My Journey to Owning a Property in Montenegro

My Journey to Owning a Property in Montenegro: from Research to Buying Process

Introduction: the Start of a Dream

My journey to owning a holiday home in Montenegro started a few years ago when I was planning a holiday to Croatia. Like many people, I was rather taken aback by the high cost of renting a holiday home in Croatia and subsequently moved my search further southwards. I soon stumbled upon the beautiful Bay of Kotor and the area around Budva as options for my holiday. There was an immediate attraction and a few months later, I landed in Tivat, ready to explore the Bay of Kotor and surrounding areas.

Fast-forwarding to a couple of years later and I now own a holiday home in Montenegro. In this blog post, I will take you through the journey from the research and planning stage to the buying process. I will share my thoughts on every step and advice for anyone who is considering buying property in Montenegro.

My Inspiration and Motivation

Programmes such as A Place in the Sun, where people go abroad looking for a property, have been a huge inspiration for me for many years. Buying a holiday home has been a long-standing dream of mine, as I’m sure it is for a lot of us. I wanted to own a place where I can go to when the weather is not pleasant in the UK. The new home should also be somewhere I can go to in order to find relaxation and peacefulness.

Whilst I am waiting to spend more time in my second home, I am looking forward to the steady stream of income it will give me from renting it out.

Why Montenegro as the Location of my Property Purchase?

Quality of Life

After several visits around the country, it was clear to me that Montenegro offers the kind of quality of life I was looking for. Its diverse landscape with mountains, beaches, and lakes, and its pleasant climate makes it a very attractive place to relocate to or to own a holiday home in. Besides, Montenegro has a rich cultural and historical heritage, which adds to its appeal for both tourists and long-term residents.

Here are a few of the sightseeing highlights:

Ostrog Monastery: a major pilgrimage site for Orthodox Christians, this monastery is perched on a cliff and features cave churches with frescoes
Budva Old Town: a historic town with unique architecture, including Venetian style stone buildings
Lake Skadar: a location that played a key role in the development of culture and civilization in Montenegro
Bay of Kotor: a popular attraction known for its cities featuring Venetian architecture
Castle of San Giovanni: a fortress in Kotor that is considered one of the most important cultural monuments in Montenegro

There are of course many more attractions I could mention.

Several expats I spoke to also pointed out the low crime rate and the excellent healthcare. Finally, Montenegro provides a convenient base for anyone traveling to other popular destinations in Europe. Its strategic location in the Balkans is boosted by excellent transport links.

Favorable Investment Climate

Montenegro uses the Euro as its currency, providing economic stability and reducing the risk associated with currency fluctuations. Moreover, the Montenegrin government has been actively encouraging foreign investment through various incentives, including tax benefits and simplified procedures for property purchases.

Montenegro is also a candidate for European Union membership. If it joins the EU, property values could potentially rise due to increased economic stability and integration with the European market.

Finally, compared to other European countries, property prices in Montenegro are relatively affordable, offering good value for money and potential for appreciation.

Rental Income Potential

Montenegro has become an increasingly popular tourist destination due to its stunning coastline, historic towns, and natural beauty. This growth in tourism can lead to higher demand for rental properties, particularly in popular areas like the Bay of Kotor, Budva, and Tivat.

As in many other countries, the number of digital nomads in Montenegro has also increased exponentially. Digital nomads provide opportunities for medium to long-term rentals.

Gross rental yields in Montenegro lie in a range of 4.4% to 7.1%, according to research by one of the leading real estate companies. The level of yield depends on the location, the type of property, and whether you are renting out in summer only or long-term. Long-term rental yield of a 3-bedroom apartment appears to be the highest in Tivat. Short-term summer rental yield for a 1-bed and 2-bedroom flats are expected to be the highest in Kotor.

It is important to note that rental income is taxed at 15%. Some tax deductions are possible from works done to the property or general maintenance cost.

Research and Planning

Budget – Managing Expectations, and Initial Research – Finding a Top Real Estate Agent

I knew that my budget didn’t allow me to look into beachfront or waterfront properties or into properties in the heart of popular towns such as Kotor and Budva. In the years leading up to the property purchase, I read a lot about the different areas in Montenegro. There were several different regions that were top of my list.

I used Google Maps to find real estate agents in those areas and stumbled upon the top real estate agent on Google Maps with only 5-star reviews. Going through their website, I selected several properties that looked appealing to me and filled in a contact form. Less than a day later, I was on a video call with one of the real estate consultants discussing the different properties and areas I was looking into.

It was extremely helpful for me to speak to someone with first-hand experience in the area. This experience felt like an expert guidance to finding the best suitable property. I believe that reaching out to a real estate partner can be done as early as possible in your search.

Property Search and Property Lawyer

My initial thought was to buy a newly built studio or 1-bedroom apartment. Newbuilds were generally more expensive than apartments in existing buildings. However, they often came with certain benefits including porter services, gym and swimming pool, and everything being new. The one I had my eye on was to be completed in 2025.

When I started becoming more serious about one of the studios, I contacted a specialized property lawyer. The lawyer came highly recommended by the real estate agency. The agency sent me a list of about 10 recommended lawyers. I contacted about 3 from that list. It was important for me to have a few chats with the lawyers to create a bond with them and to understand exactly how much I could expect to have to pay in legal fees. The lawyer I chose was very experienced and made me feel like I was in safe hands with her.

I was even more reassured of the high standards of my lawyer when she advised me not to go ahead with the purchase of the studio. I had paid her €750 to verify if this project is fit for purchase. There were too many red flags, one of which being that the developer was a subcontractor of a large developer in the area, and that this subcontractor was very difficult to reach. Besides, some of the essential documents were missing.

The next property the real estate agent suggested ticked all the right boxes for me. When the checks came back positive, it was time to move on with the purchasing process.

The Purchasing Process

Surveyors and Preliminary Contract

Whilst surveyors were doing some final inspections to the building and the flat, my agent set up a preliminary contract or reservation agreement (rezervacioni ugovor) between the seller and me. The agreement stated when the final contract would be signed and when the payments would need to be made by. I paid a deposit of 5% of the purchasing fee which was non-refundable if I ended up not going ahead with the purchase.

This was all done through the real estate agent and approved by my lawyer. Because I couldn’t be in Montenegro for the purchasing process, I gave my lawyer the Power of Attorney so she could sign contracts in my name. At this stage, I also paid my lawyer another €750.

Currency Exchange Provider

The next step was to find a currency exchange provider for the exchange between GBP and euros. This is a crucial step that is often overlooked. Making large international transfers through your local bank, is always going to make you incur additional costs and high exchange rates. I compared a few and chose a currency exchange company that was highly recommended.

The Final Contract

The final purchase contract (ugovor o kupoprodaji nepokretnosti) was then drawn up by the buyer’s and seller’s lawyers. The buyer bears the costs for having the contract notarized. My contract was signed by the seller and my lawyer in the presence of a notary. It was agreed to pay 50% of the purchasing fee at the time of contract signing. The rest of the fee was to be paid 2 weeks later. All payments went through the notary which I felt was a secure way to make those transfers.

Once done, the buyer’s lawyer registers the transaction and has the title deed (list nepokretnosti) transferred. The list nepokretnosti is an important document that authorities and banks will need to see when asking for evidence that you own a property in Montenegro.

Fees Involved in Buying Property in Montenegro

Real estate transactions in Montenegro involve a standard set of taxes and fees. Here are all the fees that were included in my property purchase:

Lawyer’s fee: EUR 1,500

Property transfer tax: 3% of the purchase price. It is due within 15 days after receiving the notice from the local Council. Property transfer tax is only applicable to existing properties.

Notary fees: mine were close to EUR 500. This can be more for larger properties.

Estate agent’s fees: the fees are paid by the seller and are generally around 5% of the property value.

Power of Attorney: signed, notarized and with an Apostille: EUR 290 (done in the UK)

Translation by sworn interpreter of Power of Attorney: EUR 40

Cadastral or tax registration fee: EUR 49

Post-Purchase Things to Keep in Mind

Renovations: Finding a Contractor

The real estate agent put me in touch with a contractor who is specialized in renovation of flats in the area. I spoke to a few other contractors but was happiest to go ahead with the recommended contractor. He has been extremely responsive and trustworthy. He gave me a comprehensive quote of all the works that are required and has asked for a 30% deposit for the works to get started. This deposit will cover some of the materials and is also a way to reassure all the different people involved in the works that they will get paid.

Connecting with the Community

The flat I purchased is on the fourth – top – floor of a building with around another 10 apartments. I plan to reach out to the neighbors at some point although there may be a bit of a language barrier. Every building in Montenegro should have a building’s council comprised of a representative of the owner of every apartment. I have yet to find out if my building has one.

Hiring a Management Agent

The only point where the estate agent wasn’t able to help out, was to suggest a management agent. After a quick Google search, I contacted a few companies and received a reply from one of the companies. I was put in touch with a lady who I have been whatsapping with since. She will help overlook the works with a bi-weekly visit to the apartment. After the works are done, she will support me in renting the flat out and managing the rental process and collecting rent.

Property Insurance and Property Tax

I thought I might need to arrange the property insurance through the management agent, but the process was, maybe unsurprisingly by now, very straightforward. I was even able to set up a payment from abroad.

Annual property tax is another additional cost after buying a property. The tax base for this is the market value of your property. The annual property tax ranges between 0.25% to 1% and is paid in two payment, once on the 30^th of June and then again on 31^st of October.

Additional Info on Residency and Visas

The Montenegrin government provides a few different options for visas and residency:

Tourist visas and visa-free travel

Citizens of many countries, including Australia, Canada, the EU, UK, and US, can enter Montenegro without a visa for up to 90 days with a passport.
Other passport holders must apply for a visa allowing stays of up to 90 days.

Temporary Residence Permit

Required for stays longer than 90 days.
Usually valid for one year and can be renewed on a year-by-year basis.
Issued for reasons such as employment, study, family reunification, or real estate ownership.
Foreign nationals who own residential property in Montenegro can qualify for this, provided they own at least 50% of the property and meet financial and criminal history requirements.

Permanent Residence Permit

Valid for five years and can be renewed.
Gives nearly all the privileges of citizenship except voting rights and holding a Montenegrin passport
This can be obtained after five years of holding and renewing a temporary permit.

Montenegrin Citizenship

Available after ten years of residency with a permanent residence permit.

Final Thoughts on my Journey to Owning a Property in Montenegro

If you are considering buying abroad, then Montenegro is an excellent place to do it. The country and its people are beautiful, and the climate is pleasant for most of the year. The cost of real estate is, and rental yields are attractive. The most appealing to buying in Montenegro for me, is probably the easy and straightforward buying process. Find yourself a great real estate partner, and you’ll be on your way to a smooth process with lots of knowledgeable support.

Tell me about your experience of buying in Montenegro, or why you are thinking about purchasing property there. I’d love to hear from you.