If you’re scouting holiday home locations, Serbia may not be on top of your list, but it should be. This quick guide is dedicated to anyone contemplating a property investment in Serbia.
Why choose Serbia?
Eastern Europe is currently a hot spot for tourism, in part because it offers a more affordable experience than traditional European destinations. While Serbia might not have the tourist influx like Croatia, it’s less crowded, offering authentic, undiscovered holiday experiences. The Daily Mirror refers to Serbia as “one of Europe’s best-kept tourist secrets”.
Given the lower levels of tourist traffic, property prices remain relatively lower in Serbia than its neighboring countries. Although Serbian property prices have been on a steady decline since the 2008 financial crisis, recent economic reforms have fortified the real estate market, resulting in a nearly 20% increase in the last two years. This situation presents a myriad of opportunities for shrewd investors:
Take advantage of low property prices,
Capitalize on the burgeoning tourism industry for higher rental income,
Profit from potential capital gains when selling the property.
How to purchase property in Serbia
The property buying process in Serbia, though it’s non-EU, is relatively simple for UK citizens. Owning property in Serbia relies on reciprocity; you can be a property owner in Serbia if Serbians are entitled to own property in your country. Hence, as Serbians can own land in the UK, Britons can likewise own property in Serbia.
The process, from making an offer to completion, can last from a few days to a month. Once your offer gets accepted, both parties sign a purchase agreement, which is then notarized. The buyer then deposits 10-15% of the total purchase price, and a solicitor moves to assess the title deed. Once all papers are confirmed to be in order, the finalized contract is signed in the presence of a notary, and the buyer becomes the legal owner. Payment concludes the entire process.
Additional resources and information about your property purchase can be found on the Expat Serbia website.
Renting Your Property
Employing a local property management service is recommended for foreign property owners, not only for peace of mind but also to provide a professional experience to your tenants.
Reaching out to potential tenants, particularly in emerging holiday markets like Serbia, can be challenging. Property listing on holiday lettings websites could attract vast audiences of potential tenants, thus securing your investment.
Letting providers such as OwnersDirect often allow first listings to be free, levying fees only upon booking. They might also handle the booking process, customer services, and other aspects of property management.
Costs and Taxes
Serbia’s low buying costs add to its appeal as an investment destination:
– Property transfer tax approximately equals 2.5% of the property value, while real estate agents might charge around 3% as commission.
– For new build properties, the transfer tax is replaced by an 8% VAT, resulting in higher buying costs.
– Standard taxes apply upon property ownership comparable to other region’s countries.
– A flat rate income tax of 20% applies to any collected rent, but you can deduct costs such as management fees, maintenance, and insurance.
– Capital gains tax, charged at a flat rate of 20%, applies once you sell the property.
