How does the legalization of self-built properties change the real estate market in Montenegro?

The history of illegal constructions in Montenegro

The history of the emergence of illegally constructed buildings in Montenegro appears to be a complex and multi-layered process. The development of illegal construction began many years ago, and in this article, we will examine the key points that contributed to this phenomenon. It all started in 1991 when Yugoslavia disintegrated. Over the next fifteen years, seven independent states emerged on the map of Europe, including the partially recognized state of Kosovo. Montenegro gained its independence only in 2006.

The period of Yugoslav time

During the Yugoslav period, the cities of Montenegro developed with obvious difficulties. The region was not perceived as attractive for international tourism, which predetermined the lack of significant construction along the coast. However, after gaining independence, the situation changed dramatically. Foreign investors began to actively invest in local lands, while Montenegrins had to seek solutions to housing problems. This initiated an unexpected construction boom in the region. In a short time, all the plots of land outlined in the existing urban planning were developed.

Factors contributing to the construction boom

• Less than 15 years after gaining independence.
• Local authorities are struggling to adapt to the new development plans for the region.
• The budget deficit limits the creation of necessary communications.
• The old urban planning schemes haven't been revised for 20-30 years.

Position of the authorities

Alexey Smirnov, an expert in the development of Adriatic regions, emphasizes that during that period, permits for the construction of new facilities were not issued because the land in question was not urbanized: there were no roads or other vital communications. Government authorities realized that it was impossible to stop the construction process. Since the land plots were privately owned, this law became the main one in local legal practice. As a result, the authorities partially turned a blind eye to unauthorized constructions. Local residents built their own homes, some followed a project, while others acted at their own discretion. At that moment, it didn't matter much.

Registration of objects

After the construction was completed, the owners registered their properties with the cadastral and tax authorities. The state accepted these buildings and issued a document of ownership (a certificate of immovability) marked "without construction permit," indicating the absence of formal approval. Thus, these properties became part of the real estate market, allowing for various transactions: buying and selling, gifting, or renting. However, it is worth noting that banks were reluctant to issue loans using such properties as collateral.

The overall scale of illegal constructions

Regarding the scale of self-buildings, the exact number of objects built without authorization remains uncertain at present. According to various estimates, it could be between 40,000 and 100,000 buildings, which confirms the high level of unregistered construction in the region. This situation raises many questions and generates active discussions about the future prospects of real estate market development in Montenegro and the need to introduce a more flexible urban planning policy.

Illegal construction in Montenegro

In Montenegro, there is an illegal situation in the real estate market, where numerous properties have been built without the proper permits from the authorities. This concerns both individual owners who constructed their own homes for their families and large construction companies actively operating in the region. As a result, there is a huge number of apartments in multi-story buildings that are not legally registered. The issue of "illegal" properties also affects cases of reconstruction, where, for example, the first floor was built according to all regulations, but the subsequent floors did not receive legalization.

Statistics on permission violations

According to statistics from 2018, about 71% of all housing in rural areas lacked the necessary permits, while in cities this figure exceeded 50%. Such violations mainly concern private homes, but among apartments, every second one turned out to be outside the legal framework. Many people found themselves in a situation where they had to make deals involving such properties due to a lack of available alternatives.

This became a well-known phenomenon, and despite the difficulty, tenants continued to live in their homes, paying their taxes faithfully and transferring ownership to others.

The emergence of unauthorized constructions

The emergence of illegal constructions in Montenegro has become commonplace in the real estate market. However, this situation could not continue indefinitely. About seven or eight years ago, local authorities began to actively focus on cadastral issues, developing comprehensive construction plans and creating new laws to regulate this area.

Solution to the problem of unauthorized constructions

It has become clear that the issue with those who have already built their homes without proper documentation needs to be addressed. Complete demolition of such structures would be impractical — there are too many of them, and they belong to private citizens whose rights are protected by law. Most of these buildings comply with modern construction standards, and it is evident that the owners are not responsible for the shortcomings of a system that failed to provide adequate oversight during the transitional period.

Legalization initiative

In this regard, a decision was made to initiate the process of mass legalization of illegally constructed buildings, which would also serve as a means to replenish the state budget. On July 30, 2016, the Parliament of Montenegro approved the law "On the Regulation of Informal Structures," which opened the possibility to legalize all unauthorized constructions.

Attitude towards the new law

This law was received with great enthusiasm by property owners and participants in the construction market. The conditions for legalization turned out to be quite favorable.

• To formalize the legality, it was necessary to submit an application.
• Gather relevant documents.
• Pay the tax for connecting to municipal utilities.

Tax rates and legalization

The tax rates were set at relatively acceptable levels, with the possibility of discounts and installments. On average, for coastal areas, the tax rate ranged from 70 to 150 euros per square meter. For example, for a house of about 200 square meters in Budva, the owner had to pay around 20,000 euros in taxes. This created a basis for the legalization of many properties that were previously outside the legal framework and allowed their owners to formalize their ownership legally.

Discounts and payment terms

If you decide to pay the entire amount at once, you can take advantage of a 20% discount. Or you can split the payment over a longer period of up to 20 years.

Legalization of real estate in Budva

To legalize a villa with an area of 200 square meters in Budva, it is necessary to pay a tax of about 20,000 euros. Previously, the authorities set a deadline for submitting applications — it was established until July 15, 2018. By this deadline, all owners of illegal assets were required to declare their properties.

Unfortunately, many were unable to meet this deadline. As of October 2019, the government reported that 51,000 applications had been submitted, but only about 30,000 were processed. Due to the influx of requests, the authorities decided to extend the deadlines for submitting documents and recently announced that legalization will be conducted indefinitely, but only for properties built before 2018 and that have markings on orthophoto plans created during the transitional period.

It should be noted that houses built after the established deadline cannot be legalized in the future.

Application statistics

Alexey Smirnov, an expert on real estate in the Adriatic coast, notes that among his acquaintances, 60% have already submitted their documents for the legalization of their properties. About 30% were unable to do so for various reasons:

• Someone was unaware of the need to submit an application.
• Others were abroad;
• Among the owners, there are many foreigners.

The remaining 10% deliberately avoid filing to avoid future tax consequences, as the law does not provide for demolition of the property, only fines.

Issues with processing applications

One of the main challenges remains that the authorities are not ready to effectively process the submitted applications. Personally, I submitted 55 applications from clients, and only three of them received a complete response. We provided all the necessary documents, including the elaboration, cadastral plans, and property certificates. The response we received was: "Your properties have not yet been included in the detailed land plan." It is unclear when they will be able to be added to the plan — it may take several years.

Pace of legalization

The legalization process is moving extremely slowly, and it is likely that we will need another five to ten years to complete the registration of all illegally constructed buildings erected from 2006 to 2018. This stage is becoming inevitable, and all owners, regardless of their wishes, will have to go through it.

The Montenegrin market still has a significant number of properties without building permits, and this situation is considered the norm. However, in the future, properties without permits may be illiquid, and their sale will face serious difficulties, even if prices are reduced. In addition, it is possible that the authorities will become stricter with those who continue to ignore legalization.

Stages of legalization

The legalization process consists of four main stages:

• Application submission;
• Receiving confirmation of application acceptance;
• Analyze the strength and safety of the facility;
• Decision on legalization.

Necessary documents

A typical set of documents for the legalization of a house with an area of up to 500 square meters includes an application that can be submitted either by the owner themselves or by their authorized representative.

Introduction

A certificate of ownership is a document that can be described as proof of rights to real estate, obtained from the state registry. Additionally, it is necessary to assess the current condition of the property, which requires contacting a licensed surveying organization, and this process includes the need to provide three copies.

It is also important to obtain a copy of the cadastral plan or its extract — these documents significantly affect the confirmation of rights to a specific property.

Seismic safety and architectural projects

Additionally, it is necessary to obtain a seismic safety certificate issued by a licensed specialist, such as an architect. The architectural project prepared by an accredited organization must include at least three copies.

Such a design, in addition to the basic types of specifications for a structure or building, shall include:

• Diagrams that depict the foundation;
• Sections and facades;
• Detailed description of engineering systems and communications.

However, for properties intended for permanent residence, there is no need for such an architectural project.

Buying real estate without permits

Many people are interested in whether it is currently possible to purchase real estate without the proper building permits. The formal period for legalizing such properties has already expired, but according to practice, a number of owners are still waiting for responses from the municipalities.

The reason for this is not only the lost deadline but also the need for lengthy processing of applications, as detailed plans have not yet been developed for all regions. As a result, there are still numerous properties on the market that lack the necessary construction permits.

The issue of "illegal construction" in Montenegro

With the end of the "self-built era" in Montenegro in 2018, the legalization process began to drag on, which is related to the large scale of the problem affecting almost every second building in the country. Illegal real estate can be subject to purchase, although such transactions sometimes raise doubts.

Nevertheless, this practice takes place in the market quite often and does not contradict the requirements of the law. It is important to note that:

• Buying a home is, in most cases, a long-term investment.
• Owners often plan to pass their property on to their descendants.

Therefore, it is important to consider the future of property rights: even if the object currently lacks permits, it is worth thinking about the prospects of obtaining them. Also, don't forget to mentally prepare for potential tax obligations.

Recommendations for buying real estate

When purchasing real estate, it is very important to perform a comprehensive inspection of a particular property. It is recommended to cooperate with experienced lawyers or realtors.

This allows for a thorough analysis of the property title to check for any marks indicating a "lack of building permit" and to compare the cadastral plan with the actual condition of the property. If there are no restrictions or unauthorized changes, legalization may not be necessary.

However, if there are encumbrances, it is necessary to find out whether the owner submitted an application for legalization before 2018, as most owners have already completed this process.

The process of transferring real estate

In the current situation, the process of transferring property rights to a new owner is activated only after the local authorities review the submitted request. Once this stage is completed, the new owner is required to pay tax fees and eliminate any existing encumbrances. In the absence of an application, it is necessary to determine whether it is possible to legalize the property at all. It is extremely important to conduct research on the urban planning plans of the area to understand if there are any significant projects planned, such as the construction of an overpass.

Unique real estate offers in Montenegro

The real estate and construction organization "Adriatic Sea Expert" offers a wonderful opportunity for those planning to purchase a villa in Herceg Novi, Montenegro. This historic house, with an area of 113 m², is situated on a plot of land measuring 1153 m² and delights guests with stunning panoramic views of the sea and surrounding mountain landscapes. The uniqueness of this building lies in the fact that it was constructed in the 19th century on the main road connecting the city with the village of Kameno. This magnificent stone house once housed a famous tavern called Popa Micho.

Modern villas from Antarex

Another interesting villa offered by Antarex is a house in Sutomore, priced at400,000 €This modern building, with an area of 266 m², was constructed using Canadian technology, highlighting its high quality standards. The land area is 900 m² and offers excellent amenities, including:

• Own garden
• Swimming pool
• Parking spaces

The interior space includes a spacious living room, a stylish kitchen with a dining area, and two cozy bedrooms located on the first floor.

Villa in Tivat

A villa in Tivat is available on the market from the company Antarex at a price361,000 €This cozy house, with an area of 95 m², is situated on a 548 m² plot in the picturesque area of Donja Lastva, just 200 meters from the sea. The well-thought-out layout includes:

• The hallway
• A cozy living room with a kitchen area
• Three bedrooms
• The bathroom
• Outdoor space on the terrace

The garden on the property and the additional outbuildings make this offer particularly enticing.

Spacious villa in Igalo

If you need more space, check out the villa in Igalo, also from Antarex, for600,000 €This large building, with an area of 394 m², is located on a spacious plot of 3195 m² in the vibrant center of Igalo, which is part of Herceg Novi. The first floors house a restaurant with two spacious halls and a separate room with a fireplace. The presence of a private water source adds convenience for future residents.

An affordable option in Herceg Novi

The company Antarex also offers an affordable option - a house in Herceg Novi, priced at200,000 €This property consists of two one-bedroom apartments. The area of the apartment on the first floor is 51 m², while the one on the second floor is 47 m². The yard area is slightly smaller at 52 m². The house is in excellent condition, fully furnished, and ready for occupancy, making it ideal for remote purchase.

Cozy house in Kotor

Those looking for privacy and comfort should consider a house in Kotor for the price of a house in Kotor490,000 €The proposed project Riviera Nekrtinine. The total area of this cozy space is 240 m² and includes a spacious well-maintained yard. This property is two stories and fully furnished, allowing new owners to feel at home right away.

An interesting offer in Žabljak

Also an interesting offer is a house in Zabljak from the company DOO "Monteonline" for a75,000 €The area of this building is 77 m², it is located in the Uskochi district and is just a 7-minute drive from the city center. However, it is important to note that this property also requires legalization, which may affect the purchasing process.

Conclusion

Each of the proposed properties is a unique opportunity for investors or for those dreaming of a home by the Adriatic Sea.

Real estate in Montenegro: a wide selection for buyers

This article discusses various real estate offerings in Montenegro in detail, presenting a wide range of residential properties for potential buyers.

A house with an area of 77 m²

The first option is a two-story house with an area of 77 m². It is connected to central water supply and electricity, with a septic system installed for wastewater. The land plot is 400 m², and there are plans to complete the landscaping of the terrace in the future, as well as to create a stone terrace on the lower level. One of the features of this house is—wood stoveWhat sets it apart from typical residential properties. The property is fully furnished and equipped with all necessary appliances, allowing the new owner to move in right away. Additionally, this offer has high investment potential, making it very attractive to buyers.

Villa in Dobrova Water

The next property is a villa in Dobra Voda, priced at €605,000, offering 859 m² of living space, including 4 bedrooms and 4 bathrooms. By purchasing this villa, you can obtain a residence visa in the country. This three-story building has stunning sea views and is surrounded by lush olive groves and springs with crystal-clear water. The sea is located just 3 km away, or a 5-minute drive. Additionally, the Beganovic Apart & Spa complex, featuring pools and restaurants, is just 10 meters from the villa.

Unfinished villa in Melina

Another option is an unfinished villa in Melina priced at €670,000. This property covers an area of 600 m², and there is also the possibility of adding another floor. The villa is located on a hillside, providing an incredible sea view from every room. The nearest promenade is 1.2 km from the house, and the supermarket is just 450 meters away. There are also a gas station, café, and bakery nearby, making this place convenient for living.

Family house in Bar

It is also worth considering the possibility of purchasing a cozy family home in Bar, with an area of 220 m² for a price of €225,000. The mentioned house is located in Shushani and offers a wonderful view of the sea. It is situated 1200 meters from the beach, and the plot area is 1000 m². On the first floor, there are:

• two spacious bedrooms with access to a shared terrace,
• kitchen,
• hallway
• a bathroom with a shower.

On the second floor, with a separate entrance, there are three more bedrooms and a kitchen.

House in Sutomore

We cannot overlook the house in Sutomore that is for sale for €110,000. This property, with an area of 116 m², requires renovation, but it is equipped with everything necessary for further living or renting out. The land area is 342 m². Inside the house, there are four small apartments spread over two floors, with the potential for increasing the number of floors. Water supply is provided by the city, and one parking space belongs to the house. There is also the possibility of purchasing the neighboring plot for further expansion.

Townhouse in Sutomore

And finally, it is worth mentioning a townhouse in Sutomore, priced at €67,000. It has an area of 46 m² and a land plot of 239 m². This is a one-story house that includes:

• a spacious terrace,
• hallway,
• living room,
• kitchen,
• bedroom,
• bathroom

It is furnished and only requires cosmetic repairs. There are fruit trees growing on the fenced property, and the water supply is provided by both city resources and a rainwater collection tank.

Conclusion

Thus, Montenegro offers numerous opportunities for purchasing real estate suitable for both living and investment. Each of the presented options has its unique advantages, making it worthy of attention.

Historical context

In summary of our conversation about illegal constructions in Montenegro, it is important to acknowledge that this topic is rich in both historical and social aspects. From the events that led to the breakup of Yugoslavia to the rapid construction boom that swept the country after gaining independence, the process of shaping the real estate market in Montenegro has proven to be complex and unpredictable.

The issue of legalization

Over time, in an effort to meet the needs of the population and attract foreign investors, Montenegro has faced the issue of legalizing structures built without permits. This problem affects not only private households but also commercial entities, creating a legal collapse that has impacted the lives of thousands of people.

Adaptation and changes

But it's amazing that, despite the lack of formal permissions, life goes on. People find ways to adapt to the new reality by buying, selling, and renting "powerless" properties. As a witness to these changes, I see how the Montenegrin authorities have started to take measures to address this issue.

Law on legalization

The adoption of the law on the legalization of informal properties has been a step towards normalizing the situation in the real estate market and, more importantly, restoring trust among citizens. Now, property owners have the opportunity to bring their assets out of the shadows by taking advantage of the offered benefits and simplified legalization process.

The future of Montenegro

This process will not only help organize the market but will also allow the country to finally reach a new level that matches its ambitions as a modern European resort.

Key points

• Historical development:The breakup of Yugoslavia and the emergence of Montenegro as an independent state.
• Construction boom:inflow of investments and the need for housing.
• Legalization:issues with the lack of building permits and a legal collapse.
• Conclusion of laws:steps taken by the authorities to normalize the real estate market.