Published on and written by Cyril Jarnias
Buying an apartment in Belgrade, a house in Novi Sad, or a second home in Niš is attracting more and more foreigners. Prices remain lower than in many European capitals, the market is dynamic, and Serbia offers a living environment appreciated by expatriates, investors, and digital nomads. But behind this apparent simplicity lies a complex legal and administrative environment, with pitfalls very specific to the country.
Many buyers discover critical errors too late: ignoring a reciprocity rule, underestimating ancillary costs, buying a poorly registered property or one without an occupancy permit, or trusting an unscrupulous intermediary. These mistakes can block the transaction, cause a down payment to be lost, or even call the ownership itself into question.
This article provides a detailed overview of the most common mistakes when buying real estate in Serbia, based on the legal and tax framework in force, market practices, and feedback from foreign investors.
Failing to verify reciprocity and legal restrictions
The very first mistake is to start searching for a property without verifying whether, legally, one has the right to buy in Serbia. The country strictly applies the principle of reciprocity: a foreigner can only buy a property if a Serbian citizen has the same acquisition rights in that foreigner’s home state.
Concretely, nationals from most Western countries (United States, Canada, United Kingdom, EU members, Australia, etc.) can buy without major obstacles, as reciprocity agreements already exist. Serbia even maintains official lists of countries for which reciprocity is recognized for property transfers *inter vivos*, and another for inheritances. But for some Asian, African, or Middle Eastern states, this reciprocity is not established, or only partially.
Before any financial commitment to buy a property in Serbia, it is crucial to verify the existence of de facto reciprocity allowing a foreigner to be an owner. Neglecting this step can lead to the loss of down payments, legal fees incurred, and the inability to finalize the transaction. If in doubt, a local lawyer can request an official verification from the Serbian Ministry of Justice, a procedure that takes about fifteen days and costs a few dozen euros.
Added to this first legal layer are restrictions on the types of properties accessible to foreigners. Even with reciprocity, a non-Serbian individual is prohibited from directly acquiring agricultural land, forests, or undeveloped land without a building. Only apartments, houses, commercial buildings (offices, shops, warehouses) and the land “necessary” for these constructions are open to direct acquisition. Areas near military installations are also sensitive: security restrictions apply and can block the purchase.
To circumvent restrictions on acquiring agricultural land in Serbia, investors often create a local limited liability company (DOO/LLC), treated as a Serbian entity. This structure allows, under certain conditions, the purchase of land. However, it entails management, accounting, and tax compliance obligations. An alternative is buying an existing Serbian company that already owns land, but this requires a thorough audit to avoid inheriting debts, disputes, or hidden liabilities.
Failing to analyze this framework at the very beginning of the project leads to a costly legal impasse. Verifying reciprocity, restrictions by property type, and the potential need to go through a company must be the starting point of any process.
Underestimating the role of the cadaster and buying a poorly registered property
In Serbia, it’s not the sales contract that makes the owner: it’s registration in the land registry, the Real Estate Cadaster, managed by the Republic Geodetic Authority. A major, yet very common, mistake is to settle for a deed of sale or an old document without verifying the property’s status in the cadaster.
Experience from recent decades shows the country has long suffered from constructions without permits, unregulated inheritances, unregistered sales, and corruption within registration services. Some statistics reported a non-negligible share of bribes paid to cadaster agents by companies. An emblematic case, the so-called “Savamala” affair in 2016, illustrated the possible abuses surrounding real estate and public registers.
Failing to perform a thorough verification exposes you to several risks:
– buying a property where the seller is not the legal owner;
– buying a lot encumbered by mortgages, seizures, easements, or lifetime usufruct rights;
– unwittingly becoming a co-owner of a building where ownership shares are poorly defined or contested;
– acquiring a building that does not match the cadastral description (areas, plot boundaries, number of floors, illegal extensions).
The cadaster provides some basic data online for free: owner identity, surface areas, property type. However, details on encumbrances (mortgages, disputes, seizures) require paid extracts and expert interpretation. Since 2018, notaries automatically feed the cadaster via an electronic system, but the old stock remains imperfect.
Buying a property built without a permit or one that has been the subject of unregistered transactions is a dangerous trap. Legally unsellable, these properties are sometimes transferred “in fact” via private contracts, exposing the buyer to major risks: impossibility of obtaining financing, reselling the property, or even connecting it to public utilities.
Best practice is to demand a recent cadastral extract, verify the presence of a clausula intabulandi (the seller’s explicit consent to register the new acquirer), and have a lawyer analyze the ownership history. The idea that “everything will be settled later” is particularly risky in the Serbian context.
Neglecting building and occupancy permits, especially for new builds
Serbia has a heavy legacy of buildings erected without building permits, without occupancy permits, or in violation of urban plans. Despite successive “legalization” laws, this problem remains one of the biggest risks for a foreign buyer.
There are two typical error scenarios:
– buying an old house or building that never obtained an occupancy permit;
– buying an apartment “off-plan” in a building under construction without verifying the quality and solidity of the urban planning approvals.
For a significant building, several documents are required: urban planning conditions (verifying compliance with the local plan), the building permit, and the occupancy permit (certifying the construction conforms to plans and is safe). A notary should, in theory, refuse to certify a sale if these documents are absent or irregular. In practice, as the rigor of controls varies, independent legal review is highly recommended.
Regarding new construction, the recurring error is to trust only the developer’s marketing: beautiful renderings, promised rental yields, “verbal” guarantees on timelines. In reality, many projects in Serbia are sold off-plan without bank guarantees or completion insurance. If the developer goes bankrupt or faces financial difficulties, the buyer who has paid successive down payments may find themselves stuck with a half-finished construction site, facing a long and uncertain legal recourse.
Renovation budgets for historic buildings can easily reach between 700 and 1,000 euros per square meter.
The basic rule is simple: never sign nor pay a down payment without having seen, analyzed, and understood the relevant permits. For a new project, you must also verify the construction company, its references, its financial strength and, if possible, demand clear delivery obligations and delay penalties in the contract.
Poorly preparing the pre-contract and losing the deposit
The purchase process in Serbia very often involves a pre-contract (predugovor), which serves to reserve the property while finalizing financing, conducting verifications, and preparing the final deed. It is at this stage that the most costly error occurs for many foreigners: signing a vague, poorly drafted, or unbalanced pre-contract.
In practice, a deposit of 10% to 20% of the price is often required. It is forfeited by the buyer if they withdraw without cause, but the seller must generally refund double the amount if they pull out. This protection for the buyer is only effective if the pre-contract is drafted with great precision.
Frequent pitfalls:
Essential elements to verify to secure your real estate project before signing a purchase agreement.
Lack of detail on suspensive conditions (obtaining credit, legal checks, dispute resolution).
No mention of the planned deadlines for signing the final deed at the notary.
Ambiguity regarding applicable penalties in case of delay by either party in contract execution.
Insufficient mention of the property description, especially for sales involving co-ownership or under construction.
Some hasty buyers sign a simple deposit receipt, with no clear mention of the total price, refund terms, or the seller’s obligations. If a problem arises, this type of document is very difficult to enforce.
The pre-contract should always be drafted or reviewed by a lawyer and ideally authenticated by a notary. It must provide for outcomes in case of discovery of unexpected encumbrances, cadastral irregularities, or lack of permits, and precisely organize the fate of the deposit according to each scenario.
Ignoring the real cost of the transaction and ownership
Many buyers focus on the price per square meter and completely neglect additional costs. Yet, in Serbia, the overall cost of a real estate purchase is generally between 7.6% and 10% of the property price. Forgetting to include this in the budget leads either to cash flow tensions or to hasty compromises on property quality.
The main cost items are: the following.
| Cost Item | Indicative Range |
|---|---|
| Property Transfer Tax (secondary market) | 2.5% of the taxable value |
| VAT on new residential | 10% (instead of transfer tax) |
| VAT on new commercial / garages | 20% |
| Lawyer fees | approx. 1% to 3% of price |
| Notary fees | approx. 0.1% to 0.5% (capped at ~6,000 €) |
| Real estate agency commission | generally ~2% (often shared) |
| Cadaster registration fee | ~30–50 € |
| Clausula Intabulandi fee | ~34 € |
| Translations / interpreter | ~20–50 €/page, 40–80 €/hour |
In addition to these acquisition costs are the recurring costs: annual property tax (up to about 0.4% of the cadastral value for residential, more for commercial), co-ownership fees, maintenance, insurance, tax on rental income (20% with a standard deduction), and, upon resale, potential taxable capital gains (15%, even 20% for some non-residents).
For a new real estate purchase in Serbia, the VAT (10% for residential) is included in the price quoted by the developer. Unlike the provisions sometimes available for Serbian citizens buying their first home, no refund of this VAT is possible for foreign buyers. It is therefore wrong to think it can be recovered.
Finally, many investors forget banking costs (international wire transfer fees, currency exchange, foreign currency account fees) and potential financing costs (loan application fee, property appraisal, notarization of the mortgage). In a market where the majority of apartment transactions are still conducted in cash, these costs are sometimes hidden or minimized, yet they weigh on the real return on investment.
Trusting the wrong intermediaries
The Serbian real estate market is officially regulated by an intermediation law, but in practice, not all agents are licensed or monitored. Using unchecked intermediaries is a frequent cause of bad surprises, especially for foreigners unfamiliar with the local language and customs.
There are many warning signs:
Several behaviors should raise red flags during a transaction: the agent’s refusal to sign a written mandate detailing their role and commission, pressure to sign or pay a deposit quickly citing competition, refusal to provide official documents (cadaster, permits, history), requests for cash payment without a receipt or outside the banking system, and mixing of roles when an intermediary claims to represent both parties without transparency.
Using an independent lawyer is crucial here. The lawyer is not paid a commission on the sale but by the hour/fee, and has an obligation to defend exclusively their client’s interests. Relying solely on the lawyer “recommended by the agency” or by the seller can create conflicts of interest.
The same caution applies to other service providers: translators, notaries, banks, experts. Notaries, for example, have a mission of formal control, authentication, and transmission to the cadaster and tax authorities, but they do not replace the thorough due diligence of a lawyer, nor the technical or urban planning checks.
Underestimating the complexity of financing for foreigners
Obtaining a mortgage in Serbia as a non-resident is possible but difficult. Only a few institutions, like API Bank, agree to finance foreign buyers without local residence, with significantly stricter conditions than for residents: high minimum down payment (often 30%, sometimes 50%), annual interest around 7%, heavy document requirements (translated and apostilled proof of income, foreign credit history, additional guarantees).
Many buyers make two mistakes:
– assuming they will obtain local financing similar to that in their home country;
– signing a pre-contract with a firm purchase obligation without a suspensive condition for loan approval.
If the bank ultimately refuses the loan, the buyer risks losing the 10% to 20% deposit already paid. To avoid this, it is crucial to plan ahead: explore local financing options in advance, but also options from your home country (such as mortgages on another property, personal loans, or refinancing). It is also recommended to only sign a pre-contract that includes an exit clause in case of loan refusal.
In financings in local currency (dinar) for a property valued in euros, there is an added exchange rate risk. The buyer may see their repayment burden fluctuate if the exchange rate deteriorates, which must be factored into their cash flow plan.
Finally, many forget that Serbian law mandates the use of the banking system for amounts above a certain threshold: beyond 15,000 euros, payment must be made by bank transfer. International transfers are sometimes slow (over fifteen days in some cases) and subject to anti-money laundering controls, which requires preparing and justifying the origin of the funds.
Paying in cash and outside the banking system
Cash culture is very present in the Serbian real estate market: in 2023–2024, about 70% of apartment sales were still concluded in cash, for a volume close to a billion euros per quarter. This historical practice increasingly clashes with anti-money laundering requirements.
Some sellers still prefer to be paid in cash, sometimes even abroad, with no banking trail. Agreeing to such arrangements is a huge mistake for a foreign buyer:
Paying in cash for a significant transaction carries several major risks: it provides no proof in case of dispute, exposes you to a tax reassessment if the operation is reclassified, can lead to bank accounts being frozen by the financial institution due to suspicions of illicit activity, and risks being refused by the notary if the flows are non-compliant with regulations.
Serbian law requires that significant amounts go through bank accounts, with a strict limit for cash payments. For a foreigner, the best protection is to open a foreign currency account in Serbia, transfer funds from their home country with proof of origin, then pay the seller via wire transfer from that account, clearly referencing the sales contract.
Any arrangement aimed at avoiding taxes or “facilitating” the transfer by circumventing banks is to be avoided. In a market already described as less regulated and more opaque than some Western countries, payment traceability is one of the few solid safety nets.
Misinterpreting the link between property ownership, residence, and citizenship
Another frequent misunderstanding concerns the relationship between property ownership and the right to reside. Many investors think that buying a property in Serbia will automatically give them a right of residence or even privileged access to citizenship. This is false.
Owning an apartment or house does not confer any automatic right of residence. Property can serve as a basis for a temporary residence application, but this goes through a separate procedure, with checks on resources, health insurance, criminal record, and verification of the property’s nature (it must be habitable, equipped with basic services, and properly registered).
Buying a home facilitates obtaining a temporary residence permit (up to 3 years). After 5 years of uninterrupted temporary residence, an application for permanent residence is possible. Access to citizenship is never automatic, even for long-term property owners, as it is a political and discretionary process.
The common mistake is to structure one’s investment solely with the perspective of a “quick passport” or an implicit “golden visa”. Serbia certainly positions itself as a relatively accessible immigration-by-investment destination, but simply buying property does not equate to an official citizenship-by-investment program. Anyone buying while betting on a hypothetical future change in law takes a considerable legal risk.
Forgetting local market specifics and negotiation practices
The logic of price setting and negotiation in Serbia often surprises foreigners. Sellers tend to list prices above the realistically acceptable level, anticipating systematic negotiation. In the secondary market, a reduction of 5% to 10% from the listed price is common, while offers 20–30% below are generally rejected immediately.
Failing to integrate this dynamic leads to two extremes:
– overpaying for a property, by not negotiating when it’s expected;
– making offers that are too low, perceived as insulting, which ruin the relationship.
In central Belgrade neighborhoods, for example, listed prices frequently range between 2,000 and 2,500 euros per square meter, with luxury properties far exceeding 5,000 euros/m². In Novi Sad, new apartments in prime locations start around 2,000 euros/m², while some suburban areas remain in the 1,200–1,400 euros/m² range. Niš still offers more affordable opportunities, with older properties between 1,100 and 1,300 euros/m² and new builds around 2,200 euros/m².
The buyer’s profile directly influences the negotiation. A cash buyer, capable of closing quickly, can often obtain a larger discount than a buyer dependent on lengthy financing. Conversely, some agents may use exaggerated language, mentioning for example ‘guaranteed yields’ or an ‘Airbnb jackpot’, especially to a poorly informed foreign investor.
Understanding trends, developing neighborhoods (Belgrade Waterfront, tech zones in Novi Sad, mountain resorts like Zlatibor or Kopaonik), rental market pressure (student housing, digital nomads, influx of new foreign residents) helps avoid being swept away by commercial pitches disconnected from the real market.
Buying in a sensitive area without studying urban planning and the environment
Another often overlooked error angle is the lack of verification of urban plans and environmental or heritage constraints. In Serbia, as elsewhere, buying an apartment with an unobstructed river view, in a neighborhood promised to be quiet, can turn into a nightmare if a major road, commercial complex, or residential tower project is already planned nearby.
Authorities publish local urban plans detailing land use (residential, industrial, mixed, agricultural) and permitted constructions (maximum height, density, setbacks). Not consulting them – or not having them analyzed by a professional – sometimes leads to investing in an area destined to radically change its character.
Typical mistakes:
It is crucial to check urban planning regulations before any investment. Major risks include: unknowingly buying in an area destined for massive densification (towers, shopping centers, interchanges); investing in a rural property zoned as agricultural or protected thinking it can be transformed; or neglecting the strict constraints, even work prohibitions, imposed by heritage law in a historic sector.
In large cities, where the number of building permits has increased significantly, this aspect is particularly critical. In one year, permit issuances grew by nearly 8%, with over 85% dedicated to new construction. This boom translates into rapid neighborhood transformation, with sometimes noisy construction sites, infrastructure lagging behind density, and urban landscape changes that can affect both quality of life and resale value.
Dispensing with a translator and signing misunderstood contracts
Many foreign buyers speak English, some a little Serbian, and think they can “get by” without a sworn interpreter. This is a serious mistake when dealing with notarized contracts involving hundreds of thousands of euros.
In Serbia, if a party does not speak the language, the presence of a court-appointed interpreter during the notary signing is legally required. Yet, some try to circumvent the rule, or settle for approximate oral summaries offered by the agent or notary, without a faithful translation of the full text.
Signing a deed without understanding its clauses, especially regarding payment, deadlines, property description, or post-sale responsibilities, exposes you to an obvious risk. In case of a dispute, it will be difficult to invoke poor understanding.
The solution is twofold: demand bilingual contract versions (Serbian–English or Serbian–French), and use a sworn interpreter during signing. The modest cost of this service is insignificant compared to the legal security it provides.
Buying a rented property without understanding tenant rights
Rental property attracts many investors, especially in large cities where demand for student housing, shared accommodation, or short-term rentals is exploding. But buying a property already occupied by a tenant without analyzing the lease agreement or the legal framework is a frequent mistake.
In Serbia, rental relationships are governed by a specific law, which imposes rules on contract duration, notice periods, rent increases, and termination grounds. Evicting a tenant who pays regularly and has a valid contract can prove long and delicate, especially without adequate clauses.
Some sellers downplay the situation, talking about a “tenant who will leave soon,” when no formal agreement exists. The buyer ends up having to manage a complex rental relationship, often without speaking the language, and delaying their own plans (renovation, personal occupancy, repositioning the rental).
Real Estate Sellers
Before buying an occupied property, you should therefore:
– examine the existing lease, its duration, renewal, and termination clauses;
– verify the history of rent payments;
– understand the tenant’s rights under Serbian law;
– incorporate a realistic timeframe before any change of use into your investment plan.
Ignoring these elements amounts to buying an asset whose effective exploitation is blocked for an indefinite period.
Conclusion: transforming a risky market into a managed opportunity
The Serbian real estate market combines attractions and risks. It offers still competitive prices, growth potential (both in property values and rental income), solid demand in large cities and some tourist areas, as well as an overall increasingly structured environment. But it remains marked by a legacy of illegal constructions, incomplete regularizations, informal practices, and procedural complexities.
Frequent mistakes include underestimating administrative and legal complexity: failing to verify reciprocity of rights, acquiring a poorly registered property, ignoring permits and urban plans, signing weak pre-contracts, relying on bad advice, using cash, believing in automatic residence rights, and neglecting the use of translators and tenant law.
Conversely, those who take the time to build a strong local team (specialized lawyer, reliable agent, notary, translator), who scrupulously follow banking and tax procedures, who read urban plans and negotiate realistically, transform this minefield into a land of opportunity.
In Serbia more than elsewhere, the security of your investment does not depend only on the neighborhood you choose or the price per square meter you get. It depends first on your ability to avoid these structural mistakes and to treat each step of the transaction for what it truly is: a complex legal act, in a country where the detail often carries more weight than the promise.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
