating the net useful floor area, the external spaces are also taken into consideration and they are calculated on the basis of reduced coefficients, i.e., balcony - 0.25, loggia - 0.75, covered terrace - 0.50, uncovered terrace - 0.25.
The apartment price per square meter consists of: standard construction price (construction, design, supervision and water contribution + VAT), which can amount to a maximum € 804.04 euro per square meter of net useful floor area of the apartment (payable in kuna at the midpoint exchange rate of the Croatian National Bank on the day of payment), as well as the price of the land, utility infrastructure and connections, which cannot exceed € 321.62 euro per square meter of net useful floor area (payable in kuna at the at the midpoint exchange rate of the Croatian National Bank on the day of payment).
Thus, maximum (the highest) apartment price is € 1 125.66 per square meter (payable in kuna at the midpoint exchange rate of the Croatian National Bank on the day of payment).
The anticipated apartment price is formed after conclusion of the agreement on mutual rights and obligations between the APN and the city/municipality, and after conclusion of the agreement on construction, design and supervision on the basis of which a pre-contract on the purchase of the apartment with the buyer is concluded.
The final price per square meter is determined upon completion of construction and calculation of all construction costs. It cannot be more than seven percent higher than the anticipated price stipulated by the pre-contract and cannot be increased subsequently.
The insurance policy cost depends on the apartment size and amounts to approximately 200-500 kuna per year. The insurance policy is tied in favour of the bank and of APN.
You have the choice to make the down payment in cash or through loan, which is a separate loan and different interest rates and lending terms apply to it (i.e. the usual or commercial terms) as compared to those that are guaranteed under the POS programme. However, you can realise the amount of down payment in the same commercial bank where you realise the basic loan, which is your choice.
The loan agreement is concluded with the bank, along with the insurance agreement, by establishing a pledge for the funds provided by the bank. In addition to the above-mentioned agreement, you conclude a contract with the APN for the purchase of the apartment, acquiring thereby ownership of the apartment; by this, in parallel, also public funds are provided. After payment of the debt to the bank, public and other funds belonging to the Republic of Croatia and the local self-government unit are repaid.
Each buyer may, within his/her own framework, determine the manner and period of repayment of the loan, which means that this period may be shorter than the above indicated 30 + 1 years, provided that the bank loan instalment and the APN loan instalment are equalised.
Down payment in an amount of at least 15 per cent of the anticipated sale price of the apartment is payable within 30 days from the conclusion with the APN of a pre-sale contract for the purchase of an apartment. You can also pay more than 15 percent of the participation, in which case the remaining amount of the loan is reduced.
The law foresees the possibility that families with three or more children, volunteers of the Homeland War (who by 15 January 1992 have spent 100 days in the defence of the sovereignty of the Republic of Croatia) and buyers with disabilities are not obliged to pay the down payment in cash, but the participation is added to the bank loan under the same conditions.
Housing savings can also be used as participation.
A business cooperation agreement was concluded with the Erste banka, the Croatian Postal Bank, the Société Générale-Splitska banka and the Privredna banka and the terms of these banks for the APN Programmes are more favourable than those on the market.
The buyer can choose the bank where the loan will be realised, in which case the APN considers this purchase as a cash purchase.
As a rule, repayment of the loan begins one month after the loan contract has been concluded. However, the law has allowed one year of grace period that buyers can take.
You do not have to be a client of the banks with whom the APN has concluded a business cooperation agreement, however clients of these banks can achieve more favourable terms than clients of other banks.
If you are not creditworthy yourself you need to have a creditworthy co-debtor, but it is the bank that decides on this matter.
The bank determines the maximum credit rating by taking into account existing credit obligations. To be creditworthy means to have within the framework of the fixed monthly income a free part for the future loan obligation, with the amount of credit standing being higher than the established monthly annuity.
Apartment buyers with a fixed-term job cannot take a loan to buy an apartment autonomously, but the purchase of an apartment can be realized with a creditworthy co-debtor that meets the bank terms.