Purchasing Process

See generic Purchasing Process in addition to this section.

There is no restriction on UK nationals buying private property in Montenegro.

However, because of the country’s status as an emerging market, purchasers need to be aware that they need to thoroughly check land ownership. Land Registry exists for this purpose, as it does elsewhere, but sometimes a property can be bought freehold, but the land on which it is built can only be purchased leasehold.  Surveys are hardly ever carried out, but it is wise to insist on one, particularly in the case of an older property.

Buying land has to be done through a company, so this would need to be set up

Process

Once a price has been agreed and the preliminary searches have been conducted, a deposit (typically 10-20 per cent) is paid and a pre-contract signed.

When all searches are complete, buyer and seller sign the final contract of sale before the notary and the balance of the purchase price is paid. The change in ownership is then registered. Registration usually take about 7 days.

Fees and costs

A purchase tax of 2% on resale properties and 17 % on new builds is payable, calculated on the Montenegrin Inland Revenue’s valuation rather than on the purchase price.

Other expenses the buyer must meet include those for their lawyer, the notary (typically 1%) and the estate agent charges (can be 5%).

There will be some cost for an official translator.

It is wise to budget on about 10% of the value of the property as buying costs.

Financing your purchase

When deciding how to finance your purchase, consider all the options. Paying cash will always be the simplest way.

The other options are re-mortgaging your UK home or arranging a mortgage on your new property through a UK or Montenegrin lender. Re-mortgaging generally offers an easier solution. Releasing equity in a UK home means that the second home can be purchased for cash, without the need for another mortgage. However, this may only be feasible if you own your first home outright.

An increasing number of UK lenders now offer mortgages on Montenegrin property. Mortgage lending is in its infancy in Montenegro, but is beginning to become more widespread. Loans are usually from 50 to 70 per cent of the property value.

Euro mortgages

Euro mortgages, which are tied to the rate set by the European Central Bank (ECB), currently lower than the Bank of England base rate, may seem to be an attractive option.  There are several UK lenders who offer them but you must beware that currency fluctuation could have a knock on effect to these mortgages.