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Last Updated: Jun 16, 2010


House prices in Slovenia (second-hand dwellings) rose 1.15% during the year to Q1 2010, after 5 quarters of consecutive price falls. When the financial crisis hit Slovenia in 2008, housing oversupply dragged house prices down, but the country is finally emerging from this period.

There were significant price increases outside Ljubljana, with average prices rising 4.28%. However, in Ljubljana prices were down 2.57%, over the year to end-Q1 2010.
Transactions in Ljubljana increased to 357 units from 141 units last year. Outside Ljubljana, 939 units were sold, up from 521 last year.

These numbers are expected to improve further with lower interest rates. Interest rates on loans with up to one year initial rate fixation fell to 3.08% in April 2010, from an average interest rate of 4.05% in 2009.

The value of new residential building construction declined 33.5% over the year to Q1 2010. Dwelling permits also fell 16% during the year to Q1 2010.
Slovenia, being an export-dependent country, suffered badly from the global financial crisis. Slovenia’s economy has been shrinking since Q3 2008. During the year to Q1 2010, GDP was down a modest 0.8%. Unemployment rose to 10.6% in March 2010, the highest level since 2005.

Analysis of Slovenia Residential Property Market »


RENTAL YIELDS
Last Updated: Jul 28, 2009



Rental yields for properties in central Ljubljana range from 4.3% to 5.5%. Property prices are around €2,926 3 to €3,737 per sq. m. while rents are around €491 per month for a small (40 sq. m.) unit. Larger units have much higher rents that can reach up to €2,175 per month (for a 150 sq. m. flat)

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Apr 21, 2010


Effective Tax Rate on Rental Income

Monthly Income €1,500 €6,000 €12,000
Tax Rate 15% 15% 15%
Click here to see a worked example
Source:
Disclaimer

Rental Income: Nonresident foreigners earning rental income are generally taxed at 25%. A standard deduction of 40% of gross income is available for all taxpayers earning rental income, for income-generating expenses.

Capital Gains: Capital gains tax is levied at a flat rate of 20%. The rate is reduced by 5 percentage points for every 5-year holding period, which effectively means that properties held for 20 years or more are exempt from capital gains taxation.

Inheritance: Inheritance of spouses and direct descendants are not taxed in Slovenia. Other heirs are liable to inheritance tax and the applicable progressive rates vary depending on the relationship between the donor and the recipient and the value of the property.

Residents: Residents are taxed on their worldwide income at progressive rates, from 16% to 41%.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Apr 10, 2007



Roundtrip transaction costs are around 6.8% - 7.7% of the property value. The 2% Transfer Tax is paid by the seller while the real estate agent’s fee at 4% (plus 20% VAT) is typically split between buyer and seller.

Transaction costs for newly constructed or renovated residential apartment or building is substantially higher because of 8.5% VAT levied in lieu of transfer tax. New apartments intended for rental are considered commercial properties and are subject to 20% VAT.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Sep 15, 2006



Rent: Rent and rent increases can be freely negotiated but must be based on the market rate. In theory, rents must not be 50% higher than average rents in the same local municipality. In practice, this is not followed; landlords can draw contracts and change it as they wish.

Tenant Security: If the contract is for a definite period of time, the landlord has no obligation to renew the contract. If there has been no renewal 30 days before contract expiration, the tenant has to vacate the apartment at the day of expiration.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Jun 16, 2010


Economic downturn began

The Republic of Slovenia lies at the heart of Europe, where the Alps face the Pannonian plains and the Mediterranean meets the Karst. Slovenia has excellent infrastructure, a well-educated work force, and a strategic location between the Balkans and Western Europe.

Slovania made the transition in 2004 from World Bank borrower status, to donor-partner. Slovenia acceded to both NATO and the EU in the same year.

Slovenia’s economy is fueled by exports and foreign investments, and its high level of trade openness makes Slovenia sensitive to the current global economic crisis. In view of that, the economy has suffered from the recession in export markets, primarily from its main trading partner Germany.

The unemployment rate for the first quarter of 2009 rose to 8%, from 6.77% in Q4 2008. Average wages declined by 2% in 2008, from 4% in 2007.

The manufacturing sector accounts for most employment, and the decline in exports hit the manufacturing sector hard.

Inflation rate rose to 5.68% in 2008, but began to stabilize at the end of the quarter.

In the first quarter of 2009, Slovenia entered recession, with a contraction of 6.4% following a contraction of 4.1% in Q4 2008. The economy is expected to contract by 4% for the entire 2009.







  • Pro-landlord rental market
  • Low transaction costs
  • Strong post-transition economy
  • Low to moderate yields in Ljubljana
  • High rental income tax
  • Minor issues w/ ownership
RESIDENTIAL PROPERTY FACTS
Price (sq.m): €2,748 For a 120 sq. m. property, usually an apartment.
Rental Yield: 4.93% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,356 For a 120 sq. m. property.
Income Tax: n.a. Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 6.92% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 10.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Landlord Rating is based on a detailed study of each country’s law and practice.

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