How to buy property in Montenegro with the maximum benefit

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Alexey Nosovsky

A representative of the Legal Department at iWorld. Author of articles on Migration Law.

Update: 1 August 2023 12 minutes read
Property in Montenegro

Any legal adult foreigner can buy real estate in Montenegro of residential or commercial type. The procedure is carried out only in Montenegro: the owner of the object and the buyer are present in person or involve trusted persons to the process, a notary is also participating. On the basis of the certificate of ownership a foreigner can obtain a one-year Montenegrin residence permit with subsequent extension.

The cost of housing in Montenegro starts at 1,000 EUR per m2, in elite areas, such as Porto Montenegro, it reaches 12,000 EUR. Montenegro’s real estate market in the country is growing rapidly: according to the Statistical Office of Montenegro, 479 houses were built in the first quarter of 2022, which is 5.5 times more than during the same period in 2021. Buying a residential or commercial property can be advantageous for those who plan to move to the country and / or develop their own business or considering the option of renting.

Who is eligible to buy Montenegrin real estate

Any natural or legal person can buy property in Montenegro with almost the same rights as a local citizen. The legislation does not set specific requirements for foreign buyers. Acquisition of buildings and land is governed by the law «On Property and Legal Relations» as of March 25, 2009. According to Article 415, there are a number of restrictions on the purchase of certain types of real estate and land in this state. No sale to foreigners is allowed for:

  • strategic sites;
  • historical and cultural monuments;
  • national parks, islands, forests, agricultural land;
  • objects located near the borders of the country at a distance of 1 kilometer.

In addition, an individual has the right to buy a plot of land with a maximum size of 5000 m2, this restriction does not apply to entrepreneurs registered in Montenegro.

Best places to buy property in Montenegro

Most foreigners buy housing located near the sea or in the mountains. The local market offers various types of property – apartments, houses, villas, townhouses. Objects on the coast attract those who plan to live in Montenegro or is considering this purchase as a profitable investment in order to generate income. The prices for real estate in resort areas are much higher, but largely depend on the availability of infrastructure and proximity to the sea. Given the variety of residential and commercial options, there is an object for everyone in Montenegro.

Housing for permanent residence

Among foreigners who settle on the coast of Montenegro, the most popular cities are Bar and Ulcinj. These resorts are characterized by good infrastructure, schools, cultural centers and a developed network of public transport. In the cities you can find all types of affordable real estate: the cost per square meter starts at 1,000 EUR for standard average housing, and reaches more than 3,000 EUR for luxury properties.

The capital of Montenegro, Podgorica, is chosen by foreigners who want to be in the business center of the country. The urban rhythm of life and developed infrastructure attract many immigrants from the CIS countries who are going to move for a long period of time. The m2 of housing on average costs 1,500 EUR and the cost of commercial real estate – 6,500 EUR depending on the area. Podgorica is located in the center of Montenegro: the sea or the mountains can be reached in 40 minutes, so the city is suitable for both active and passive vacationers.

Luxury real estate connoisseurs in Montenegro choose the coast of the Adriatic Sea and the Bay of Kotor: Budva Riviera, Tivat, Herceg Novi. The price for a square meter of premium-class housing starts at 2,500 EUR, the upper limit can be up to 12,000 EUR, depending on the object. Foreigners who are looking for a high-quality, but at the same time, inexpensive real estate in Montenegro, should look for options in the municipalities Zabljak, Pljevlja, Kolasin, Andrijevica. Apartment or house for permanent residence in these regions will cost you about 1 000-1 200 EUR per m2.

Real estate in Montenegro for housing

Property to rent out

The most attractive regions for the purchase of housing for rent out are Budva, Bar, Kotor and Podgorica. Objects located on the coast, are in demand all year round, most apartments are purchased while still under construction. The cost of m2 of housing by the seaside starts from 1 500 and can be up to 4 500 EUR. In Podgorica, small studio apartments are popular among tenants, the price per m2 of which is 1,100-2,000 EUR. Rate of return for the lease of apartments in the center of the capital is 4.39% per year.

Kotor and its environs are surrounded by the sea bay and mountains, there is also national park Lovcen. This area is quite popular among tourists who rent mostly private houses – villas, mansions or small cottages. The cost per square meter of housing is on average 1 800 EUR. Level of profitability of renting property in the center of Kotor is 3.14%.

Very much in demand for renting property on the peninsula Lustica, located between the Adriatic Sea and the Bay of Kotor. Properties in Krasic, Veslo, Radovic, Mirishte, Lustica are priced at 1500-1800 EUR per m2. Tourism is developing in Ulcinj: comfortable holiday apartments are actively building here. The price per square meter of built-up property is lower than in other well-known resorts of Montenegro and starts at 1,200 euros.

The purchase of land for the construction of resort real estate to rent it out later is also in demand. The cost of land in Montenegro ranges from 2,000 to 40,000 EUR per 100 m2. The price depends on the proximity to the sea, the availability of communications, the landscape and other factors. An important recommendation when buying a plot of land is to make sure that the land is allowed for construction.

Purchase and sale procedure for foreigners

Citizens of different countries are free of choice to buy housing in Montenegro and conclude a deal without intermediaries. To minimize the risks and to find the most suitable property, the buyer can contact a real estate agency. The procedure for an independent purchase includes the following steps:

  1. Selecting a Property. Often buyers are looking for a home in a particular community where they have been before. In smaller communities, it is effective to search for a house through local listings. Also, you can choose an object on thematic sites, where in addition to photos of the building is available online review from the owner or realtor.
  2. Checking the property and preparing the transaction. The foreigner goes to an authorized notary, who carefully examines the ownership documents provided by the seller and prepares the sales contract. The property is inspected for tax and utility arrears. Additionally, the seller has to provide his spouse’s consent for the sale, if married. The buyer is only required to present an international passport.
  3. Signing the preliminary contract. The document is drawn up in Montenegrin, with a copy in the native language or in English attached. The contract of sale is signed by the parties in Montenegro in the presence of a notary and a licensed translator. The document specifies the amount of the advance payment (usually 10% of the property value), which is transferred after the conclusion of the preliminary transaction from any bank account. This step is not mandatory in the case of a transfer of the entire amount at once. On the basis of the agreement, the owner removes the object from sale, and the notary draws up in the cadastral register of the property a restriction on the alienation, according to which the property cannot be sold to a third party or rented out.
  4. Completing the transaction. The notary prepares the main contract, then the buyer transfers to the account of the owner the balance of the amount or make full payment if no prior agreement. After signing, copies of the document are sent to the cadastre for registration of the property, as well as handed over to the tax office in order to calculate the amount of the fee.
  5. Obtaining a Certificate of Title. The document is issued to the buyer after the tax payment at the cadastral office. The term for issuing the certificate is up to 30 days.

Mortgage in Montenegro for foreigners

Foreigners are now able to buy real estate on mortgage in a limited number of Montenegrin banks – for example, such an opportunity provides Erste Bank. Only the owner of a residence permit, permanent residency or citizen of Montenegro can get a loan. The foreigner must have a positive credit history. The rate for residents is approximately 5% for up to 20 years. The down payment is about 50% of the total cost. Also, the sale of real estate in Montenegro by the builder is often carried out in installments of 1-3 years.

Property tax in Montenegro

After signing the contract of sale, the foreigner is registered with the tax office and receives an individual number. Then it is necessary to open an account at a local bank to pay taxes. The fee is 3% of the value of the property, the payment must be made within 15 days after the decision of the state agency. If a foreigner buys a building from a developer who is a VAT payer, this tax is not charged. When entering the contract of sale in the cadastre also need to pay stamp duty – 0.5% of the value of the housing.

After the purchase of real estate in Montenegro the owner must make an annual tax payment, the rate of which is 0.25-1% of the price of the object. The amount of the fee is calculated by the local government depending on the condition of the property, its location and other characteristics. With foreigners who purchased property in the resort area, a tourist tax is charged. The amount of payment is determined by the agency based on the area of the premises, the cost of rent in the season and other indicators.

Real estate in Montenegro with optimal taxes for foreigners

Utility bills

The main utilities in Montenegro are electricity and water, which are paid by meter. Additionally, owners sign a contract for garbage collection, gas is mainly purchased and used in cylinders. The cost of utilities per month for housing with an area of 70-80 m2 is on average 100 to 130 EUR. In new complexes also pay for the maintenance of the building and the area around it. Owners of apartments, the meterage of which is 100 m2 and more, will have to spend EUR 100-200 per month, depending on the region and the type of property.

Renting out real estate

The cost of renting housing in Montenegro varies greatly depending on the region. An object of up to 100 m2 in the north or center of the country (municipalities Zabljak, Berane, Pluzine, Petnitsa) can bring the owner 100-300 EUR per month. Similar premises in resort areas – Budva, Kotor, Tivat – will cost 500-1 500 EUR. In the capital of Montenegro, an apartment with three bedrooms can be rented for 500-600 EUR per month. The owner must pay annual tax (9%) on income from the lease. The average profitability of renting property in Montenegro is 4.97%.

The benefits of buying property in Montenegro

The purchase of a residential or commercial property of any value in Montenegro provides foreigners with the opportunity to:

  • rest and reside in a country with a comfortable climate and picturesque nature;
  • apply for a residence permit and extend the status under the condition of preserving the right of ownership;
  • make a profit when renting the object.

In addition to the pluses, the purchase of property in Montenegro has its own minuses. Comfortable housing in the resort area will cost foreigners a pretty penny, especially if we are talking about the first line of the Adriatic Sea. Cheap real estate is usually located far from the coast and the main attractions of Montenegro. If a citizen of another state is buying a home with the purpose of immigration, they should take into account that in Montenegro it is difficult to find high-paying jobs, especially technical and narrow-focused specialties.

Many foreigners consider the slowness of the native population as a disadvantage, but for families with children, retirees and those who want a break from the dynamic pace of life, it is a significant plus. Real estate buyers often obtain a residence permit in Montenegro and it is especially popular with freelancers, people with passive income and business owners.

Obtaining a residence permit through the purchase of real estate

Any adult foreigner may apply for the annual Montenegrin residence permit on the basis of the purchase of real estate in the state. After the registration of the purchased property the new owner personally submits the application and the package of documents to the department of the Ministry of Interior. In order to request a residence permit, the applicant must provide:

  • a valid identity card;
  • certificate of title to real estate;
  • proof of funds for living in Montenegro (minimum 3 650 EUR per year);
  • health insurance;
  • certificate of no criminal record;
  • receipt of payment of state fees.

It takes up to 40 days to review the application for a residence permit, and then the foreigner has to pick up a plastic resident’s certificate at the office of the Ministry of Interior. It is possible to extend the residence permit for a year, provided that the basis is maintained. Leave the country for more than a month during the year is not recommended – this will be the reason for revocation of status.

Residence permit of Montenegro through the purchase of commercial or residential property does not require a certain amount of investment. Inexpensive real estate also gives the right to obtain a temporary residence and all the advantages of staying in Montenegro. The owner of the property can apply for a residence permit for immediate family members under the family reunification program.

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