New Build vs Resale Apartments in Montenegro: What Changes for the Buyer

Two apartments of the same size on the same street in Budva can be very different purchases. One is sold by a developer from a building completed last year, with VAT in the price, a warranty and no history. The other is sold by an owner from a block built fifteen years ago, with transfer tax on top of the price, a track record of running costs and a cadastre entry that has been tested by previous sales. This guide compares the two routes on tax, paperwork, quality, running costs and liquidity, so that a buyer chooses the route rather than stumbling into it.

How does the tax treatment differ?

A new apartment bought from a VAT-registered developer carries VAT in the price, and the buyer pays no transfer tax. A resale bought from an individual or from a seller outside the VAT system carries the progressive property transfer tax, paid by the buyer on top of the price. The rates and the mechanics are set out in the guide to property transfer taxes in Montenegro.

The practical effect is that a developer’s advertised price is close to the all-in figure, while a resale price has the transfer tax, the notary and the registration to add. Buyers comparing the two should compare total acquisition cost, and company buyers should note that VAT on a new build may be recoverable where the apartment is used for a taxable activity, which changes the comparison again.

What paperwork is specific to a new building?

A newly completed building goes through a sequence before an apartment in it can be fully owned: the technical inspection, the use permit, the division of the building into units and the registration of each unit in the cadastre with its own title. A buyer who signs before that sequence is complete owns a contractual right against the developer, not a registered apartment, and the risks of that position are described in the guide to buying off-plan properties.

For a completed new build the buyer’s lawyer checks that the use permit exists, that the unit is registered with the correct area and shares of common parts, that the developer’s financing bank has released its mortgage over the unit and that the land under the building is owned or correctly held by the developer. New developments where the units are registered and the bank released are straightforward; those where registration is still pending deserve a conditional contract.

What does a resale’s history tell you?

A resale has been through the cadastre before, which is reassuring but not conclusive. The title deed shows the chain of owners, any mortgages and any notes about permits or disputes, and the guide to real estate title deeds in Montenegro explains how to read it. Beyond the title, a resale comes with knowable facts a new build cannot offer: the actual utility bills, the building’s maintenance contributions, the condition of the roof and the lift, the behaviour of the owners’ assembly and the rental income the apartment has produced.

The risks are the ones that come with age: unregistered alterations such as an enclosed terrace, outstanding building contributions that pass with the apartment, and installations at the end of their life. A survey and a request for the building’s accounts answer most of them.

How do warranties and snagging work on a new build?

A developer is responsible for defects in the building for the periods the construction law sets, longer for structural elements than for finishes, and the contract should state the warranty and the procedure for claims. On handover the buyer inspects the apartment and records defects in a snagging list the developer corrects. Buyers abroad should have a local representative attend the handover, because defects noted after acceptance are harder to pursue.

The quality of a new building is judged before purchase by the developer’s record, the materials specified in the contract, the engineering of the common parts and the energy performance, and after purchase by the first winter. Developers with completed, occupied buildings in the same town are the reference; a first project is a different risk.

How do running costs compare?

New buildings have modern insulation, efficient heating and cooling, lifts and systems under warranty, and higher maintenance contributions because the services they offer, from pools to security, cost money. Older buildings have lower contributions and higher energy bills, and they face the capital costs of renewal: a roof, a facade, a lift. For a let apartment the running costs feed directly into net yield, and the method in the guide to rental yield in Budva, Bar and Kotor applies to both routes.

A new apartment also commands a higher nightly rate and a better category in the tourist registration described in the guide to registering an apartment for tourist rental, which offsets part of the higher cost for an owner who lets.

Which route has the better liquidity?

Resales in established buildings in the centre of Budva, Tivat or Kotor have the widest buyer pool, because the location is proven and the price is lower than the new stock nearby. New developments are liquid while they are new and the developer’s marketing is active, and less so once the block is full of owners competing to sell similar units. The scarcity markets, such as the old towns and the bay villages, are resale by definition. A buyer planning an exit within a few years should favour locations with a deep resale market over the newest building in a developing area, as discussed in the guide to selling property in Montenegro.

Which route fits which buyer?

The new build fits the buyer who wants a modern, warranted apartment with a predictable first decade, who values the VAT-inclusive price and the services of a managed development, and who accepts a higher entry price and contributions. The resale fits the buyer who wants an established location, a known history, a lower price with transfer tax on top and the capital works that come with age. Investors who buy to let often hold one of each, and our advisors compare specific listings from both categories as part of the real estate service, with the total acquisition cost and the net yield side by side. Current new and resale listings are on the apartments page.