After the publication of the draft of the Law on Amendments to the Law on Spatial Planning and Construction, a series of public hearings on the proposed draft law was held in February 2023, and now we are waiting for the final wording of the proposal of the amendments and the lawmaker’s response to the of proposals and objections raised during the public hearings.

The draft envisages numerous amendments to the law, the most striking of which is the amendment related to the conversion of the right of use on construction land into the right of ownership (conversion).

The current version of the Law on Spatial Planning and Construction regulates the issue of conversion without compensation, thus affirming the principle that the conversion of the right of use into the right of ownership can be carried out without compensation (in which case the Law on Planning and Construction applies), or with compensation (in which case a special Law on converting the right of use into the right of ownership on construction land for a fee applies). The Law on Spatial Planning and Construction precisely prescribes that the conversion without compensation is applied in all cases except when the applicants are the entities whose position is not regulated by the special Law on converting the right of use into the right of ownership on construction land with compensation.

The proposed act of the Law on Amendments to the Law on Spatial Planning and Construction deletes the explicit distinction between "conversion without compensation" and "conversion with compensation". The consequence of this change should be the automatic (ex officio) conversion of the right of use into the right of ownership on construction land immediately after the proposed changes enter into force. The conversion with compensation should be applied only to certain type of entities (sport societies, agriculture and housing cooperatives and the entities incorporated under the former Yugoslavia succession agreements)  and their position should be regulated by a separate law.

The effect of this change means the releasing of the large number of entities from the obligation to pay the compensation for conversion in order to proceed with the investment and enabling them to exercise that right free of charge.

On the other hand, it is unclear what will be the fate of the Law on converting the right of use into the right of ownership on construction land with compensation - whether this law will be repealed in its entirety, or only harmonized in a part that would be in direct contradiction with the provisions of the draft Law on amendments to the Law on Spatial Planning and Construction. This issue is particularly important when considering the provisions limiting the possibility to carry out the conversion - especially in case of publicly owned land that may be only in the public ownership.

In addition to this amendment, the draft Law on Amendments to the Law on Planning and Construction foresees a number of other changes: