For each three million euros charged for conversion, the state loses 67 million

For each three million euros charged for conversion, the state loses 67 million

The fee for the conversion of the right of use into the right of ownership over the construction land should be abolished because it did not fulfill its purpose. According to the data of the Ministry of Construction, from 2015 to 2019, only seven million euros were collected for the conversion fee, and 5,000 hectares of construction land are "locked" and empty because investors do not want to pay again for the land they have already bought once.

How many investments were missed due to the conversion - one might guess from NALED's research, which includes 13 companies that are expected to pay 3.2 million euros in the name of the conversion fee, and since the amount of fee (about 75,000 euros per hectare) discourages them from doing so, the state loses investments of 67 million euros, as well as up to several thousand jobs per project.

- Domestic companies were the ones that most often entered the conversion process. They complain about the amount of the fee, the unclear provisions on its calculation, and the long procedure. For example, one domestic company in the conversion process has about three hectares of land worth about 300,000 euros. They must pay one million euros for the conversion, which is three times more than the value of the land. However, although they submitted a request for conversion, the request has not been resolved for almost four years and blocks their investment of five million euros and employment of 50 workers - says Nikola Lapčević, Vice President of Property and Investment Alliance at NALED and Director of Erste Bank's legal sector.

Obligors to pay the conversion are companies that acquired the land in the process of privatization, bankruptcy or through enforcement proceedings. In addition to not being able to obtain a building permit based on the right of use, they are also restricted in trying to obtain a loan or a bank guarantee because they are not landowners. Due to all these restrictions, their land is losing value. Foreign investors particularly do not want to buy it, as they do not understand what the right to use the land means and why it must be converted.

Local governments were also surveyed in the analysis. As one of the problems with conversion, they point out the unclear law provisions defining who should be paying the fee, the way of determining its amount and the right to reduction. Representatives of local governments point out that businesses have low interest in initiating the conversion procedure, mostly because of dissatisfaction with the amount of the determined fee.

In the cities and municipalities, they add that their capacities for processing requests are small and that the procedure needs to be simplified and automated so that it would not be so long-lasting.

- By requesting them to pay a conversion fee so that they can build on their land, businesspeople are asked to practically buy it again. They are especially dissatisfied with the fact that they are placed in an unequal position in relation to investors who received the land free of charge. As there is no economic justification for investing in land for which it is necessary to pay a fee, its sale does not pay off, and since there is no obligation to convert, we can wait a long time to complete the ownership transformation in Serbia. That is why we see enabling free conversion for everyone as the only solution for this situation, which will unlock investments, which is especially important in a situation of the economic crisis caused by a pandemic - adds Lapčević.