New Tenancy Act: Contracts Only Through Notaries
The new Tenancy Act, replacing the 1996 regulation, introduces notarized contracts, limits rent increases, and sets clear rules for eviction and protection against non-payment.
The new Tenancy Act, replacing the 1996 regulation, introduces notarized contracts, limits rent increases, and sets clear rules for eviction and protection against non-payment.
Every new long-term lease agreement will henceforth have to be concluded as a notarial deed and notarized by a public notary, this is the core of the draft Tenancy Act that has just been released for public consultation. After three decades of struggling with outdated legislation from 1996, the state finally aims to more thoroughly regulate the relationship between landlords and tenants. Key novelties include strict limits on rent increases, precise notice periods, and the introduction of protection against non-payers.
Notarization is not an end in itself: it enables direct enforcement of debt collection or eviction, bypassing lengthy court proceedings that have long plagued both landlords and tenants. Additionally, the state will finally obtain more accurate data on the actual number of long-term rental units, which have been floating in the gray zone for years.
Upon moving in, both parties must jointly prepare a detailed inventory report, including a description of the property's condition, meter readings, and photographs of each room. The tenant is required to pay a deposit equivalent to one month's rent, while the landlord gains the right to inspect the apartment twice a year, but only with prior notice.
The proposal aims to curb runaway rent hikes with a simple rule: during the term of the contract, rent may be increased at most once a year, with at least 30 days' notice to the tenant. The increase must not exceed the annual growth rate of housing prices according to official data from the Croatian Bureau of Statistics, any clause allowing more frequent or larger increases will be automatically null and void.
The rules for terminating contracts are now clearly delineated. A tenant may terminate the contract without providing a reason, with a 60-day notice period. The landlord, on the other hand, may terminate the contract due to non-payment, significant damage, or violation of house rules, but only after a written warning, the tenant is given 15 days to remedy the breach, and if they fail to do so, the eviction period cannot be shorter than an additional 30 days.
Protective periods have also been significantly extended. When the tenant has not breached their obligations, the minimum eviction period is six months, or one year if the tenancy has lasted more than five years. If a child lives in the apartment, this period is extended by an additional six months, a shorter period may be stipulated by contract, but never less than three months.
To protect landlords from non-payers, a system is introduced in which the Agency for Workers' Claims Insurance, under certain conditions, takes over the payment of claims. The annual membership fee for this protection will be up to two percent of the annual rent, ranging from approximately 40 to 150 euros, and the tenant will be required to issue a blank promissory note for up to 10,000 euros.
The law for the first time establishes a general framework for social and affordable rent. For apartments owned by the state, the base rent would be at least 7.725 euros per square meter, while the total cost of rent and utilities must not exceed 30 percent of the tenant's income. The status of approximately 4,000 protected tenants in former social housing will also be specially regulated.
Alongside the new law, conditions for the Affordable Rent Program are further relaxed, the previous two-year waiting period is abolished for co-owners who previously rented out their properties to tourists, in an attempt to attract more private landlords. So far, 958 properties have been registered in the Program, and 61 matches between owners and potential tenants are in progress.
As a concrete example, a family with two children renting a 53.4 square meter apartment in Zagreb's Trešnjevka neighborhood pays an affordable rent of 339 euros per month. The apartment owner receives a total of 662 euros, with the state covering the difference of 323 euros per month. The draft law still needs to go through public consultation and the full legislative procedure before potential adoption.
