The Law on Amendments to the Law on Financial Support for Families with Children (“Law“) stipulates possibility for mothers to acquire rights to funds for construction, participation in the purchase, i.e. for the purchase of a family-residential building or apartment based on birth of a child.
In February 2022, the Government of the Republic of Serbia (“Government“), i.e. the Ministry of Family Care and Demography (“Ministry“) adopted a Regulation on Detailed Conditions and Method of Exercising Right to Funds for Construction, Participation in Purchase, i.e. Purchase of Family-Residential Building or Apartment Based on Birth of a Child (“Regulation”) that more closely prescribes the conditions and the manner in which the right to funds for the construction or purchase of family – residential building or apartment, where it predicted that a special decision will determine the amount of funds that will be allocated from the Budget of the Republic of Serbia for each budget year individually.
Shortly thereafter, the Government issued a Decision on the amount of funds for exercising the right to funds for construction, participation in the purchase, i.e. the purchase of a family-residential building or apartment based on the birth of a child in 2022 (“Decision for 2022“). The Government has not yet enacted the Decision for the 2023 on the amount of funds for construction, participation in the purchase, i.e. the purchase of a family-residential building or apartment based on the birth of a child, but that Decision is expected in the following period. By the time of the adoption of the Decision for 2023, it is not possible to acquire the subject subsidy for children born in 2023.
In order to, in accordance with the Law, realize the right to funds for construction, participation in the purchase, i.e. the purchase of a house or apartment based on the birth of a child, it is necessary that the child was born on 1 January 2022 or later, with the fact that the right can to accomplish the mother, while the Law stipulates that this right can exceptionally be exercised by the child’s father, in the event of the mother’s death, in which case he must, in addition to all the documentation provided for by the Regulation, submit a death certificate for the child’s mother.
In order for the mother of a newborn child to realize the right to funds for the construction, participation in the purchase, i.e. the purchase of a house or an apartment based on the birth of the child, it is necessary for the mother that it is the first house or an apartment that she acquires in the territory of the Republic of Serbia.
The Law also prescribes a restriction in terms of prohibition of alienation of the real estate that was built or purchased with allocated funds, within a period of five years from the purchase or construction. Besides that, in order to be entitled to a subsidy at all, the total monthly income of married or non-marital partners, on the day of submission of the request, must be lower than two average net monthly wages of employees in the Republic of Serbia, according to the last published data of the Statistical Office of the Republic of Serbia.
To build a house that can be the subject of this right, it is needed:
– that the land on which the real estate is planned to be built is owned by the applicant and registered in the Real Estate Cadaster without encumbrance,
– that a building permit has been issued for the subject real estate in accordance with the regulations on planning and construction.
Also, it is mandatory that the house or apartment that is the subject of participation in the purchase, i.e. the purchase, is owned by the seller/s, as well as that it is registered in the Real Estate Cadaster without encumbrances.
In addition, the Regulation expressly prohibits kinship between the user of the funds and the seller of real estate, i.e. that with the seller is a blood relative in the direct line up to any degree, and in the collateral line up to the second degree, as well as in in-law relatives up to the first degree of the direct line or adoptive kinship.
We note that the right for subsidies can exercise a mother who is a foreign citizen and has the status of a permanently residing foreigner, if the child was born on the territory of the Republic of Serbia and/or is a citizen of the Republic of Serbia.
The amount of funds that will be granted to the applicant depends on the criteria prescribed by the Regulation and Decision for 2022, and one of the criteria is the local self-government unit on whose territory the house will be built, or the apartment will be purchased. In this regard, the Decision from 2022 stipulates that:
- for house construction in local self-government units that have been determined as devastated areas in accordance with the relevant regulation in the amount of 50% of the value of house construction works;
- for house construction in other local self-government units – in the amount of 20% of the value of house construction works;
- for the purchase of the house or apartment – in the amount of 20% of the value of the real estate assessed by the competent tax authority, and at most in the amount of 20% of the purchase price;
- for participation in the purchase of the house or apartment through a residential loan – in the amount of 20% of the estimated value of the real estate based on which the loan is approved, and at most in the amount of 20% of the purchase price.
In any case, the amount of funds given in the form of subsidies cannot exceed the amount of
EUR 20,000.
We note that by the Decision for 2023, it is possible to foresee conditions and amounts that are different from those prescribed in the Decision for 2022. Current practice indicates that the procedure for allocating funds is slow and ineffective, i.e. that from the submission of orderly request it is necessary to wait several months until approval, and this is one of the criticisms expressed by public opinion (which creates a particular problem if the purchase of real estate is financed through loan). In this regard, amendments to the Regulation were announced, all with the aim of achieving greater efficiency and legal certainty in the implementation of the procedure for the allocation of funds for construction, participation in the purchase, that is, for the purchase of a family-residential building or apartment.
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