Land finally in private property - new Law on spatial organization to enable legalization of million illegally built facilities

The Parliament of Serbia has adopted the Law on spatial organization and construction, which should simplify and accelerate procedures for issuing building permits and enable legalization of the facilities that were built without permit. The adopted amendment also enables legalization of the facilities that have been built without building permit prior to the putting of the Law into effect, although the Law initially enabled legalization of the facilities that had been built prior to May 13th, 2003. The estimates are that there are about 1 million such facilities.

Since the new regulation should be put into effect eight days after it is published in the Official Bulletin of Serbia, the owners of the facilities that have been built without building permit can expect to be able to legalize everything they built prior to that date. They should not delude themselves into believing that they have another six months at their disposal only because it is stipulated that the request for legalization can be submitted within six months. The Law also stipulates that a building inspector can stop construction of the facility that is being built without complete documentation on spot and without any written authorization.

One of the most significant innovations introduced by the Law is transformation of the rights to use of land into the ownership right to building land. Minister Oliver Dulić reminds that the companies that participated in privatization or acquired land in the past on various basis will be charged the market price for the transformation of the rights to use of land into ownership rights. Half of these incomes will be distributed among local self-governments for further construction of infrastructure, while the rest will be paid to the Restitution Fund, which will then pay the compensation to earlier owners of building land.

The Law also stipulates that the building permit is a negotiable document, which means that the investor can transfer it to someone else if he gives up the building project. Another innovation is the possibility of issuing temporary building permit for construction of asphalt base, concrete factory, meteorological poles and temporary junction.

All municipalities in Serbia will have to adopt land-utilization plan of the settlement and municipal spatial plan within 18 months. The plans will have to be in digital form and available to citizens, and if the local self-government fails to adopt the plans, the penalty is dissolution of the town hall. For construction without building permit the Law stipulates fines of 1.5 to 3m RSD for companies and fines of 100,000 to 200,000 for responsible persons.

Registry of investors

The Law stipulates forming of the registry of investors, that is, the database with the information on all investors, which should disable double sale of apartments, while the investors who are prosecuted or whose facilities are to be torn down will not be able to compete for construction in some other location.

USAID's support

The new Law is one of the most important legal documents in field of local economic development that have been adopted in the last few years with the aim of improving investment climate in Serbia.