Montenegro – a Mediterranean jewel

Montenegro is one of the hottest tipped places for 2007 for buying a second home in the Mediterranean. Property is cheap, but caution is advised.

Montenegro’s charm comes from it’s stunningly beautiful coastline, extremely cheap real estate and incredibly friendly people. Montenegro has captured the hearts of many stars, and recently Jeremy Irons, Chrissie Hynde and Michael Douglas and Catherine Zeta-Jones are all rumoured to have bought property in the country.

Montenegro has had a troubled past. Separated from Yugoslavia from June last year, some remnants of it’s past remain – the antiquated sewers which smell terrible, particularly in the heat, and the often sporadic water supply. However with the influx of new money, Montenegro is starting to flourish and properties with the most amazing views can still be bought at rock bottom prices. An old villa covering 1,500 square foot, and fully modernised and renovated will set you back a cool £300,000 however this is nothing if you consider the same villa in Croatia would be twice the price.

Taxes are very low, which again is encouraging foreign investors. Property buyers face a transfer tax of 2% of the purchase price and up to £15 per square foor for construction. Income tax is set at 9% – the same rate as capital gains tax. However, the government is fairly laid-back about taxes and has a similar attitude to house deeds. Whilst the tax is good for most (many people don’t pay the capital gains tax), the lack of good records for deeds can cause problems when buying a property. Records on landowners, or land usage laws, are often spotty at best meaning you may discover further down the line that the land you have bought cannot be built on, or that a road will split your land in half in a few years time.

When buying a property, it is better to deal with an experienced broker who can offer advice and guidance on the peculiarities of the property system. If records of your property aren’t complete, they can also help trace the owners and the property’s past by searching through property archives and documentation.

One important thing to note about buying property is that new owners must pay all the previous owners home-related unpaid bills so you should include a clause in your purchase agreement that the previous owner will pay all his outstanding bills. Some people will not pay their bills for months before selling their house, and some unpaid bills have been known to total over £15,000!

Buying in Montenegro probably poses more risks than most other European countries however the country has a unique charm and the positives outweigh the negatives. If you are looking for a property on a budget but want beautiful views and cheap living, Montenegro should be near the top of your countries to look at.

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  1. From Montenegro: Real Estate Update - Buying Foreign Property | Apr 3, 2009

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