THE LETTINGS MARKET

Thanks to the reinvigorated tourist industry and the fact that this is the country’s main industry, there are opportunities to secure short-term lets in Montenegro, with a number of estate agents offering ‘ready to let’ property for sale. However, while the market is expanding, it is still very young and so lettings can be sporadic at best and you shouldn’t rely on rental yields – weekly income is very low, with yields of around 2 – 3%.

The difficulty in reaching Montenegro, with only one direct flight during summer, means you generally have to fly into Croatia and negotiate the poor infrastructure to reach your destination. Consequently, if you do intend to secure some rentals, you need to be on the coastline, close to Kotor or Budva, and be somewhere accessible – while this is a small country, the difficulty of negotiating public transport or taking to the roads with the notoriously bad Montenegrin drivers can be off-putting for potential tenants.

There are very few property management companies in Montenegro at present, but this is beginning to change. While the tourist market is potentially year-round, you may find yourself competing with some of the newer developments which are offering guaranteed rentals to their buyers. One of the best prospects for rentals would be holiday complexes, as there would be a management infrastructure in place, rents would be guaranteed and you would be well placed to benefit from future appreciation rates. The general view is that if the tourist industry can recapture the 60s era when this was Europe’s most exclusive destination, and if budget flights can be secured, then rentals will become an excellent generator of income. Consequently this is a market where you should look at any rental income as an added extra and buy something in which you would like to spend time.

RENOVATING A PROPERTY

Given that the most popular buys are stone-built traditional farmhouses, renovating is a popular pastime in Montenegro. While builders are affordable and generally do a good job, there may be issues over the finishing, with you holding a very different opinion of what a finished property is compared with the construction workers. The best thing to do is get a recommendation from someone who lives in the country and who knows a good architect or builder. Also, be aware that it can be a very difficult and costly process to renovate here. Planning permission can be difficult to gain if you intend to buy on the coastline, and despite the rumours circulating, you do need planning permission to build or renovate in most areas of Montenegro. While there was once a period when a few hundred euros would have ‘avoided’ the need to secure planning permission things have changed. However, if you build or renovate outside of an ‘urbanised’ area or around 3km from the coast, you’ll probably find you don’t require planning permission.