Although there are no exact statistics, according to economic analysts, Montenegro’s economy loses between 20 and 30 million euros annually due to illegal apartment rentals. The majority of landlords remain in the gray zone, and taxes are impossible to collect because tax inspectors are not allowed by law to knock on private doors. Therefore, the Association of Tenants is calling on the authorities to urgently address this issue and find a way to collect the money that could be redirected to the housing fund.
In Podgorica, some studio apartments are rented for 300 euros a month, depending on the location, with higher rates possible. The rental process is usually concluded by pocketing the money without signing any contract.
The lack of signed rental contracts is evident from the data of the Tax Administration. Last year, just over 12,500 rental agreements were signed in Podgorica. Similar figures come from the south of the country, where landlords signed just under 12,000 contracts with tenants.
In northern towns, the highest number of contracts was signed in Bijelo Polje, while the Tax Administration shows that no rental contracts were signed in Žabljak in either 2022 or 2023.
The Association of Tenants is urging the authorities to regulate the real estate market legally and protect tenants. Among other things, they are demanding mandatory registration of rental contracts.
Dragan Živković from the Association of Tenants says that, apart from the financial losses, the more serious issue is the lack of contract protection.
“Neither tenants nor landlords are protected,” he adds.
The financial loss to Montenegro’s economy due to illegal apartment rentals is estimated to be between 20 and 30 million euros annually.
Željka Kažić from the Association of Real Estate Agencies explains that since owners are required to submit tax declarations themselves, not all of them comply with this obligation, and as a result, the Tax Administration lacks insight into the precise income generated from this tax.
“Therefore, we believe that the Tax Administration should urgently introduce a registry of accommodation owners where they can automatically be taxed,” she says.
Tax inspectors’ hands are tied by the law, which does not allow them to inspect private apartments.
Adnana Duković, a tax inspector, says it is very difficult to determine whether a taxable activity is being conducted in private property without being able to perform an inspection.
“Currently, under the existing legal framework, we cannot carry out inspections without a court order. With new regulations, tax inspectors will be able to initiate inspections independently,” she says.
Until then, tenants are most affected, as they often face the reality of the highest bidder winning.
Živković explains that landlords often find tenants from Russia, Ukraine, or Turkey, who are willing to pay much more than previous tenants.
“And then, of course, the threats, force, and eviction start. And that’s when it happens that even if the tenant has a contract, they still can’t do anything,” Živković concludes.
According to the most recent census, Montenegro has around 397,000 apartments. In addition to long-term rentals, the “day-to-day” rental business is thriving. While landlords fill their pockets, the state treasury receives only crumbs due to the lack of proper control.
