TO RENT OR TO BUY, QUESTION FOR BOTH RESIDENTS AND NON-RESIDENTS

How is the real estate market in Serbia open for its non-resident buyers? Is buying, rather than renting, better option for residents only, or non-residents as well? What are the challenges and options available? Find out here :)

Question whether it is better to rent or to buy a real estate is always present, when we are facing an option of a longterm choice. Whether it's better to rent or buy depends on various factors, and the decision is highly individualized based on your financial situation, lifestyle, and long-term goals.

However, while the residents may have more options available to make a fully informed decision (availability of bank loans in Serbia, loan approvals, options of different banks, legal perspective etc.), question arises if the options for non-residents are available to make the purchase more desirable than renting? 

THE ADVANTAGES OF RENTING A REAL ESTATE

Some of the advantages of renting rather than buying may appear clear and straightforward, but let’s see what some of the most important are:

• Flexibility - Renting provides greater flexibility, making it easier to move for job opportunities or lifestyle changes without the commitment of selling a property.

• Lower beforehand costs - Renting typically requires a smaller beforehand financial commitment compared to buying, as there's no need for a substantial down payment, bank loans or notary costs. Although, depending on what kind of property is being rented (apartment, office space etc.), the expenses might vary.

• Maintenance responsibility - Renters are often not responsible for major investment, maintenance costs or repairs. Landlords typically handle these issues. Mind you, smaller repairs and repairs needed due to every day wear and tear, are still the obligation of the tenant.
• Predictable costs - Monthly rent payments provide a level of financial predictability, making it easier to budget without unexpected home-ownership costs.
• Exploring new areas - Renting allows individuals to live in different neighborhoods or cities before committing to a long-term purchase. This flexibility can be particularly valuable for those unfamiliar with a new area.

• Property taxes - Property taxes are the responsibility of property owner, clear and simple, so tenants are not exposed to this additional cost.

THE ADVANTAGES OF BUYING A REAL ESTATE

Non-residents can buy and sell properties in Serbia. The purchase is possible on the principle of reciprocity. If Serbian citizens are allowed to purchase properties in another country, then citizens of that country can also buy properties in Serbia (with the exception of agricultural land, which remains only for Serbian citizens).

Non-residents who own any type of real estate, whether residential or commercial, are eligible to obtain a Serbian residence permit. The value of the property does not affect the eligibility for the permit. The initial residence permit is valid for one year and can be extended upon expiration. In order to renew the permit, the individual must reside in Serbia for a minimum of 183 days per year. Upon living in Serbia with a residence permit for five consecutive years, individuals may apply for citizenship.

Purchasers of real estate in Serbia are subject to a 10% value added tax for new buildings (only for residents) or a 2.5% transfer tax for secondary properties. Property owners in Serbia are required to pay an annual property tax, ranging from 0.2-1% of the cadastral value, based on factors such as region, area within the region, year of construction, location, and cadastral value. Non-resident landlords must also pay a 20% income tax on rental earnings in Serbia.

Now, let’s explore the advantages of buying, rather than leasing, a real estate.

1. Long-Term Investment - Purchasing real estate allows buyers to build their capital over time. As bank loans are gradually being paid off, the ownership stake in the property increases, offering long-term financial benefits. And for the non-residents, the principal of investment remains - whether as a future asset to sell, lease or keep
2. Stability, control and permanency - Buying provides stability and control over the property. Unlike leasing, where terms and conditions may change at the discretion of the landlord, homeowners have more autonomy over their living space. And not only that! Unlike impermanence of living in leased property, owning a real estate gives you permanence and freedom to dispose of your property at your will.
3. Value estimate and increase: Some real estate has historically shown appreciation and increase in value over time, especially in desirable locations. By owning property, buyers have the potential to benefit from this, potentially yielding substantial returns on their investment.
4. Sense of Community: Buying a home often creates a stronger sense of community and belonging. Homeowners tend to invest more in their neighborhoods, building relationships with neighbors and participating in local activities.
5. Freedom to Customize: Unlike leased properties, which may have restrictions on modifications, homeowners have the freedom to customize their homes to suit their lifestyle and needs. This includes renovations, landscaping, and other improvements that enhance the property's value and utility. The owner can renovate, modify, or personalize the property according to their preferences without seeking permission (unlike the leased property).
6. Potential Rental Income: Homeowners have the option to rent out their property, generating rental income that can help with bank payments or supplement their cash flow. This additional income stream can provide financial flexibility and contribute to overall wealth accumulation.
7. Family home: Real estate ownership can be passed down to future generations, making your real estate not only your asset but a family home for generations to come. By holding onto property over the long term, homeowners can create wealth that benefits their heirs and descendants.
8. Sense of Pride and Security: Owning a home often instills a sense of pride and security. It provides stability for oneself and one's family, offering a place to call one's own and a sense of accomplishment in achieving home-ownership goals.

HOW TO MAKE A CHOICE?

As your trusted real estate agent, I understand that choosing between leasing and buying a property is a significant decision, regardless whether you are natural person or non-resident, and I'm here to guide you through the process. When considering your options, it's essential to weigh various factors, some of which were listed here, and always having in mind the current market conditions. And when it comes to that, as your real estate agent I will keep you fully informed, up to date and aware of all nuances in the process of buying, or leasing, your future home.

As your advocate, I'll provide comprehensive market insights, help you navigate negotiations, and ensure you make an informed decision aligned with your unique needs and aspirations. With my expertise and support, you can confidently embark on the path to home-ownership, knowing that you have a dedicated ally every step of the way!

"Home is where love resides, memories are created, friends always belong, and laughter never ends."