Belgrade authorities call for abolition of land conversion because it “hinders investments”

The statement made by Belgrade’s Deputy Mayor, Goran Vesić, about the Belgrade government calling for the abolition of the conversion of the right of use to the right of ownership has caused a public uproar.

While Vesić says this decision was stifling investment, Nikola Jovanović from the Local Self-Government Centre (‘Centar za lokalnu samoupravu’) points out that that is a “vague announcement that is potentially extremely harmful to the state budget.”

On the other hand, NALED thinks that, as a result of such a decision, up to 5,000 hectares of building land have been “blocked” from being used and that land conversion actually harms the state budget and doesn’t benefit it.

Jovanović points out that the conversion obligation was introduced so that the privatization process would not turn into the looting of building land and the dismissal of workers.

“This obligation is still in force today when purchasing real estate and other assets under bankruptcy proceedings, when the state retains ownership of the land. Therefore, in these cases, the investor has the option to pay for the conversion of such land into building land that they would subsequently own. It is not reasonable for the state to abolish conversion,” Jovanović explains.

NALED thinks that conversion causes more damage to the state and local self-government than it benefits them. According to data collated by the Ministry of Construction, Transport and Infrastructure, the state has earned only 7 million euros from collecting the conversion fee in the last 10 years, and lost investments worth much more than that because of the conversion. Abolishing the conversion fee (i.e. the fee for converting the right of use to the right of ownership of the land) is something that NALED has been recommending for quite some time.

“During our research, we interviewed 13 companies that had to pay the conversion fee in the amount of 3.2 million. Because of this, their investments worth 67 million were halted. In addition, according to our estimates, as much as 5,000 hectares of building land were “blocked” from use due to conversion. Last year alone, the proceeds from the subsidy for the development of building land amounted to more than 16 billion dinars or 135 million euros,” NALED adds.

NALED points out that there are two options – further simplifying the relevant procedure by amending the law, which has not proved effective, or, conversely, abolishing the conversion fee. This, they say, would not be contrary to the Constitutional Court’s decision, because it requires that the market value of the land be taken into account when the conversion fee is charged.

(eKapija, 23.05.2022)

This post is also available in: Italiano

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