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As initially reported in OPP March, the Montenegrin government is now believed to be in the later stages of a debate on the position of foreign ownership in the country – with some confusion over the real rights to be attributed to non-nationals. The full set of laws being debated is numerous and complex, however one of the fundamental changes in discussion, will make it easier for overseas investors to buy land for development purposes, by removing the need to establish a limited company before purchase. The proposed laws will also make it possible for international buyers to obtain a domestic mortgage for off-plan property, previously restricted to completed units only. However, finance minister Igor Luksic revealed during the government’s session in parliament debating the matter, that the legislation would look to restrict foreign buyers by only allowing them collectively to own a small proportion of the country’s total housing stock. “Foreign citizens would, eventually, be allowed to obtain the ownership of a total of five percent of Montenegrin territory, assuming that we were all to move out and sell our property to the foreigners, which-in practice-is not possible,” said the minister.
Other restrictions, as applicable in most countries, would not permit foreign ownership of natural resources and public goods, agricultural land, forests, cultural monuments of ‘extreme importance’ and real-estate in areas which have been designated as places of national security. Adding that certain mountainous areas and agricultural holdings could be purchased on a case-by-case basis by non-nationals, Luksic added: “We find that we should not dissimulate the trade with holiday houses and houses in these areas by completely excluding the foreign citizens. Increased tendency to build will have to be cleared through the process of spatial planning.” Although the changes to the legislation are generally favourable and are aiming to strike a balance between economics and domestic politics, some believe that the 5% limit, which is practically impossible to regulate, puts out a mixed message to the international community. Stating that the 5% is just an appeasement to the country’s socialist party which is keen to place further limits on foreign ownership, Alfonso Murillo, chairman and lawyer at the Montengro Trust, a legal and taxation specialist company based in the country, told OPP that the signals being put out to international investors could damage the country’s reputation.
“The lack of transparency is holding back Montenegro from the growth that other countries have experienced through foreign investment into their respective property sectors’” he explained. “The 5% issue just confuses buyers and makes them think that there is some anti-foreign feeling here which there is not. The government is trying to ensure that people do not sell their land to non-national investors to cheaply, or lose access to their beaches which is fine, however the 5% ruling is just political manoeuvring. It is not practical or enforceable. “However, some non-nationals have already expressed their support for the law because they think it will stop large ugly complexes from shooting up as in Spain, but they too are ill-informed. The new laws do not cover these aspects of building.”
According to Rajko Jankovic, head of the Montenegrin government’s Land Ministry, foreign citizens have been snapping up property regardless of restrictions and now own 19,209 hectares of land and 1.52 million sqm of apartments, houses and business space in the country. In the city of Budva 25% of property or business is foreign owned, followed by the towns of Bar and Tivat with 20% and Herceg, Novi and Kotor which have 16.6% of all property and business in the respective areas owned by foreign nationals. In total, foreigners account for 8.49% of all non-business space in Montenegro. The ministry also released a breakdown of the total land area and square metreage of apartment space owned by foreign residents in 2007. Serbia dominated the list owning 15,936 ha and 1,100,746 sqm of apartment space, followed by Bosnia Herzegovina 1,721 ha - 131.621 sqm, Russia 292.1 ha - 131.6 sqm, UK 216.6 ha - 52.328 sqm, Slovenia 259.2 ha - 48.969 sqm, Croatia 532.7 ha - 29.801 sqm and Macedonia 112.1 ha - 13.290 sqm. |
