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Jun 16, 2016

Low buying costs in Serbia


How high are realtors’ and lawyers’ fees in Serbia? What about other property purchase costs?

Transaction Costs

Who Pays?
Real Estate Agent’s Fee 3% buyer
Court Fee 0.05% - 1.0% buyer
Registration fee 0.01% - 0.05% buyer
Transfer tax 5% seller
Costs paid by buyer 3.06% - 4.05%
Costs paid by seller 5%
ROUNDTRIP TRANSACTION COSTS 8.06% - 9.05%
See Footnotes
Source: Global Property Guide

How difficult is the property purchase process in Serbia?

The Foundations of Property Law Relations of 1996 states that the reciprocity principle is the general rule that governs property and property rights acquisition in Serbia. Foreign individuals and legal entities can easily acquire property if the said property is necessary to their business. Foreigners can also easily acquire houses and apartments even if they are not performing business operations. However, foreign ownership of property is restricted near military land and on city construction plots.

Serbia propertiesIn Serbia urban (or construction) land is owned exclusively by the state. Urban land, however, can be leased for a minimum of five to a maximum of 30 years. In interest of constructing buildings for commercial purposes, investors can acquire property rights or rights to use land outside of land ownership. Ownership of buildings and apartments is not restricted. Foreign individuals who cannot own land through reciprocity can circumvent this restriction by incorporating themselves in Serbia.

Once a property has been chosen, the buyer makes an offer. Once the seller accepts the offer, both parties sign a preliminary purchase agreement and have it notarized. Upon signing the preliminary contract, the buyer pays a 10% deposit, which is non-refundable in case the buyer changed his mind. The buyer’s solicitor can now start examining the title deed of the property and its history as well as the rights of the seller to dispose the property. When all is in order, a completion date is written into the original contract and the whole process takes around six weeks to complete. The final contract is signed in the presence of a public notary. The finalized and certified contract establishes the legal ownership of the property. Once ownership is confirmed, the Inland Revenue Office determines the value of the property, and the buyer pays the 5% property tax based on the estimated value of the property. Once this is accomplished, the property can then be registered with the local Area Property Registry. The buying process is complete upon payment of the agreed price.

Registering a property in Serbia requires six procedures and takes 91 days to complete.



Footnotes to Transaction Costs Table


The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Real Estate Agent´s fee:
The real estate agent’s fee is around 3% of the purchase price of the property and it is generally paid by the buyer.

Registration fee:
Registration of property is submitted to the Cadastre and associated cost is RSD3,120 (€25).

Transfer Tax:
Transfers of property are subject to 2.5% transfer tax.


VAT:
First transfer of right of use of a residential property is subject to 8% VAT. Otherwise, first transfer of the right of use of new buildings or parts therefore is subject to the normal VAT rate of 20%.

Court fees:
Court fees are set according to an official court fee schedule, with a maximum rate of RSD39,000 (€312).

COURT FEES

PROPERTY VALUE (in RSD) COURT FEES (in CSD)
Up to 10,000 (€80) RSD980 (€8)
10,000 – 100,000 (€800) 1%
100,000 - 1 million (€8,000) 0.50%
Over 1 million (€8,000) 0.25%





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