Croatia to clamp down on short-term tourist rentals to ease price squeeze

By Antonio Bronic

SPLIT, Croatia, Nov 20 (Reuters) - Croatia is set to become the latest European country to tackle a tourism-related housing price crunch, although some property owners fear the proposed legislation will hit business.

A package of draft laws was approved in the Croatian parliament last week, but the final nationwide legislation will only be passed following wider discussion and likely amendments.

Cities from Malaga and Barcelona in Spain to Athens and Budapest have clamped down on short-term rentals in an effort to alleviate housing shortages and reduce prices for local people.

Such moves in popular tourist destinations might have an impact on platforms such as Airbnb and Booking.com.

This year the Croatia coastal tourist trap of Dubrovnik banned new private rental permits in its historic Old Town in a bid to keep young people from leaving as a result of high costs.

Croatian Finance Minister Marko Primorac said that the laws will raise taxes on houses for rent and the lump sum tax on tourist rental, but will not affect housing units where people live long term or where people live in their own property.

Some locals say that will give them a chance to rent at market prices and revive towns where blocks of apartments only fill up during the holiday season.

"What bothers the citizens of Split, as well as Dubrovnik and other coastal towns, is that they are emptied of residents," said Zaklina Juric of the "Tenants Together" initiative.

"There are no shops in the centre, the town is dead and someone has to finally acknowledge that," Juric said of the new laws, which the group supports.

Tourism accounts for some 20% of Croatia's gross domestic product $(GDP)$, with about 125,000 people employed in the home rentals business. And some of those who rent their properties short term are worried by the proposed legislation.

"The owners of apartments are panicking, many of them took loans, invested in the apartments, logistics which will all be brought in question with this new law," said Jurica Lepinc, who owns a rental agency in Croatia's capital Zagreb.

Klaudia Kapural, who rents her apartment in Zagreb through an agency, said taxes would skyrocket. She criticised a provision that 80% of tenants will have to agree on rent in residential buildings, saying it will be hard to accomplish.

"Many apartments will be closed, the prices ... will probably rise 20% next year," said Natasa Luketic, who also rents an apartment.

(Reporting by Antonio Bronic and Daria Sito-Sucic; Editing by Alexander Smith)

((daria.sito-sucic@thomsonreuters.com; +38733 295 484; Reuters Messaging: daria.sito-sucic.thomsonreuters.com@reuters.net))