Starting next year, the rules for short-term rental of apartments to tourists in residential buildings will change – such rentals will no longer be considered part of family accommodation but will be treated as long-term leases. The new law requires that apartment owners renting to tourists obtain the consent of co-owners within five years, and these changes will create a clear distinction between true hosts and renters in family accommodation, which will also have tax implications.
In addition, the validity periods of temporary solutions for conducting hospitality activities and alignment with the Tourism Act are being regulated.
– With these changes, we have protected and preserved the host in true family accommodation, as part of our tradition and added value of our tourism offer – said Minister of Sports and Tourism Tonči Glavina.
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‘Rash measures’
The public has long awaited these amendments to the Hospitality Act, especially due to the complex situation with ‘cimerfrajem’. The category of family accommodation, which has grown to over 125,000 service providers and about 600,000 tourist beds over the past decade, has long included a large number of renters. Renters are landlords who usually have no contact with guests, often using booking platforms and allowing guests to check in and out independently. This is one of the reasons why a significant part of the problems with apartmentization is attributed to them, which the new law aims to regulate. However, some doubt the effectiveness of these measures.
– It seems to me that such rash measures and the last-minute tweaking of laws cannot yield the desired result, but may further deepen some divisions within Croatian society, as it turns out that foreigners with properties in Croatia are in a better position and manage those properties better than Croatian citizens, who are now divided into those who have properties in buildings with four or more apartments and those who have standalone properties. Clearly, not everyone has equal rights, as foreigners who have been exclusively buying most of these properties in attractive locations in recent years manage them completely unimpeded, without any control, and all these laws do not apply to them – says Nedjeljko Pinezić, advisor for family micro-entrepreneurship and former president of the Community of Family Tourism in the Croatian Chamber of Commerce (HGK).
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Nevertheless, Glavina says that these amendments to the law are in line with the government’s direction to ensure affordable housing for young people and families. The trend, he added, is for more apartments to transition from short-term to long-term rentals. Short-term rentals, they state in the draft, have begun to significantly affect property prices in the country due to volume, reducing their availability and raising prices for long-term rentals or housing. All of this, the Ministry warns, affects the overall contribution of tourism to the economy, and for some, the new measures are quite correct.
– A reasonable and fair, if I may say economically logical solution. Tourism takes place in the everyday living space of the host, who should primarily benefit from the tourist activity in their ‘living room’. It would be nice if everyone could benefit without limits, under the same conditions, but tourism is such that it has a spatial ceiling, which, if breached, brings long-term harm to all involved. I wholeheartedly support – stated Josip Mikulić, a regular professor at the Department of Tourism at the Faculty of Economics in Zagreb on LinkedIn.
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Who is a host?
According to the Ministry’s proposal, a host is defined as a landlord who has registered residence in the area of the local self-government unit where the facility providing hospitality accommodation service is located.
Defining the term host will represent a legal basis for introducing a more favorable tax treatment for this group of landlords, or open the possibility of distinguishing true family accommodation from landlords who provide accommodation services solely for the purpose of conducting economic activities, the Ministry states in the effects of the regulations.
A landlord who rents an apartment in a residential building ‘defined by the regulation governing the maintenance and management of buildings’ will not be considered a host. This means that those who have apartments and flats in multi-family buildings cannot be hosts even if they live next to the apartments they rent out.
It should be noted that a requirement has been introduced that those who wish to rent apartments in a building must have the consent of 80 percent of the tenants. However, the amendments to the Hospitality Act also stipulate that owners of all existing apartments rented in buildings must obtain the consent of other tenants within five years.
Of course, this must also be done by all who will be in the registration process when the law comes into force. If they do not obtain the consent of co-owners within five years, their decision to conduct the activity will be revoked. Another novelty is the extension of the deadline for those conducting hospitality activities in facilities undergoing legalization. These legal changes, which have been on eConsultation since last night, extend the temporary solutions for categorizing family accommodation and serving food and beverages for two years until December 31 of this year, and as Večernji list learns, this will allow about 15,000 entities to continue operating without interruption. This number includes both hoteliers and renters equally.
Tourist boards and marketing
– The amendments to the Hospitality Act propose concrete measures that favor the development of sustainable tourism. In creating the amendments, care was taken to consider all stakeholders, especially ensuring that all prescribed deadlines are reasonable and long enough for all providers to have time to adapt to the proposed changes. Additionally, with these amendments, we are fulfilling what we set out in the Government Program in this mandate, we have protected and preserved the host in true family accommodation, as part of our tradition and added value of our tourism offer – said Glavina, adding that these amendments to the law are also in line with the strategic direction of the Government to ensure affordable housing, primarily for young people and families, and the trend is for more apartments to transition from short-term to long-term rentals.
Glavina also emphasized that these amendments follow the Government’s strategy for the development of sustainable tourism and ensuring more favorable housing for the local population, primarily for young families. He warns that Croatia, like many tourist destinations, is facing a huge increase in rental capacity on online platforms, which is why it is important to protect the local population, the environment, and ensure sustainable tourism growth.
– Many countries in Europe, especially tourist destinations, are now on the brink of sustainability, as the trend of increasing offers of rooms, apartments, and houses on booking platforms has exploded. According to Eurostat data, online booking platforms generate 700 million overnight stays in the EU in 2023 compared to 440 million overnight stays in 2018. Many destinations cannot cope with this and are opting for radical measures, which we do not want to reach, and that is why we are taking all these steps now. We think of all stakeholders, and this reform protects the local population, space, and environment and ensures social and economic sustainability – says Glavina, adding that ‘this is a strong step in our comprehensive reform, which will not be the last, and its goal is to enable a successful transition to sustainable tourism, which will be balanced in the needs and satisfaction of both tourists and the local population’.
Glavina also announced a special marketing campaign at the level of the tourist boards system and branding hosts in family accommodation as an important added value of Croatian tourism.
