Legalization for 30 years, plugs holes in the budget from Europe Now 2

Citizens who have illegally built buildings in which they live will be able to pay the urban rehabilitation (legalization) fee in monthly installments over 30 years, instead of 20 years under the current regulation, and can also have a 20 percent discount if they pay the amount all at once. Municipalities will receive 80 percent of this fee, instead of the current 100 percent, and 20 percent will go to the state budget, which could be around 36 million euros.

These are the most significant innovations in the Draft Law on the Legalization of Illegal Buildings, which is currently in the parliamentary procedure. This will be the sixth time that a law or amendments to the law related to legalization have been proposed or adopted in the last 15 years. The result so far of the legalization campaign, which has been ongoing since 2017, is that only 5,5 percent of the buildings for which requests were submitted have been legalized, or out of 61.647 requests, 3.397 legalization decisions have been issued.

Costs for municipalities, net income for the state

Last year's fiscal strategy envisaged that part of the money missing from the budget due to the reduction in pension contributions under the "Europe Now 2" program would be provided by legalizing illegally constructed facilities. Under current legal regulations, the entire fee belongs to the municipalities on whose territory the facility is located, as it is a substitute for the utility fee, which is the main municipal income.

The proposed law now stipulates that 20 percent of the money will go to the state budget, while all obligations remain with the municipalities, which must provide the missing communal infrastructure for illegal settlements that are being legalized, bear the costs of rehabilitating the area, and pay for alternative accommodation for families whose houses are demolished and whose legalization is not possible. The draft law does not stipulate any costs for the state budget, so that this money, according to the Fiscal Strategy, can be used to fill the budget gaps caused by “Europe Now 2”.

Expected total revenue 183 million

The explanation of the Fiscal Strategy, in July last year, did not specify how much revenue was expected from legalization, stating that it would depend on the model chosen. Their calculation at the time also showed that the new revenues and measures would cover the decline caused by the reduction in contributions, but data from recent months indicate that there is a significant decline in revenues from contributions, VAT and excise duties compared to the plan.

However, a calculation of possible revenues was presented based on the data at the time.

"If it is known that 58.445 requests for the legalization of facilities have been submitted, that 2.999 facilities have been legalized so far, and that municipalities have received 9,4 million euros in revenue for their legalization, then proportionally, it can be estimated that the legalization of all facilities would generate revenue of as much as 183 million euros," it was stated in the Fiscal Strategy from July last year.

Of that amount, 20 percent is 36,6 million euros.

The explanation of the new bill states that it is being passed with the aim of realizing the commitment to inclusion in European integration, that Montenegro has been facing this problem for years and that there are tens of thousands of such facilities.

It was also pointed out the problems in this work so far - a large number of requests for administrations at the local level, delays in the production of ortho-photo (satellite or aerial) images and the General Regulation Plan. In order to solve this problem, it was prescribed that the identification of the object on the ortho-photo image and the verification of whether it was built in accordance with the parameters and guidelines will be carried out by licensed companies that will issue a report on the identification of the object in order to speed up the procedures.

It was stated that the new law will be lex specialis, that is, above other laws and regulations with which it may conflict, that existing solutions that have proven good in practice so far have been retained, but that others have been refined and improved.

It is expected that this procedure will increase municipal revenues, which must be invested in infrastructure, which will increase the quality of life in these areas.

First general conditions, then an overview of the facility

The law stipulates general conditions for legalization - that it must be identified on an ortho-photograph, registered in the cadastre, for which there will be a six-month deadline, that it is not built on an area designated by a planning document for the construction of infrastructure and other facilities of general interest, that its surface area or part of its surface area does not exceed the regulatory line or the line of the ownership plot if the facility is built on an area for which there is no valid planning document, that the property and legal relations on the facility and land have been resolved, and that it has secured vehicular or pedestrian access from a city road or public road.

It was also stated that the ortho-photo image will be available on the website of the Ministry of Spatial Planning. Ten days ago, the Ministry signed a contract with the company “Vekom Geo”, which will produce a satellite image and deliver a software package for automated detection of illegal construction. The company, as stated at the time, will begin satellite imaging immediately, so that the Law on Legalization can be adopted by the end of July this year. This also means that the deadlines will start immediately after adoption, and these special conditions for legalization are valid for five years.

According to the proposal, facilities that are built in a manner and from materials that do not ensure stability, functionality, durability and safety of use cannot be legalized, which will be determined by a special local government commission.

Even buildings built outside the parameters will be legal

Special conditions are that residential buildings with a net area of up to 200 square meters can be legalized even if they are not built in accordance with the basic parameters and guidelines of the valid planning document, provided that they are at least one meter away from the neighboring cadastral plot. Also, larger residential and business buildings, hotels, four- or five-star tourist settlements and tourist resorts can be legalized if they deviate from the parameters and guidelines, provided that they are built at least two meters from the border of the neighboring plot. These buildings will be able to be legalized even in cases where a planning document has not been adopted for the area in which they are built, and even if the border from the neighboring plot is less than one or two meters, provided that the owner of that plot has given consent.

Facilities that, contrary to basic parameters and guidelines, exceed the permitted gross area and number of floors will also be able to be legalized, provided that the gross area does not exceed 1.000 square meters and the number of floors does not exceed two.

In the event that legalization is not possible or the owner does not submit a request, the buildings will be demolished. These families will have the right to alternative housing at the expense of the municipality, under the conditions and deadlines that will be determined by special decisions.

The amount of the fee will be determined by the municipalities according to infrastructure needs.

The legalization procedure is initiated by the owner by submitting a request, along with which they must attach a survey report of the actual condition of the illegal building prepared by a licensed geodetic organization, photographs of all facades of the illegal building in JPG format with a minimum resolution of 5 megapixels, and proof of the recording of the existence of the building in the cadastre.

In addition to inspecting the ortho-photograph, the municipal commission will also conduct an on-site inspection of the illegal building. If the building meets these initial conditions, the owner will then be given 90 days to submit the remaining documentation - proof of resolved property relations, determination of compensation, analysis of static and seismic stability testing, consent from the owner of the neighboring plot if required, consent from the competent authority if it is being built in a protected zone...

Those who wish to receive a 50 percent discount for buildings used for primary housing will need evidence of the number of household members, place of residence, and that they do not have another residential building. A 90 percent discount will be available to family household members who are single parents or guardians, persons with disabilities, young people who were children without parental care, families with children with developmental disabilities, as well as members of the Roma and Egyptian populations.

For facilities located on the coast, a special fee will be paid, the beneficiary of which will be the Regional Water Supply Company, which already receives a portion of the money from utility bills. The amounts of both types of fees will be determined by local governments depending on the needs of communal development, space rehabilitation and other costs, with the consent of the Government.