Incentives for Housing Savings Reduced to 10 Percent

The Ministry of Finance has announced that the proposed amendments to the Housing Savings Act and the State Incentives for Housing Savings propose a reduction in the percentage of state incentive funds from 15 to 10 percent.

Thus, the maximum amount of state incentive funds in one calendar year would be reduced from 750 kuna to 500 kuna, for a maximum deposit of 5,000 kuna per year.
-This way, budget expenditures for promoting housing savings will be reduced by one third, and the reduction applies to all payments made after January 1, 2013-, the Ministry states in the information about the adoption of the Law on Amendments to the Housing Savings Act and State Incentives for Housing Savings.

This information was published on the Ministry’s website, and as unofficially learned in that department, the proposed legal amendments are in the process of being submitted to the Government procedure.

The Ministry reminds in its information that housing savings, according to the applicable Law, is a special purpose savings collected from domestic individuals and legal entities to address the housing needs of citizens by approving loans for housing construction to Croatian citizens with financial support from the state in the territory of Croatia.

On the amounts of paid savings deposits to housing savers, in accordance with the applicable Law, state incentive funds are paid from the state budget in the amount of 15 percent of the paid housing savings deposits, with the maximum deposit on which state incentive funds are calculated being 5,000 kuna per year per saver. Thus, the highest amount of state incentive funds that a housing saver can achieve during one calendar year is 750 kuna, the Ministry states.

-The Law on Amendments to the Housing Savings Act and State Incentives for Housing Savings proposes a reduction in the percentage of state incentive funds from the amount of available housing savings paid in one year from 15 to 10 percent, whereby the maximum amount of state incentive funds per housing saver in one calendar year amounts to 500 kuna. The base amount for calculating state incentive funds remains the same, i.e., 5,000 kuna-, emphasizes the Ministry of Finance.

As they state, the housing savings banks are ‘familiar with this proposed Law and support the efforts of the Ministry of Finance to maintain the trust of housing savers in state incentives for long-term designated savings for housing loans even in times of unfavorable economic trends and the current state of public finances.’

However, they also note that the reduction in incentives is primarily the result of an analysis of the housing savings incentive system in Croatia ‘which has shown that the purpose is not fully met and that the system primarily does not serve the housing needs of citizens (a small number of concluded housing loan agreements) but is primarily a profitable form of savings for those citizens who do not intend to resolve their housing issues in this way.’

Therefore, the Ministry of Finance announces that ‘the housing savings incentive system will be analyzed more deeply during 2013, and decisions regarding the further status of housing savings incentives in the Republic of Croatia will be made accordingly.’

In Croatia, there are five housing savings banks operating – Prva stambena štedionica, Wüstenrot stambena štedionica, Raiffeisen stambena štedionica, PBZ stambena štedionica, and HPB stambena štedionica.