EVIAVILLAS GUIDE TO BUYING PROPERTY IN GREECE
The process for acquiring property in Greece is little different to many of those found within the remainder of the EU, though every country has its different regulations, planning and procedures to follow. With more flexible financing arrangements and mortgages now available, it is relatively easy to purchase a property in Greece if one pays attention to detail; carries out some appropriate research, and most importantly you instruct recommended registered or qualified professional advisers to guide you along the way.
This summary is not an exhaustive guide but hopefully a simple one which will alert you to what you need to do and to look out for. If you want more detail we would recommend the purchase of The Overseas Property Guide, www.greeceBuyingGuide.com, the cost will be more than covered by the time and expense it saves you.
Subjects we will cover will include
1) Pre Purchase
a) Purchase objective
b)
Requirement checklist
2) Purchase
a) Purchase summary
b) Finding a property
c) Appointing a lawyer
d) AFM
e) Greek bank account
f) The purchase – existing buildings, land, build your own, off plan purchase
g) Deposit
3) Purchase Costs
4) Completion link
5) Taxes & Post Purchase
Greece has not had the property nightmares which Spain has experienced where purchasers have seen their properties demolished with minimal compensation, or have had to pay large additional contributions to the local authority for its infrastructure and services. However to avoid disappointment care is still required, in particular when buying a plot of land outside a town boundary or where property is owned by several people. In the past it has been relatively easy to obtain permission to build a villa if one had a plot over 4,000 sqm (one acre) outside the town boundary and on a qualifying road, but this may well change as the Government has indicated its intention to amend and tighten up the existing regulations. A property can be on the market but if in multiple ownership, situations can arise where not everyone may be in agreement about it being sold.
For villas, apartments or land which are already registered, the purchase process can be quicker and even easier than the UK.
1) Pre Purchase
a) Purchase objective
You have decided you wish to purchase a property abroad. In doing so have you considered your objective for making that decision ? Is it for example
a. A holiday home to enjoy
b. For retirement or new life
c. Investment only
d. Because of work
e. Other or mixture of above
A holiday home can not only provide capital appreciation but some rental income by letting it out when not in use by you. As an investment, do you know what your potential return maybe, the capital appreciation when sold, and what the costs and taxes are likely to be ?
Once you understand and know your objective and goal, the question of where may have to be considered if you do not have a preferred choice. Even if you do have an idea where you wish to buy, the preparation you do before even looking for a property is time well spent. With all the TV programmes, articles in papers such as timesonline and magazines, property guides and information on the internet, it is not difficult to carry out the background research from the comfort of your home. Try and find someone who has bought abroad to find out about their experiences, but preferably a person who has gone through the process in the area you are considering. You could also go along to an overseas property exhibition to find out more, aplaceinthesunlive
This research beforehand will assist you in working out the potential budget you can afford and is needed in order to complete the process without suddenly finding unexpected expenses. Is it a cash purchase or will you require a mortgage ? Advice from an independent financial adviser may be appropriate before travelling abroad.
back
b) Requirement checklist
Your choice of the location will be influenced by the reason for the purchase.
For holiday homes, questions to be asked and matters to be considered when deciding your requirements include
- Location
- Climate
- Crime rate
- Away from, near to, or by the beach (which could be noisy but convenient)
- In town or out of town
- Rural or mountain location
- Proximity to shops and restaurants
- Availability of outdoor activities, beach, sailing, diving, tennis, walking, horse riding etc
- A view or not
- A flat or a villa
- Size
- Number of bedrooms, bathrooms etc
- Balcony / patio
- Air-conditioning or central heating
- Parking / garage
- Garden or not
- Swimming pool or not (maintenance issue)
- Maintenance and its costs (who is going to look after the garden or pool)
- Distance from airport (recommended should be within 90 minutes)
- Are flights all the year and what is cost
- How many times a year do you intend to visit
- Accessibility and availability of facilities all the year around
- Potential for rental income
- Language
- Taxes and insurance
- Finance – budget and mortgage
Many of these questions apply for the other objectives but there are also additional points to reflect.
When retiring or starting a new life, just because you liked a place where you had a holiday, it does not mean it is a suitable place to reside permanently.
- See what it is like out of season
- Consider possible renting for a while before committing to a purchase.
- How will you keep yourself occupied and what will your living expenses be
- Are you going to be able to continue your hobbies
- Will you be able to visit the theatre or go to concerts or the cinema
- Do you have friends or relations there
- Are you close to good medical facilities and shops when you can no longer drive
- How easy is it to buy your basic day to day goods
- Will language be a problem
back
For investment purposes, the type of property and location could be very different, since you may well wish to be in an area of change (for capital growth) and /or there is demand from the local inhabitants for longer term lets; this type of letting normally requires less management. Holiday lets can be more lucrative in the right location with good management but remember the holiday season may only be 3 months and management costs are substantially higher. Is it an area where the season can be prolonged and are there year round attractions ? Your research needs to be very thorough.
Greece can provide something to cater for everyone and Evia has all the right ingredients for the different types of purchaser with it being an all the year round destination. The natural beauty and unspoilt nature of the island provides an attractive environment to have a holiday, to live and to work. The two bridges at the capital city, Halkida, plus the various ferry links make the island easily accessible and it is only an hour from Athens and the airport. The crime rate is low and with sun on over 300 days a year the weather will not depress you as you will be able to enjoy the outdoors all year. One can have the best of all worlds of being near the facilities of Halkida and the mainland but being on a Greek island.
back
2) The Purchase Process
a) Purchase summary
The principle components below are little different to those you have probably experienced in your home country.
- Agree price
- Confirm details of solicitor and funding
- Agree and sign preliminary contract
- Lawyer / Notary carry out title checks
- Seller fulfils obligations of preliminary contract
- Sign contract and pay balance plus fees
To achieve the following is applicable
back
b) Finding property
There are a number of property websites which advertise property in Greece and these should provide you with some potential leads and properties to look at for your visit. Once in Greece one should use a recommended registered Greek estate agent like Eviavillas. There are unfortunately people marketing properties who appear to be agents but are in fact resellers. A licensed agency may not only be able to show you the properties on its books, but can carry out a property search on your behalf of other ones which may be available including those being marketed by the developers themselves. Before leaving do prepare so that you know what your objectives and requirements are and the questions to ask. Have a look at a number of properties and do not be rushed or pressurised into making a purchase, which is most likely to occur if you have been offered a cheap flight and accommodation package to a specific development. Do not hesitate to ask questions.
c) Appoint a lawyer
One should try and appoint a lawyer who is familiar with the local laws and regulations. Local knowledge can be invaluable in saving time and reducing the possibility of an abortive transaction. Preferably the lawyer should be by recommendation and is able to speak English. This will not always be possible and one may have to use the services of an interpreter, a facility Eviavillas can provide. The lawyer can also advise you on establishing the Assessed Tax Value of the property. This is usually lower than the sale price and provides the relevant base relevant on which taxes will be paid on purchase, tax returns and when disposed. Consideration should also be given to granting him or another trusted person the power of attorney which will save you time and expense in the purchase process. The majority of Eviavillas’ overseas clients have granted us power of attorney.
back
d) AFM
- Before anyone - a citizen of Greece, the EU or another foreign national - can purchase property in Greece, they must first obtain a tax registry number, known as an AFM. This tax roll number is easy to get and can be obtained at any tax office in the country. Your passport will be required to obtain the AFM.
e) Greek bank account
A requirement to ensure your payments go through this and to prove that the funds for the property purchase from another country have the official import documentation, usually known as the pink slip. A passport and the AFM will be needed for opening an account which is not difficult.
f) The Purchase
Prices are not necessarily fixed and can be negotiable. Your agent should be able to assist you on this aspect and once the price is agreed, which may include fittings and furniture, the legal process commences with the drawing up of a preliminary sale agreement. This will include any specific terms or arrangements agreed between the parties.
This process is overseen by a public Notary, who is an independent legal official. After the buyer obtains financing, if required, the lawyer carries out checks on the title deeds. This includes for example looking at the necessary permissions, ascertaining it is not on a registered archaeological registered forestry site, and ensuring there are no debts associated with the property.
Existing buildings. If acquiring an older property an independent survey, usually a civil engineer, (Mechanikos Politikos) is recommended as Greece is in a seismic area. One also needs to ensure you are aware of potential costs for improvements, refurbishment or general maintenance.
Land. Planning law in Greece can be quite complicated and is increasingly subject to change. There are a number of proposals currently which may impact on your purchase, but your lawyer and estate agent should be able to advise in conjunction with a reputable architect or engineer. Planning permission is required and the development allowed on a site may well depend on whether it is in within the town boundary or not and whether it fronts onto a municipal road. Ensure you are satisfied you can carry out the development you propose. Extra care and research is required for sites outside the town boundaries since one now often has to trace records to confirm facts as far back as 1926.
Build you own. In all cases a building permit must be obtained and this service is normally carried out by an architect or state registered engineer who, in conjunction will complete the plans of the proposed house and submit these, together with the other information required, to the building permit office for approval. Applications are also required for electricity and water supplies. Outside towns most sewage is dealt with by septic tanks. A permit normally takes about four to ten weeks and once granted a building contract is normally entered into with stage payments being made during the construction process. Eviavillas provides a full package to deal with this process which can be looked at under the “Build Your Own” on our website.
Off plan purchase. The building should have already gone through the permission process and provides an opportunity to purchase a property at a discount before it is completed. Other advantages include the best location for your house or apartment, staggering payments throughout the building process and being able to make alterations or choose fittings of your choice.
g) Deposit
A deposit of 10% is normally payable on the signing of the preliminary sale agreement.
back
3) Purchase Costs
An item which must be budgeted for as it can be as much as 18% but as low as 10% when purchasing premises where the transfer tax (stamp duty/ purchase tax) is substantially below the actual purchase price.
An indication of the breakdown for costs is as follows
- Transfer Tax (stamp duty / purchase tax) – 7-9% on 1st 15,000 euros, 9-11% on remainder depending on location and services provided
- Land Registry Fees – Around 0.50% of transfer tax value
- Notary’s Fees - About 1.2%
- Lawyer’s Fee – In the region of 1% subject to a minimum
- Municipal Tax – 3% of transfer tax
- Mortgage Registration - 0.45% of the property value
- Selling Agent’s fees – Usually fees for the buyer are 2% and for the seller 2% of the sale price. This is normally in addition to the advertised selling prices, but check as the fee can be reflected in the marketed price
- Mechanikos Politikos or Licensed Architect – From about 300 euros for surveying and inspecting a building or plot. Depends on type of survey, the value of the premises and any special requirements.
- VAT – 19% for new constructions with a building licence. Ensure you clarify with your developer/ builder what is included or not in the construction price.
4) Completion
With the execution of the final contract, the ownership of the property will be conveyed legally to the purchaser. The final contract is signed before the public notary who draws up and reviews all the official documents relating to the legal transfer of the property and that the seller has complied with any terms and conditions. Proof that the transfer tax (similar to stamp duty) has been paid beforehand is required. If the purchaser cannot be present, a lawyer or named person can be given power of attorney. All outstanding fees and taxes are paid at this time.
You will now be a proud owner of a property in Greece, however you do need to budget for the running costs and the taxes below.
back
5) Taxes & Post Purchase
a) Utility Connections
For resale properties there should be none but do check the previous occupier has paid them before the purchase is completed. For new property you will normally have to pay for connection to the services. The developer or builder should provide the costs in writing or be included as part of the total price.
b) Utility Bills
Electricity bills are every two or three months and reflect general utilities such as street lighting, refuse collection mains sewerage and TV licence. Water billing has been historically somewhat erratic and behind, but is improving and is normally every three or four months. The cost is based on meter readings and the unit price has stepped increases as you use more. The summer bill can be substantial if you have a swimming pool or a garden with an automatic watering system. Telephone ones are monthly or every two months. Many properties have septic tanks which have to be emptied every few years, though dependent on size and usage. Diesel is the most common heating fuel and with the increase in oil prices it can be substantial if using the premises in the winter months. Make arrangements for the bills to be paid direct or by someone on your behalf, such as Eviavillas as part of our management package.
c) Maintenance
The property, garden and swimming pool have to be looked after. If you have a holiday home or an investment property which is let out, a managing agent will be required and various levels of service can be provided depending on your requirements. A service which Eviavillas provides. link to services
d) Local Municipality Tax
At present Greece does not have the equivalent of the UK’s council tax or property rates found around the world on domestic property. The Municipality Tax ranges from 0.025% to 0.035% of the assessed value of the property and charged in the electricity bill.
e) Annual Property Tax
This is only incurred on property which has an assessed value of over 243,000 euros. It amounts to 0.3% to 0.8% of the assessed value.
f) Tax Return
A property owner has to complete a tax return every year and on time, otherwise fines are incurred. It is applicable even if you live abroad and do not have an income in Greece. Another service which Eviavillas can provide. Link
g) Other Taxes
Capital gains tax is payable on disposal and ranges from 5% to 20% depending on long you have owned the property.
We hope this guide assists your purchase. If you do the research and ask the appropriate questions, the buying process will be much easier with the support of appropriate qualified or registered professionals. It is now time to enjoy your property and the delights of Greece. back |
