Property Legalisation in Montenegro: What Changed in 2025

In 2025, Montenegro’s real estate market entered a new phase. In August, an updated law on the legalisation of illegally built properties came into force. Its goal is to bring order to the market, bring unpermitted buildings out of the shadow economy, and stop uncontrolled construction.

The new law leaves little room for interpretation. Only properties that physically existed at the time of the official orthophoto survey can be legalised. They must be recorded in the cadastre, have properly registered land ownership, and have real access from a public road.

Clear restrictions are also set out: buildings located in protected natural areas or special protection zones, as well as properties that do not meet urban planning requirements, are excluded from legalisation.

Property owners must submit a legalisation application within six months from the date the law entered into force. In practical terms, this sets a deadline of February 2026. The application package includes a geodetic report (elaborat), land ownership documents, proof of completed construction works, and available utility plans and schemes. Statutory fees also apply.

If all criteria are met, the property receives legal status, is officially registered, and ownership rights become fully valid and protected.

At the same time, the law introduces strict prohibitions. From 2025 onwards, any transactions involving non-legalised property are prohibited. If a building was not recorded in the orthophoto survey before the established date, it is automatically excluded from the legalisation process. After the application deadline expires, such properties risk remaining permanently outside the legal framework, with no possibility of registration.

How the Legalisation Law Has Affected Montenegro’s Property Market

Shrinking of the secondary market and asset freeze

The first and most visible effect is a sharp reduction in supply on the secondary market. All non-legalised properties have been removed from circulation, even though many of them were previously bought and sold freely. Formally, the market has become “cleaner,” but in practice, it has become significantly smaller.

For owners of such properties, this means an asset freeze. The property exists, but it cannot be sold, while the timeframe for legalisation remains uncertain. Given that similar processes in the past have taken years, the market is now facing a large number of “stuck” properties with an unclear future.

Social focus of the law and the financial barrier to legalisation

The law is officially positioned as socially oriented: demolition mainly affects buildings in protected areas or those with serious violations. In reality, however, not all owners will be able to complete the legalisation process.

The cost of geodetic work, documentation, fees, and related expenses remains high for many owners — especially those who built with minimal budgets and limited resources. This further reinforces the market freeze.

Rental market: growth of the grey segment

The rental market deserves separate attention. Non-legalised properties can no longer be legally rented to tourists. As a result, part of this stock inevitably moves into the grey zone — without registration, without taxes, and without transparent rules.

Price growth for legal properties

Against the backdrop of reduced supply, prices for legalised properties are rising. Today, buying and selling is only possible for properties with clean documentation, and their number is significantly lower than before.

This price growth is not speculative but structural. It is driven by the removal of non-legalised properties from the market, rather than by a sudden increase in demand.

New developments and declining trust in off-plan projects

Developers are facing a separate challenge. Off-plan sales have become more difficult, as investors understand that any violation of regulations during construction can automatically push a project into the non-legalised category.

The risk of ending up with an apartment that cannot be sold, rented, or properly registered makes buyers far more cautious. Trust in the developer has become a key factor, while launching new projects has become slower and more complex.

Outlook

In the short term, Montenegro’s real estate market is in a phase of stagnation: fewer transactions, higher prices, cautious buyers, and difficulties in bringing new properties to market. There is still no clear understanding of how long the legalisation process will take or how effectively public authorities will handle the volume of applications.

In the long term, however, the effect is expected to be positive. The market becomes more transparent, more legal, and better protected. For foreign investors and buyers, this increases confidence and reduces systemic risk. Montenegro is gradually moving away from a chaotic property market towards a more European model — at the cost of temporary turbulence and a challenging adjustment period.