Buying a land as a foreigner in Montenegro

After the first wave of Covid-19 epidemic, the real estate market in Montenegro has experienced an interesting trend: the requests for houses and land plots for building houses have doubled! Before Covid-19, among clients looking for residential properties, 95 percent were interested in apartments, with only 5% searching for a house or a land to build one. Yet, after the market was restored in May, the inquiries were 50/50.

Here, we will guide you through the most essential steps in the process of buying the land and building a house.

Note: There are no legal restrictions on Foreign persons buying properties in Montenegro except those restrictions regulated by the Law on Ownership Rights, which introduced few limitations, among which is the limitation for foreign persons to acquire agricultural land (but if the subject of the contract is the property on an agricultural land bellow 5000 sqm, you can make the purchase). However, even in the case of agricultural land, you can form a company and purchase the land through the company. Further, with signing of Agreement on Stabilization and Association, Montenegro granted a national treatment to EU nationals acquiring real estate on its territory.

Step one: finding the land

If you have no experience of buying a property in Montenegro, having a reliable sales consultant is very important. He/she needs to advise you on local urbanization plans, to check if the property deeds are correct, to check in cadaster if the land is clear, etc. You have to be aware that buying a land is a bit more complicated than buying an apartment. It requires an additional cautiousness where there are no cutting corners. You need to take your time and be involved in the process. Thus, once you know the right town/county/neighborhood, your agent should check if the urbanization plans in that area are valid.

Step Two: you found the land – now what?

You have found a perfect land? Congratulations! Now, you need the right documentation – a clean property deed, valid urban-technical conditions (UTC), and even a geometer. It is time to bring the heavy artillery as well – to involve a lawyer to double-check the documentation (not because you distrust your agent, but because you need a professional to provide you with official due diligence). You should also consult an architect/engineer to tell you his opinion of the land – not if he likes the view, but rather how he can fit the object and to advise you whether that land is good for the house you imagined. In order to do that, the architect will ask for a geometer’s analysis and UT requirements.

Step Three: purchasing the land

Once you are certain you found the right property and you received all reassurances, you can ask your agent to make an appointment with the notary. The process is simple, and everything will be done in a few hours. You will pay the notary fees and a 3% transfer fee. In few weeks, you will have your name registered as the owner of the land.

Step Four: the design

Once you have the land and the valid urban-technical conditions (UTC), you can start working on the design with the architect. If you are planning to do something within the areas which are culturally sensitive or under UNESCO protection, make sure you have someone with experience in the field, and make sure they did similar projects in the past. There are plenty of studios with people who are educated abroad, speaking English, and thus, you will have no problems communicating with the architects. With the new Law on Spatial Planning, most of the administrative duties are placed on the shoulders of the companies doing design and revision of the technical documentation. This means you will have no contact with the local authorities, various administration offices, etc. This also means, you need to choose those who can smoothly navigate administrative waters and are completely acquainted with local and national regulations.

Step Five: building process

The building process is composed of several stages: notification of works, selection of the main contractor, selection of the engineering supervision, contracting, commencement of works, rough structural civil works, MEP installations works, construction craftworks. Once you have a detailed design with a bill of quantities, you can ask for quotations from the construction companies. There are turn-key companies, or you can take a project management company that will hire different companies for different construction segments.

Building prices range from €500 (for good but standard quality) to whatever-your-budget-allows you per m2. Everything depending on quality, payment method, the delicacy of the work.

Approximate costs related to the purchase of a land in Montenegro

Step Six: property registration

This is something you have to do once the works on the structure are completed. A licensed surveying organization has to measure the property and submit a report to the Real Estate Cadaster of Montenegro.

The costs related to the registration process are:

• Surveying fee – 0.70 – 1.50/m2 (net area)

• Filing the registration request – 35 – 70

• Obtaining property deed – 12 per piece

Step Seven: handover

The deadline for handover is 60 days from the date of the submission of the Final Engineering Supervision Report. The use of the structure is not allowed before registering the structure in the real estate cadastre.

Step Eight: use it or sell it

Enjoy your new property! You can sell it if you believe you will earn an extra profit or consult your agent about rental options. If you built your property in Podgorica, there are some nice long-term rental options, and houses are always in demand. If you invested in the South, the short rentals are the best option. In this case, you will need someone to manage it for you, and you can be sure the costs of maintenance and your vacation will be covered.

NOTE: Keep in mind that this is just a rough overview of the entire process. We always recommend consulting one of our real estate professionals to provide you with detailed information for your specific case and support you throughout the entire process.