If you’re on the hunt for a holiday home, Serbia might not be the first place you think of, but it really should be. Here’s a quick guide to help you consider Serbia for your next property investment.
Why Choose Serbia?
Eastern Europe is becoming a popular tourist destination because it’s often more affordable than places like Western Europe. While Serbia isn’t as famous as Croatia, it has fewer crowds, giving you a chance to enjoy a more authentic, untouched holiday experience. Some even call Serbia “one of Europe’s best-kept tourist secrets.”
With fewer tourists, property prices in Serbia are generally lower than in neighboring countries. Even though prices dropped after the 2008 financial crisis, economic reforms have recently boosted the real estate market by nearly 20% over the past two years. This is great news for savvy investors because:
– You can buy properties at lower prices,
– Earn good rental income thanks to the growing tourism,
– Enjoy potential capital gains when you decide to sell the property.
How to Buy Property in Serbia
Even though Serbia isn’t in the EU, buying property there is pretty straightforward for UK citizens. It operates on a reciprocity basis; if Serbians can own property in your country, you can own property in Serbia. Since Serbians can buy land in the UK, it works the other way around too.
The whole buying process, from making an offer to finalizing the purchase, can take anywhere from a few days to a month. Once your offer is accepted, you sign a purchase agreement, which is then notarized. You’ll pay 10-15% of the purchase price, and a solicitor will check the title deed. If everything is in order, the final contract is signed in front of a notary, and you become the legal owner after making the payment.
Renting Out Your Property
If you’re a foreign property owner, it’s wise to hire a local property management service. They’ll take care of things smoothly and professionally, both for you and your tenants.
Finding tenants, especially in a rising holiday market like Serbia, can be tricky. Listing your property on holiday rental websites can attract many potential tenants, ensuring your investment pays off.
Some letting providers, like OwnersDirect, might offer free first listings and only charge fees when bookings are made. They can also manage bookings, customer service, and other rental aspects.
Costs and Taxes
Serbia’s low buying costs make it an attractive investment spot:
– The property transfer tax is about 2.5% of the property value, while real estate agents charge around 3% as commission.
– For new builds, the transfer tax is replaced by an 8% VAT, making it more expensive.
– Standard property ownership taxes in Serbia are similar to those in other countries.
– A flat 20% income tax applies to any rental income, but you can deduct costs like management fees, maintenance, and insurance.
– A 20% capital gains tax is charged when you sell the property.