Although citizens and companies set aside a record 7.5 billion euros for the purchase of real estate last year, as much as a third of that amount was spent on unregistered apartments, houses and other buildings. The turnover of real estate that is not recorded in the cadastre is a big black point of property-legal relations over real estate in Serbia, but not the only one, because legal uncertainty is also created by other procedures in this area.
Unresolved ownership issues, illegal construction and lengthy and expensive administrative procedures are holding back a large number of investments in our country. That is why NALED, with the support of the Swedish International Development Agency (Sida), will prepare a comprehensive study in the next three months with a proposed solution to improve the procedure of registration in the cadastre, legalization, recording of public property, restitution, expropriation, consolidation, conversion and other procedures.
- There are 4.9 million objects registered in the real estate cadastre, but an almost identical number is not recorded. Among them are more than 2.7 million properties that meet the requirements to be registered, but their owners have not done so or do not want to, while two million illegal buildings are outside the cadastre records that must first be legalized. The solution for both groups is a simpler and digitized procedure, with less documentation and lower costs. Unresolved requests to the cadastre that were submitted on the basis of incomplete documentation, documents that are not enforceable for registration or outstanding requests for registration of rights to real estate submitted before 2018 are a big burden for further investment in real estate. Bearing in mind the evident lack of personnel capacity in the Republic Geodetic Institute, it is necessary to enable the representatives of interested judicial professions, first of all public notaries, but also public executors and lawyers to give their contribution and help the cadastre services in solving the backlog of cases - says Jasmina Radovanović, Head of Property and Investments Unit in NALED.
According to her, the study has an ambitious goal, to offer solutions for the final and successful transition of property relations over real estate in Serbia, from social to private ownership. This implies changes to existing laws and the adoption of new laws, as well as the elimination of institutions that complicate the trade because they belong to the old times, such as the right to use real estate, the state fee, etc.
A team of professors, lawyers, experts in this field participates in the preparation of the study, as well as representatives of businesses and departmental institutions - the ministries of construction, finance and justice, the Republic Geodetic Institute, the Chamber of Notaries, the Directorate for Property, the Directorate for Agricultural Land – who will contribute to the design of quality proposals. etc. The first meeting of this group was held recently.
The meeting welcomed the state’s decision to abolish the fee for the conversion of the right of use into the right of ownership, but it was pointed out that all situations should be reviewed in practice so as to offer a solution on how to apply the procedure effectively. When it comes to expropriation, NALED's expert team paid special attention to the analysis of this extremely complex and sensitive procedure of forced acquisition of property rights over immovable property, which has been the subject of much debate lately by experts, media and citizens, so in the coming period we will give concrete recommendations for the improvement of this procedure, which will go in the direction of greater legal security, fairness and rights of the owners, as well as a more efficient procedure and a uniform treatment of authorities throughout the territory of Serbia.
In the domain of restitution, it was stated that this process needs to be completed as soon as possible in such a way that the public finances can bear this burden, but that the old owners receive adequate compensation in the foreseeable future or in real substitution of immovable property of the same value if the requested cannot be returned or in material compensation that is in decent proportion to the value of the confiscated property.
A large segment of the comprehensive study will also be dedicated to redefining the tax policy on real estate. At the meeting, it was assessed that Serbia collects taxes in this area insufficiently efficiently and that is why it is very advantageous to invest money in real estate, which is why we are known as "a nation that saves in bricks", and often this property becomes "dead capital" because it is not used to create new value. The tax policy is designed disproportionately in relation to the wealth of the taxed person, so the property tax is paid on the right of ownership of real estate, and not on the economic strength of the taxpayer due to the fact that this tax does not allow the borrowing costs associated with the acquisition of real estate to be deducted from the base.
And finally, the collection of taxes from real estate leasing is particularly ineffective. It is estimated that between 150,000 and 200,000 apartments and other buildings are rented, but the collected tax revenues are small, primarily because the rents are paid in cash, which is very difficult for the tax authorities to detect.
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