Buying Guide
Why invest in Montenegro
Montenegro is currently undergoing a period of change and economic growth. Having gained independence from Serbia last year and with the future prospect of joining the European Union, the country is now looking to capitalise on its rich endowment of cultural and natural attractions, investing to boost tourist visitor numbers. World Travel & Tourism Council’s latest findings reveal that Montenegro tops the list of the world’s high performers (defined as countries set to grow fastest over 2007 and the decade to come), with demand growing each year at a rate of 10.1 per cent.
The Montenegrin government is eager to attract foreign investment and is accelerating the privatisation of hotels and implementing tough fiscal policies. It has endeavoured to remove all obstacles for potential property buyers, ensuring that those who decide to invest have little to contend with in terms of visas, residency, taxes and red tape.
The potential for capital appreciation in Montenegro is significant and property prices are very competitive especially when compared to neighbouring markets like Croatia. However, property prices are expected to rise as they did in other countries preparing for EU membership. Over the last 3 years Montenegrin property prices have already risen by approximately 85%. Currently the market is increasing at 20%, and upwards of 30% in the tourist hotspots.
Buying process
Foreigners have the same rights to property ownership as citizens of Montenegro providing the buyer’s country of origin has a reciprocal agreement with Montenegro. In the case of Britain and Ireland, for example, such an agreement exists. The selling and buying of properties is without restriction in Montenegro and is regulated by law and legally secure.
The purchasing process in Montenegro is surprisingly straightforward, although a title can be an issue, therefore one of the most important aspects of your property purchase in Montenegro is establishing that the property has a “clean title”, meaning that the seller has legal authority to sell the property and there are no pending claims on the property before the courts. Over the years, the property administration system has lacked an effective method of tracking ownership of land and buildings. It is therefore important that this is thoroughly checked in advance of any purchase and to ensure you deal with an independent lawyer when purchasing property there.
Surveys are not usually carried out, but it is wise to insist on one, particularly in the case of an older property.
The purchase process
Once a price has been agreed and the preliminary searches have been conducted, a deposit is paid to secure the property and a pre-contract signed. When all searches are complete, buyer and seller sign the final contract of sale in the presence of a notary public. However, if the buyer is not present, the power of attorney can be provided for the lawyer. The finalised and certified contract establishes the legal ownership and all monies and contracts must be exchanged by the agreed completion date. A 2% purchase tax is paid at time of completion and then the documents are submitted to the local land registry department and the change in ownership registered. This registration can take up to 10 days.
Fees and costs
A purchase tax of 2 per cent is payable, calculated on the Montenegrin Inland Revenue’s valuation rather than on the purchase price. Other expenses the buyer must meet include the lawyer’s and notary public’s fees (typically 1 per cent) and the estate agent’s fees (usually 3-4 per cent).
Financing your purchase
At present, no lender offers foreigners mortgages secured on property in Montenegro.
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