Greece

Why buy property in Greece?

Every year, thousands of Britons flock to Greece and its islands for holidays, yet, surprisingly perhaps, comparatively few bought properties there until recently.

The Athens Olympics of 2004 made Greece the focus of extraordinary international interest, which boosted tourism and created strong demand for rental accommodation. This, in turn, fuelled the international property market. A variety of tools are available to help with further research, including television and radio programmes, magazines, the internet, property exhibitions and estate agents.

The Greek property market: an overview

As property in Greece is at present relatively undervalued, there is excellent potential for capital growth.

Many different types of property are available in Greece, from traditional stone houses to chic new apartments. Prices depend on condition and location. For example, properties on the popular Greek islands like Crete, Corfu and Rhodes are more expensive than those in inland areas of the mainland.

The resale market

The Greek resale market is particularly sensitive to location. Property is usually more expensive to buy in coastal and island resorts, but easier (and often more profitable) to sell.

Would your target market be international buyers or locals?

Popular property locations in Greece

The Greek islands are traditional favourites with British purchasers, while mainland Greece attracts Germans, Scandinavians and growing numbers of Eastern Europeans.

80 per cent of its foreign property purchasers are British. Its wealth of history and varied landscape, from snowy mountains to sandy beaches, attract holidaymakers, which gives property there good rental potential. Prices increased by around 8 per cent in the first quarter of 2006.

For those seeking a less established market, the Peloponnese peninsula in southern Greece is worth considering. Property prices there have increased by 20 per cent over the last year.

The Greek Islands

Airline services from the UK to the holiday hotspots of Crete, Rhodes and Corfu are good, and improving. On the larger islands in particular, rental markets are well developed.

The choice of property includes stone cottages, new houses constructed in traditional style, and luxury villas and apartments. Older properties for restoration can be bought from around €44,000 (£30,000).

Buying a property in Greece

The purchase process

Once a price has been agreed, a deposit (typically 10 per cent) is paid and a pre-contract agreement signed.

Fees and costs

The cost of purchasing property in Greece is relatively high. Allow around 13–15 per cent of the purchase price for fees and taxes, including transfer tax (resales only), municipal tax (paid to the local authority), lawyer’s and notary’s fees, and land registration.

Financing your purchase

When deciding how to finance your Greek property purchase, consider all the options.

Paying cash, if you can afford to, is the simplest way. The other possibilities are remortgaging your UK home or arranging a mortgage on your new property through a UK or Greek lender. Remortgaging generally offers the easier solution. Releasing equity in a UK home means that your Greek property can be purchased for cash, without the need for another mortgage. However, this may only be feasible if you own your UK home outright.

The mortgage market in Greece has opened up hugely in recent years, and interest rates currently sit below the levels of the UK. Euro mortgages

Euro mortgages, which are tied to the rate set by the European Central Bank (ECB), currently lower than the Bank of England base rate, may seem an attractive option, and several UK lenders offer them.

Taxation

Greece’s taxation arrangements are particularly complex, so be sure to seek advice tailored to your personal circumstances. Even non-residents may be liable for property, wealth, income, inheritance and gift taxes.

The UK has a double taxation treaty with Greece; tax is paid in one country or the other, not both.

You will need a fiscal number (known as an AFM) to, for example, rent or buy property, purchase a motor vehicle, or work in Greece. Those resident in Greece (including pensioners receiving a pension from another country) and those with Greece-sourced income (including rent) must also complete returns.

Property: some taxation issues

The government has introduced several methods to discourage speculation, among which is capital gains tax. It applies to properties purchased after 1 January 2006, and is levied in inverse proportion to the length of time for which the property has been owned, penalising those looking for a quick profit.

Wealth tax is levied on certain assets, including property. If the total value of an individual’s Greek properties, based on the official government valuation, does not exceed €243,600 (£164,527), no tax is payable.

Local taxes are usually from 0.25–0.35 per cent of a property’s official value annually. Other fees and taxes, direct and indirect, are also levied, to pay for local services.

Money matters

Greece’s currency is the euro (EUR). The current exchange rate is EUR1.48 = £1.00 sterling. ATMs are widely available.

Foreign currency can be exchanged at banks, bureaux de change and post offices, and in many larger hotels. Banks will cash travellers’ cheques. To avoid additional exchange rate charges, carry them in euros, pounds sterling or US dollars.

Passports, visas and residency

Passports and visas

Those with passports endorsed ‘British Citizen’ can visit Greece for up to three months without a visa.

Greece’s economy

Greece’s main trading partners are Germany, Italy, France, the UK and the USA. The services sector is expanding rapidly.

The implementation of structural and fiscal reforms, combined with substantial EU funding, has helped Greece’s GDP annual growth to outperform the European average consistently.

Communications

Line rental is still payable to OTE, but other service providers are now available.

Payphones are widespread, as is mobile phone use. Internet

The internet is becoming increasingly popular. Services to and from the islands vary.

And finally …

Before deciding where and what sort of property to buy, explore the resale market thoroughly, even if you have no intention of selling.

Obtain professional advice and guidance specific to your circumstances, especially in areas like property purchase, potential rental returns, taxation and mortgages.