Serbia is changing its Property Practices to Attract New Investment
The Republic of Serbia has a hybrid system of laws, rules and procedures regarding owning, leasing and developing real property that is in a state of transition. For the most part, property rights are based on Civil Law. Currently, planning, zoning, permitting, and taxing procedures are in place. The Socialist practice that provided for the “ownership or tenancy” of land to be conveyed with ownership or tenant rights of the building or structure on the land is still practiced; however, laws and practices are changing in favor of land ownership and private property rights. The Serbian Government has “guillotined “ or terminated over 15,000 laws that hampered the property transfer system.
The government is working incrementally to change the property ownership system from the “socialist system,” where the State owned most of the property and leased it to end users, back to a privatized system of property ownership. The Property Directorate of Serbia is working through the 78,000 +/- claims for returning property to its original/rightful owner. Reparation is being paid by the State to rightful owners where ownership can be established and where the property cannot be returned to the original owners, their heirs and/or assigns. Additionally, the ownership of all properties is being legally established in a revitalized land registry known as the Cadestre. The process of registration in the Cadestre is targeted for completion in 2010.
To facilitate the privatization process and to encourage property sales and development during the transition process, the government is granting either fee simple ownership or long term leasehold of the property that can include a guarantee no cost conveyance for fee simple ownership to the new property owner when the transfer is possible. This guarantee may include an indemnification provision that holds the new or repatriated owner harmless regarding claims from previous owners, who claim ownership prior to State nationalization of the property.
Under current Serbian Law, the Government may expropriate property under the “ Law of Expropriation” ; however, an owner/buyer/tenant has the right to request a determination from local authorities regarding the matter which is to be made within sixty days. Should the property be expropriated, Serbian Law requires compensation. The “Law of Foreign Investment “ provides safeguards against arbitrary expropriation of foreign investments.
Future Blogs will discuss procurement procedures in greater detail as well as current market conditions that will focus on the various cities and regions. Your comments and questions are welcomed guides to this Blog.
Nancy Bowen Wiggins, CIPS, CCIM
Author, Blog on Serbian Real Estate
Nancy Wiggins Commercial Real Estate
AND HOLDING,d.o.o.
Its is the firs time that I visit this blog. I really enjoyed reading this article and the ones about Argentina. It is very interesting to learn how different (from what we are used to see in USA) the real estate business practices can be in other parts of the world.
I have the following questions for Mrs. Wiggins:
If “ownership or tenancy” is conveyed with ownership or tenant rights of the building or structure. What happens in Serbia to “ownership or tenancy” if the building is demolished?
Second, are there any special incentives for foreign investors in Serbia?
If so what are they?
Alberto, that is a great question. David Segrest is the pro in Argentina and Nancy Wiggins is the pro. You can always visit their country profile to see their contact information.
Thank you for your interest,Alberto. The answer is a mixed one. Currently they are changing the registration of land and land tenancy to/from 99 year tenancies to fee simple ownership.”Urban” land under the “Planning & Construction Act of 2003″,may not be conveyed in fee simple but is conveyed via leasehold that has not a legal renewal provision. According to Serbian rules[that are undergoing radical change],
private ownership entitles the owner of the structure a full range of rights where the rights to the land are not contingent upon the maintenance of the structure.Hope this helps. A more complete answer will probably require a Serbian real estate attorney which I can suggest.
Thank you for your interest,Alberto. The answer is a mixed one. Currently they are changing the registration of land and land tenancy to/from 99 year tenancies to fee simple ownership.”Urban” land under the “Planning & Construction Act of 2003″,may not be conveyed in fee simple but is conveyed via leasehold that has not a legal renewal provision. According to Serbian rules[that are undergoing radical change],
private ownership entitles the owner of the structure a full range of rights where the rights to the land are not contingent upon the maintenance of the structure.Hope this helps. A more complete answer will probably require a Serbian real estate attorney which I can suggest.Real Property can be owned by foreign individuals. Most foreign ownership of property is via ownership of a Serbian Company that has a 10%corporate income tax rate.If the owner keeps account books the rate can be as low as 0.4%,if not it can go to a high of 3%. So there is incentive to invest in property via a corporation.