If you’re looking for a holiday home, Serbia might not be the first country to spring to mind but it is well worth considering. Here is a quick guide to anyone thinking of investing in a holiday home in Serbia.
Tourism is booming across Eastern Europe at the moment as holidaymakers turn away from traditional European destinations to save money. Serbia has not seen the same vast swathes of tourists as countries such as Croatia but that is no bad thing. Tourists are already heading to countries like Serbia and Bosnia to escape the crowds and discover a more untouched, authentic holiday experience with the Daily Mirror calling Serbia “one of Europe’s best-kept tourist secrets”.
The relative lack of tourist interest in Serbia has also left property prices lower than in some of the country’s neighbours. Like most of Europe, Serbia has seen property prices fall steadily since the 2008 financial crash. Now Prime Minister Ivica Da?i? is instating important reforms and organizing EU membership for the country that have already helped strengthen the real estate market with property prices rising almost 20% in the last two years as well as general economic improvements such as increases in GDP.
This means a multi-pronged opportunity for savvy investors:
- You can buy property at a low price,
- Ride the wave of increased tourism for better rental income
- And potentially make healthy capital gains when you sell
“Golubac” by Denis Barthel. Licensed under CC BY-SA 3.0 via Wikimedia Commons
The Buying Process
Although Serbia is not yet an EU member, the buying process is still quite straightforward for UK citizens.
Foreigners’ rights to own property in Serbia is depended on reciprocity, which means that you can own real estate in Serbia if Serbians can own real estate in your country. Serbians can own land in the UK so Britons can own land in Serbia.
The buying process itself can take anywhere from three days to a month. First you make an offer. Once it is accepted, the buyer and seller sign a purchase agreement and have it notorised. At this point, the buyer makes a 10-15% deposit of the total purchase price and the buyer’s solicitor begins to assess the title deed. If everything is in order, the contract is finalised and signed in the presence of the notary and the buyer becomes the legal owner of the property. Payment ends the buying process.
Check out the Expat Serbia website for more details and for lots of other useful info for once you’ve made your purchase.
Renting Your Property
As with any foreign rental property, it is advisable to use a local property management service to look after your holiday home when you aren’t there. Not only does it mean peace of mind for you as the owner, but it ensures that your tenants get a professional experience while they’re relaxing on holiday.
Of course, finding the tenants is often the hard part, especially in an emerging holiday market such as Serbia. While good old-fashioned word-of-mouth certainly does still help, it only goes so far. Listing the property on a holiday lettings sites will help you reach a large audience of potential tenants and help make your holiday home a successful investment.
Letting providers such as OwnersDirect often offer first listings free of charge and will only charge a commission when a booking is actually made. They also manage the booking process for you and manage customer services so you’re don’t need to be available 24/7.
Costs and Taxes
The low buying costs are another benefit of investing in Serbia:
- There is a transfer tax of around 2.5% of the property value and expect to pay roughly 3% to your estate agent for commission.
- Be aware that new builds involve a higher buying cost because the transfer tax is replaced with VAT at 8% instead.
- There are also taxes to pay once you own the property, which are at a more standard level compared to other countries in the area.
- You must pay a flat rate income tax at 20% on any rent you collect, but you can deduct costs like management fees, maintenance and insurance.
- Once you sell the property there is also a capital gains tax, also at a flat rate of 20%.