“Forbes ranked Montenegro as the best country in the world for retirees.” How can a client buy a house in Montenegro with the help of an expert

04/09/2023, 16:00

What is essential to know about buying property in Montenegro under construction? How does the process of selling by installments look? Should a buyer pay something if he resells property? Svetlana Timashova, who heads one of the very first real estate agencies in Montenegro—Red Feniks—has answered all of these questions. She also told us in detail how they at Red Feniks are helping clients with all documents, opening companies, and other important points connected with purchasing Montenegrin real estate.

“It is very difficult now to find a good house with a price below €250-€300 thousand.”

Svetlana Timashova, who heads one of the very first real estate agencies in Montenegro — What is the situation with real estate prices in Montenegro at the moment?

— Real estate prices in Montenegro for the last 2-3 years have jumped very much. Firstly, this is due to the fact that the cost of absolutely all building materials has increased. Moreover, this applies to components that are produced both in Europe and in China. Because of this, the price per square meter has now increased very much.

It used to be possible to buy a good, new property for €1500-€1800 per square meter, but now it will cost at least €2000, and these will be objects without a sea view and not in a central location. In general, the average price is now €2–€2.5 thousand per square meter; if it is a new apartment, furnished, just built, it will be about €3000–€4000 per square meter. And the property, which is located in the coastal line, will cost from €4.5 thousand per square meter and above.

House prices have also increased a lot. Now there is no price for a house below €250–€300 thousand. This is already a thing of the past. Now, the cost of a more or less quality house starts at about €300,000 and higher.

“Compared to other countries, Montenegrin taxes are very low.”

— Montenegro will introduce a progressive tax on real estate turnover at the beginning of 2024. What does this mean, and how exactly will it affect the market and buyers?

— In Montenegro, there has always been a one-time tax on secondary real estate in the amount of 3%. The introduction of a progressive tax has long been discussed, and from the beginning of 2024, the taxation scale in the country will look like this:

For the purchase of a property up to €150,000.00, the tax will still be 3%.
For a purchase amount above €150,000.01, the taxation will be as follows: €4500 plus 5% of the amount above €150,000.01.
For a transaction over €500,000.01: €22,000.00 + 6% on the amount over €500,000.01.

However, I think the three percent tax will remain the most common, as the price of inexpensive one-bedroom properties has always been up to €150k. Beyond that, it can simply be seen as a luxury tax. In other words, I believe that the increase in this tax is quite small and should not hit buyers too hard. Especially given the fact that, compared to taxes in other countries, Montenegrin taxes are very low. And the prices for Montenegrin real estate actually correspond to the quality.

— Is there any way to avoid taxation when buying real estate in Montenegro?

— Yes, it is possible not to pay a 3% tax at all if you buy a new building from a developer who provides and pays all necessary costs. Thus, you can buy real estate for any amount and not pay tax.

At the same time, we always advise our clients to buy objects from reliable developers, whose real estate has already been sold and whose quality of work can be verified by the examples. There are not so many such developers with a good reputation in Montenegro, and our company has been working with the best of them for a long time— our experience is more than 17 years in Montenegro.

— If a client wants to sell a property in Montenegro, does he have to pay any tax?

— No, because when concluding a notarial contract in Montenegro, payment for the property can go to any account of the seller, including those registered in other countries (except offshore). That is, the money goes to the account that the seller indicated in the contract of sale. Therefore, no tax office or any other inspectorate in Montenegro can then demand that you pay tax on this sale.

promenade and main beach of-petrovac in Montenegro

“For purchasing homes and villas, the Bar region is excellent.”

— Which regions are the most popular for buying among foreigners?

— The Budva Riviera is very popular among foreigners because of its wide, sandy beaches. However, it is worth considering that in July and August, this region is crowded with tourists who come here for vacation.

Another very popular region is Herceg Novi. The beaches there are of different types (small and large pebbles), but the plus is that in the summer, this region is much less crowded, both on beaches and streets. And in general, there is a more European standard of living here. Europeans who come from the border with Croatia by car are very fond of coming here and buying real estate.

The very beautiful Bay of Kotor is also in demand. By the way, Kotor Bay leads the world's top five best places for retirees to live, according to Forbes. But here is the next nuance: due to the fact that for many years there was a ban on construction in this region, today there is practically no new real estate there. That is, there are no modern buildings—most of the houses here have small windows and red roofs, and this Mediterranean style is protected by UNESCO.

There is another interesting place— Tivat. However, this city has very high prices as it is very much loved by the locals. They prefer to live there as there are almost no beaches and such a crazy tourist flow. However, just because there are almost no beaches in the city, we do not recommend foreigners to buy real estate in Tivat.

Separately, it is worth mentioning houses and villas. To buy such real estate, it is very good to go to the Bar region, which is located closer to Albania. In this region, there are a lot of villas and houses, and they continue to be built there. In Herceg Novi and in the Bay of Kotor, buying houses is also a common practice.

“Montenegro does not grant loans to foreigners.”

— How to buy real estate in Montenegro in installments?

— There are two options, depending on the stage of the purchase.

If you buy a property at the construction stage, you first make an initial payment and then gradually pay the entire amount until the end of construction. In our experience, cases where the developer provides installments after the completion of construction have never occurred. It is simply not financially profitable for anyone.

By the way, the amount of the down payment will also determine the final price. There are three options here:

The lowest price will be when you pay 90% immediately and 10% at the end of the construction when you already have the key in your hands.
The next option is to pay evenly, in which the client pays 50% immediately and then pays the next half in stages. These stages can be either quarterly or monthly, depending on the agreement with the developer.
And there is a third option when the client pays 30% and pays the remaining 70% in installments. However, as a rule, there is no initial installment less than 30–35%.

Again, the installment is paid while the construction is underway. As a rule, the standard construction period is 24 months.

If we talk about temporary installments for buying secondary real estate, we always try to conclude the contract with a seller in such a way that the buyer has the opportunity to pay within a short period (3 - 6 months). Naturally, ownership of the property is not transferred until payment is made. Therefore, we do not advise our clients to ask for large installments.

As for loans, in Montenegro, foreigners are not granted them. However, we have examples when clients from Germany were given loans from their local German banks and even on the object under construction. For this, we provided certain documents, such as extracts from project documentation, building permits, etc.

Therefore, German citizens can work with their banks for both ready-made and under-construction real estate in Montenegro.

— What advantages can a foreigner gain from buying real estate in Montenegro?

— Buying real estate in Montenegro gives you the opportunity to get a residence permit for one year, with a subsequent extension. If the foreigner is not in Montenegro for more than 11 months a year, it will be necessary each year to apply for a residence permit again. This is not a complicated procedure; it requires just a few documents (a certificate of criminal record and a certificate of ownership of real estate). We provide from us the service of obtaining a residence permit.

expensive yachts on the pier in porto with mountai, Montenegro

Why choose Red Feniks when buying real estate in Montenegro?

— Our agency has been operating since 2006, and now we have two offices—in Budva and Herceg Novi. Over the years, we have built an excellent reputation among both sellers and buyers. Both of them recommend us to their friends and acquaintances, and this already speaks volumes.

The advantages of working with Red Feniks:

A real estate appraisal is the first thing we do when a seller contacts us. Since we already have a lot of experience, it really reflects the value of the property. We do not sell properties that are overpriced.
The sellers trust us. They listen to us when it is necessary to give the buyer an installment or to revise some conditions in the contract because our company is respected in their circles. This means that both parties of the transaction benefit from cooperating with us.
Exclusive sale of objects. Moreover, we have already reached the point where we can organize the exclusive sale of those objects that we ourselves created from scratch. That is, our partners invest in construction, and we fully manage and sell these projects.
Multinational team. We employ specialists from Russia, Ukraine, Montenegro, Turkey, and Germany. Accordingly, our employees speak English, Russian, Montenegrin, and German. This, again, is very valuable for the buyer.
Free property showings. When clients come to Montenegro, we arrange viewings in advance and show the property free of charge. Along with this, our managers tell buyers about the country and the peculiarities of each region or district of the city where the desired property is located. Of course, we arrange free transfers from the airport and help with accommodation.
We are honest about all the nuances. We have earned a good reputation, as we never hide from the client nuances related to the purchased real estate. Whether the roof is leaking or the plaster is crumbling, we always warn the client about all the disadvantages of the apartment or house before the deposit is handed over.
We help to solve problems with documents. A common scenario is this: there is a good property that turns out to have small problems concerning the documents. For example, there may be an incorrectly entered area in the archive, or there may be some inaccuracies in the ownership sheet of the previous owner. We correct all these issues ourselves: we make requests to the archive, submit the necessary applications to the cadasters, etc. And the buyer and seller just wait patiently until we finish this procedure.

I should note that sometimes it is more convenient for people, for various reasons, to open a company and buy an object under its name. By the way, it does not affect taxes. Plus, having opened a company, you can apply for another type of residence permit, which includes a residence permit and a work visa.

Opening a company in Montenegro is not a problem. The cost of maintenance, including all taxes, accounting services, and audits, is about 2500 euros per year. We open companies for our clients and lead them.

How does Red Feniks assist buyers of real estate in Montenegro?

—How exactly do you help your clients with real estate purchases and paperwork?

— The general structure of our work is as follows:

Before the client arrives in Montenegro, we send them links to various properties and answer any questions they may have.
Then, when the client is about to arrive, we always offer to meet him at the airport free of charge. We advise him where to stay, depending on the time of year, budget, and region where he wants to buy a property.
The next stage is showings. We take the client from the hotel, show him the apartments, and bring him back. As a rule, the showing program lasts 2–3 days.
When a client is interested in a property, we immediately check it for encumbrances and examine all the documents. If suddenly, during the sale, there are some debts for electricity or annual tax, we notify the seller, and he promptly resolves these issues. Or, if the seller is abroad, we pay these debts ourselves so that the property is free of them at the time of the transaction.
Of course, we always warn our clients about the need to bring a cash deposit (up to 10 thousand euros that are allowed for import). We take a deposit because many sellers are also foreigners, and they do not want to fly to Montenegro without knowing for sure whether the transaction will take place or not. Therefore, our company keeps the buyer's deposit with us until the moment of the transaction at the notary.
At the time of the transaction, we give this money to the seller, and the notary immediately fixes in the contract of sale that the deposit for a certain amount has already been paid on the day of signing the contract and is considered part of the total value of the transaction. The client sends the rest of the amount by agreement with the seller within a specified period of time, which is spelled out in the contract.
When the notary receives the full payment, we also ask the seller to confirm that all funds have been received. And then the notary sends the documents to the cadastre for re-registration of the owner. This usually takes 30 days. By the way, in Montenegro, you do not need to keep the property sheet—it is permanently saved in the cadastral system.
In addition, we help the buyer with issues such as the transfer of electricity and water meters so that everything is already functioning when they arrive next time.
After the sale, we give the client recommendations for furniture stores and repair services if anything needs fixing or remodeling. That is, we continue to cooperate, so to speak, in a neighborly manner. Montenegro is a small country, so I think that all these things are very important for buyers.

We look forward to seeing you in Montenegro! We guarantee that working with us will be not only simple and enjoyable, but also profitable. Our experience and expertise will allow you to successfully implement any plans—be it buying a home, investing, or property management. Don't miss the opportunity to be part of Montenegro's thriving market and delightful culture.