The situation of urban construction land in Serbia
| 14 February 2010 - Comments (0) | Procedures |
Urban construction land in Serbia went though many changes in the past 60 years. It was nationalized, partially given back and last, privatized again. That last step was made possible by the New Law on Planning and Construction adopted in August 2009 by the Parliament of Serbia.
This article is an update of a previous one written before this new Law.
Nationalization
After the Second World War everything from agricultural land, forests, construction land, apartments, buildings and factories was confiscated from their owners. The communist state established total control over private properties.
It happened in several stages, and the most important one was in 1958 when Communist authorities took urban construction land away through a massive nationalization. First, the land became public property but was later transformed into state property. The owners of a land became simple users of that land and the right of use could be inherited but could not be sold to another party. This situation prevented any real-estate market to develop. Some people nevertheless sold their right of use but there was no way to get an official recognition of that transfer.
Rights of use and right to trade
In 2003, the Law on Urban Planning and Construction (Zakon o planiranju i izgradnji, Official Gazette of the Republic of Serbia No. 47/2003) was adopted. It allowed selling and transferring rights of use. That was an official and legal recognition of the common practice (Article 84 of the law). The law also allowed the formation of constructible plots. That was a first step forward for the local real estate market but not enough for the market to really take off.
But the law did not change the status of the land. Buying it still meant buying the right of use on it. Many potential foreign investors could not accept or understand that their millions worth investments could be located on a land that they can use for 99 years but not own. They wanted full ownership like elsewhere in the West.
Privatization
The new constitution of Serbia, that was adopted in October 2006, opened doors for the privatization of construction land in Serbia. A new law needed to be voted to finally return the land to their users.
That law happened in August 2009, with the New Law on Planning and Construction (“Official Gazette of the Republic of Serbia”, No. 72/2009), which became effective on the 11th of September 2009. This new law regulates the conversion of the rights of use to the rights of private ownership, effectively giving back the land to their users. This is a normalization that was much needed and put Serbia in line with the rest of European countries.
Restitution
The last step, will be the law on the restitution of confiscated properties for which the former owners had lost all rights. That is a complicated piece because those former owners now need to receive compensation if not the confiscated property itself. It is worth noting that, in the New Law on Planning and Construction, a special fund for restitution will receive 50% of the payments realized on the basis of conversion of rights of use to rights of ownership (Article 107).
You can read more on the topic in this article : Serbia a 'black hole' on land restitution map.
