Branko Bačić: We are considering introducing fines for building managers and irresponsible co-owners

The reconstruction after the earthquake, affordable housing, and housing policy, the issue of protected tenants are some of the hot potatoes that Branko Bačić, Plenković’s ‘commando for special operations’, as some call him, has tackled in less than a year since being appointed Minister of Construction. These were also the main topics of the interview in which we, of course, touched on the upcoming elections, property taxes, but also one of Croatia’s biggest long-term problems – demographic policy.

Recently, there has been much speculation about the election date. When will it be held?

– The elections will be held within the constitutional timeframe. This year is a super election year: elections for the European Parliament, as well as parliamentary and presidential elections, will take place. At this moment, we are focused on fulfilling the Government’s program, and in my assessment, we are doing exceptionally well. We have taken on many obligations that we must resolve before the elections. The goal of the Ministry of Physical Planning, Construction and State Property is to implement the Law on the Management of Real Estate and Movable Property owned by the Republic of Croatia in such a way that we decentralize the management of state property.

At the same time, the goal is to adopt a law on the execution of judgments of the European Court of Human Rights in the case group ‘Statileo vs. Croatia’ and the decisions of the Constitutional Court of the Republic of Croatia, i.e., to resolve the issue of protected tenants. Additionally, it is extremely important, and related to the ministry, to develop a national housing policy plan, which will be adopted by the end of the first quarter of this year, to ensure that apartments are more affordable for young people or that they can rent them more favorably.

What are the main outlines of this housing policy?

– Apartment prices on the market are still extremely high, therefore the national housing policy plan is being developed multidisciplinary, considering all aspects of demographic, social, economic, financial, spatial, and environmental policy. The basic prerequisite for developing a quality housing policy proposal is the implementation of comprehensive analyses and the establishment of models for projecting housing needs. The purpose of this strategic document is primarily to define affordable housing, and within the housing policy, it is possible to strive for additional goals such as reducing emigration, housing for young people, settling with deficit staff… At this moment, Croatia is implementing several models of support for housing.

There is the Program of Socially Encouraged Housing Construction under which apartments are built for purchase and rent, a model for subsidizing housing loans primarily for purchasing apartments on the market, and the Program of Interdepartmental Cooperation, which was introduced in 2019 for housing families in need and provides more favorable rental conditions for residents in assisted areas. According to the Interdepartmental Cooperation Program, one building has been completed in Beli Manastir, and construction is underway in Novska, Drniš, and soon in Benkovac and Knin. With this model, apartments are rented at a price significantly lower than the market rate, 36 cents per square meter, with the possibility of later purchase under significantly more favorable conditions.

Can we expect a new model for affordable housing, for example, a more favorable rent with the possibility of purchasing apartments, like the example from Beli Manastir?

– This will be shown precisely in that strategic document. In the analysis we are conducting, it is necessary to find reasons as well as answers to the extremely high prices of apartments for purchase, but also for rent. It is crucial to achieve lower apartment prices for targeted groups of citizens through state measures. The state has several levers available for implementation, financial, tax, land, and ecological-energy, but in the development of the national housing policy plan, we have also included representatives of the association of cities and municipalities because they, with their properties and the prices of utility connections, can help achieve more affordable housing. When we talk about housing policy and more affordable housing, I want to send a clear message: our focus is on recognizing and addressing the needs of our citizens.

Is it possible and to expect tax changes in the real estate segment? All real estate experts emphasize that the tax on apartment rentals is too low compared to classic rentals.

– In the process of developing the national plan, we will certainly analyze the tax issues as well. When it comes to purchasing apartments and houses, a tax on real estate transactions is charged, although previously there was no tax on the purchase of the first property. We also discussed the law on property tax in the Croatian Parliament in the first reading, but it was later abandoned. The law implied the introduction of a property tax that would be equivalent to the utility fee.

Proponents of introducing property tax also explain that it would allow for a reduction in tax obligations on labor. But while we are still developing the strategy and have not prepared legal solutions, I can only say that the strategy will, among other things, define the tax policy that regulates housing construction in Croatia. At this moment, there is a large fund of empty apartments in Croatia, i.e., apartments that are not used for residential purposes. However, this issue should not be viewed solely from a negative perspective.

What should be the priority of the new government? What should be emphasized? What changes and reforms, in your opinion, are first on the priority list?

– The priority and emphasis of this government now and in the future is demographics. I am happy when we build kindergartens, schools, halls, museums, but only through demographic revitalization do all these projects gain full meaning. Therefore, at the center of everything is the person, whom we want to enable to have a job and a roof over their head. And for that, we need a demographic strategy, which is also nearing completion.

In my opinion, this is the number one topic along with economic growth and appropriate social policies, as well as the completion of strategic transport routes alongside the growth of industrial production. In tourism, we have reached high levels. We have adopted a new Tourism Act with which we want to make Croatia a sustainable tourist destination while preserving our most valuable resource – space.

Are you satisfied with the reconstruction process? What is going well, and what could be better? And what are the bottlenecks in this process?

– On several occasions, while participating in reconstruction processes, primarily of public buildings, I have emphasized that this is a historic momentum and intervention in our Croatia. We are satisfied with the achieved dynamics of reconstruction after the earthquake. Reconstruction has been fully completed on 11,050 facilities, and 203 houses have been built. Currently, 1,445 construction sites are active, and an additional 1,373 locations are in the procurement of works. In the Sisak-Moslavina County, 12 multi-family buildings have been built with a total of 180 apartments, eight more buildings are under construction, and the construction of another 36 multi-family buildings with 666 apartments is planned.

At the same time, 131 modular houses for temporary accommodation of citizens whose property reconstruction has not yet been completed have been finished, and another 35 modular houses are under construction in Sisak. The procurement of 140 energy-efficient houses made in the facilities of Croatian companies has been completed, and they are used for the temporary accommodation of those citizens whose property reconstruction has not yet been completed and do not want to leave them. Of course, we would like the reconstruction to be even faster, but there are objective circumstances that make this impossible.

The Ministry alone canceled more than three hundred procurements for reconstruction last year, some due to significantly higher amounts of received bids compared to project prices, and some procurements received no responses at all. At this moment, there are no longer any administrative bottlenecks in the reconstruction, but the further dynamics will certainly depend on the availability of construction operatives and their readiness and ability to engage in the reconstruction. We will only be completely satisfied with the reconstruction when we have rebuilt the last house, but I believe that Croatia has done a great job so far in the reconstruction of the earthquake-affected area, as well as its revitalization.

How much more money will be needed for the complete completion of the reconstruction of buildings from the earthquake?

– It is difficult to say at this time because not all requests have been processed. During January or by mid-February, we will announce the reconstruction plan with the number of houses planned for structural and non-structural reconstruction and rough cost estimates based on the experience we have.

Care for one’s property in Croatia is at quite low levels. How to change that? Is the new law on the management and maintenance of buildings aimed at this?

– The law is still being developed. It will more closely regulate the area of building management and their maintenance. For now, this area is regulated by various regulations in which apartment owners and tenants do not navigate well. The proposed legal solution will, among other things, prescribe the introduction of mandatory liability insurance for damage for buildings and a new legal concept of ‘community of co-owners’, which will also have its OIB, which will speed up court proceedings and facilitate legal transactions, energy renovation, and building records.

The goal is also to regulate regular coordination of co-owners, as well as to define regular and extraordinary maintenance. It is also extremely important that at this moment, possibilities are being considered on how to prescribe fines for managers and irresponsible co-owners through this legal solution.

You can read the entire interview with the Minister of Physical Planning, Construction and State Property in the digital and printed edition of Lider.