RHODESNOW REAL ESTATE FAQs
Do I need a lawyer / solicitor?
Yes. Solicitors carry out necessary legal surveys and conduct a property title check for the past 20 years; they ensure the property is free of any mortgage notes, claims, expropriations, rights-of-way and, in general, any legal encumbrances. In addition, solicitors ensure that all property taxes burdening the vendor have been paid.
Do I need a notary?
Yes. A notary public is a government-appointed lawyer who processes and certifies all real estate transactions, including drawing up and reviewing all official documents, to ensure the legal transfer of the property.
Do I need a land surveyor?
Yes. Surveyors ensure that all acts associated with the construction of the property are based on lawful planning permissions.
Do I need an accountant?
Yes. It is essential to hire an accountant early on to help you with tax returns and explain taxation laws to you.
Do I need a Tax Registry Number (AFM)?
Yes. This tax number (AFM) is mandatory for all buyers, including foreigners and permanent residents abroad. It is issued on the spot at tax offices, free of charge. All applicants must present their passport and their birth certificate. If you have granted your solicitor full Power of Attorney, he / she can apply for an AFM on your behalf.
What is a property’s Tax Assessed Value?
The Tax Assessed Value is the estimated monetary value of a property according to the Greek tax authorities. As a general rule, a property's Tax Assessed value is significantly lower than its purchase price.
Do I need a Greek bank account?
Yes. All necessary payments will be made through this account; also, this account will prove that funds used for property purchase have come into Greece from another country and are, therefore, not taxable in Greece. Opening a bank account in Greece only takes a few minutes and requires no minimum opening deposit. All you need is your ID or passport and your AFM (see above).
Do I need a residence permit in order to purchase property in Greece?
• For EU nationals
Yes, only if you plan to purchase property in an area near national borders (including some islands such as Rhodes, and islands of the Eastern Aegean). If this is the case, a temporary residence permit called the Blue Card is required. You may apply for it at the local police station. Issuance takes approximately two weeks, but your solicitor can collect it on your behalf if granted Power of Attorney. This permit is a formality for EU nationals in non-controversial nations. To purchase property in all other regions of Greece, you do not need a residence permit.
• For non-EU nationals
Yes, if you plan to purchase property in an area near national borders (including some islands such as Crete and Rhodes, and islands of the Eastern Aegean). If this is the case, you must apply for a special permit issued by the Ministry of Defence in Athens.
Can you walk me through the buying process?
An alternate and more efficient way to purchase property in these areas is through an offshore company in your name, based in an EU country. This is fairly commonplace; setting up and maintaining such a company costs approximately 2,000 euros to establish and 1,500-2,000 euros annually. To purchase property in all other regions of Greece, you do not need a residence permit.
The process is fairly quick and uncomplicated. As a general rule, you must:
• Select your property.
• Make sure financing for the purchase is secured.
• Appoint your solicitor, notary public, surveyor, and accountant.
• Apply for special permit, if applicable (Blue Card or other, see above)
• Apply for your Tax Registry Number (AFM).
• Open a Greek bank account.
• Sign the pre-contract detailing terms of sale and payment schedule.
• Pay a 10% deposit to secure the property by removing it from the market; usual payment methods include cash, bank transfer or credit card.
• Return to Greece to sign the final contract, after all legal work is completed (6-8 weeks, usually). Alternatively, your solicitor may sign for you if he/she has been granted full Power of Attorney. Upon completion of final contract, all fees and taxes must be paid.
How much are closing costs?
Closing costs, including all fees and taxes, are an estimated 13-15% extra.
Do I have to file tax returns in Greece once I’ve become a property owner?
Yes. The Greek State has mandated that all property ownership in Greece must be declared by filling out a form called E9 and submitting it to the Greek Tax Authorities. This is mandatory for every property owner in Greece, even for those who live abroad and have never filed tax returns in Greece or do not have an income in Greece. As of 2006, the E9 form will be submitted only by those who either obtain or sell / dispose of any kind of right over immovable property in Greece. If you own immovable property in Greece but your assets next year have not changed from what they were the year before, you do not have to submit the E9 form again.
You can not file an E9 all by itself. E9 is a schedule which must be submitted together with the basic Income tax form E1. If you have no income in Greece, you enter “0” income in the E1 form; still, you must submit the E1 as well.
In order to submit the E1 and E9 returns, you must have a Tax ID Number (AFM). The E1 and E9 can be prepared and submitted by accountants and / or solicitors.
If you fail to declare a property you will not be able to transfer it later. Additionally, failure to file annual tax returns is subject to penalty; therefore, appointing an accountant and a solicitor early on in the buying process is critical.
Do I have to pay Capital Gains tax if I decide to sell my property?
Yes, if you purchased your property after January 1st, 2006. The percentage of tax owed varies depending on the length of time your property has remained in your ownership. Specifically:
• For properties purchased after January 1st, 2006, and remaining in one’s ownership for 0-5 years: Capital Gains Tax 20%
• For properties purchased after January 1st, 2006, and remaining in one’s ownership for 5-15 years: Capital Gains Tax 10%
• For properties purchased after January 1st, 2006, and remaining in one’s ownership for 15-25 years: Capital Gains Tax 5%
Do I have to pay annual property taxes?
That depends on the value of your property. You will have to pay an annual property tax if your property’s tax assessed value exceeds 243.600 euros.
Is it possible to get a mortgage in Greece? If so, what are the requirements?
Yes, it is possible to get a mortgage in Greece. To apply for a mortgage you will need your passport and proof of income for the last 2 years (P-60’s, payment stubs, or tax returns if self-employed). Please be aware that if you apply for a Greek mortgage, you must be able to pay all closing costs before any funds from the bank are released.
Can I purchase property in somebody else’s name?
Yes. You may purchase property jointly with your spouse and/or other co-purchasers, in names of children or legal heirs, or in the name of a company.
What type of property insurance is recommended?
Although no market standards exist as to the forms of insurance that can be taken out, it is reasonable to suggest that property be insured against the following risks: fire, earthquake, water damage, breaking glass, storm, theft, and third party.
What happens if the legal searches highlight any problems with the property?
If the searches highlight any problems you will receive your deposit back in full. This is why the deposit is paid to the solicitor and not to the vendor.
What happens if I change my mind?
If you have signed a contract and paid a deposit for a property, this is considered to be an official intent to purchase. It is important that you are absolutely certain that this is the property you want, and that you feel you are under no pressure to sign a contract and pay a deposit. Should you decide to withdraw from the purchase, you will lose your deposit.
What happens if the vendor changes his / her mind?
If you have signed the pre-contract and made an initial deposit, your deposit will be refunded in double.
Property ownership in Greece
Owning property in Greece is simple and straightforward. Greek laws authorise foreigners to own properties in most areas of Greece. Anybody, regardless of nationality, can be a property owner. Property in Greece is under the protection of the State (Greek Constitution: Article 17, paragraph 1); all property owners in the country have equal rights and responsibilities.
Restrictions apply only for Non European Union citizens who want to purchase property in border areas (East Aegean, Dodecanese islands, regions of Northern Greece, Crete, Rhodes). They will have to apply to the Council of local Prefecture which grants authorisation after having investigated your position in the community to ensure that you do not have a history of any kind which might be detrimental to the security of the island. Most properties in Greece are freehold ownership. A nationwide Land Registry is underway; some islands already have land registries, while properties in the other areas are registered in the Registry of Mortgages. Buildings in Greece are designed and constructed in accordance with European Regulations and Standards, and they are in total compliance with stringent regulations for earthquake protection. The most important part of the buying process is finding a property that feels like home.
Once you have found your new home and secured financing, completion of the process should not require more than 6-8 weeks.
Informative note for purchase and drawing up contracts of sale in Greece
Contracts that concern real estates in Greece are drawn up by special permitted law professionals called notaries and practise only this profession i.e. drawing up contracts. In order to buy and sell a real estate in Greek territory the following procedures are imposed to be done by the candidate purchaser.
• He/she selects the real estate that he/she wants to buy.
• Assigns in a lawyer to precede the research for the legal situation of real estate. As long as National Cadastral map of all territory does not exist in Greece, the cadastral office is now replaced by the land registry where is written down anything that concerns the real estate. In the cities that "CADASTRE» has functioned control must be done. Namely: Who is the proprietor, whether exists juridical suspense or claim, whether is mortgaged or is registered garnishment etc Under a simple condition: To have done at least one legal act or notarial act which concerns this real estate, because most of the real estates especially at rural regions do not have titles of property but are transmitted without contracts. Title for these real estates is usucaption. The lawyer who does the legal research at the end of the research does a legal estimation of the real estate.
• Assigns in a Political Engineer to check the existing topographic diagram that accompanies the proposal of sale and see the real estate. A right topographic diagram includes: the area of the real estate, possibility of layout, the character of extent (whether is in a built-up area) and various other technical characteristics e.g. approvals from forest inspection or archaeological service etc.
• Choose the notary who will draw up the deed of purchase.
Contracts structure and content
• Contracts that concern real estates in Greece are drawn up by special permitted law professionals called notaries and practise only this profession i.e. drawing up contracts. In order to buy and sell a real estate in Greek territory the following procedures are imposed to be done by the candidate purchaser.
• Each contract has a concrete number given by the Notary and a composition date. This is the real estate identity number in combination with the transcription number given at the Registry office.
• Report of the detail elements of the contracting parties, full names, father names, mother names, police identity (I. D.) numbers, tax registration numbers, addresses and professions.
• The real estate is described in details (extent, limits, borders) and reports the Topographer of Engineers elements mentioned at the topographic diagram. At this point all the previous acts, titles of property, contract numbers and registration numbers at the register office are mentioned.
• Afterwards, is reported the vendors statement, that sells the real estate and is described the price, the terms and the conditions of settlement of price in case it is not paid off immediately during the signature of contracts.
• The vendor guarantees that the sold real estate has no debts.
• Thereupon, the buyer undertakes the vendor's real estate and the vendor resigns
• from any rescission right.
• The notary reports the copies of tax on transfer of property statement as well as the declared value.
Note: The tax Office imposes the objective value ( i.e. the minimum one) of the real estate apart from the agreed price.
If the agreed price is over the objective value the transfer tax the purchaser pays will depend on the superior. If the agreed price is less than the objective value the tax is paid will depend on the objective value. Finally the notary certifies that the transaction takes place according the law, and reports in brief the relative laws and the certain formal statements of the contracting parties.
• The contract is drawn up only in Greek language in one original that always remains at the notary's file, an official copy which is registered at the register office and the purchaser receives as many copies as he/she wants paying the proportional tax. If the purchaser want, he/she may name a translator who takes an oath and translates orally word by word the contract from Greek to the foreigner language. At the end of the contract the translator declares that he/she translated rightly and comprehended completely quoted in the contract the foreigner purchaser and signs for this at the contract. Moreover the purchaser is able to receive a copy and on his own tax to have it translated officially at the Ministry of Abroad at the translational service or may have it translated from a Lawyer acquaintance of foreign language.
• The parties sign only the prototype contract.
• By the time the contracting parties sign must possess all the legal documents that would prove the individual identity or the legal representation of representative in case the purchaser is a company.
• The expenses of Land registry burden the purchaser.
• The transaction is completed not only with the procedure at the Notary but with the registration at the Register office.
Purchasers expenses when buying property in Greece
• The purchaser must pay for the following expenses:
• The transfer tax is about 7-9% on the objective price or if the agreed price is bigger than on the objective price.
Rentals in Greece
• The lawyers' fee is about 1-2% (subject of agreement) on the selling price adding the legal research and any other legal advice had offered to the client.
• The notary's fee is about 1,3% on the deed of purchase mentioned price
• The estate agent's fee depends on the agreement among the estate agent and the purchaser
• The registration at the register office is about 4,75 0/00 of the price mentioned on the deed of purchase.
According to Art. 1 of law 2235/94 all new leases are today free with a minimum duration of 3 years and all old leases can be terminated by the owner, who, at the end of this period, can have his house vacated, without compensation, or need for explanations. There is no right of a tenant to transfer his tenancy right to anyone else, except in case of his death, his inheritors (immediate family) can either continue the tenancy, or denounce it. Rents on all rentals are freely fixed between owners and tenants. There is no maximum or minimum rent.
Today the rental market of commercial premises is free as far as the height of the initial rent, only rentals with durations shorter than 1year are not protected, or new rentals of historical buildings. The initial rent is freely agreed between owner and tenant, as well as its future increases. The initial duration of a rental is by law at least 12 years. Laws 2.235/1994 and 3741/1999 granted property owners two possibilities, concerning the recuperation of their property:
• 12 years plus compensation of 24 monthly rents Any lease older than 12 years can be terminated by the owner, if within 9 months of it's termination, the owner asks for his premises to be vacated. In this case the owner must pay a compensation of 24 monthly rents, and the building can be immediately used even for the same profession, without any additional compensation. No compensation is paid if tenant leaves on his free will, or if he is a lawyer, doctor, mechanic, notary public etc.
• 16 years without compensation If the owner does not ask for his property within those 9 months, the lease is automatically prolonged for 4 more years, after which the owner can ask for his property without obligation to pay any compensation. This practically means that today the owner can take back his rented property after a total duration of 16 years, without having to pay a compensation.
There are two main legal ways to evict a tenant before completion of his 12 year term, but not before the end of his contract. Demolishing and rebuilding of the building and eviction for the use of the premises by the owner or his wife or children. In these cases a remarkable compensation is paid to the tenant (1-3 years of rent, depending on the case).
May 2005 - The Paper Magazine INVESTING IN REAL PROPERTY
: Bullish trends despite hindrances on the part of the State Real property values in Rhodes have been on the rise over the last three years and the trend applies for the entire zone of the Dodecanese islands. Such trends are expected to intensify through 2005 as a consequence of higher demand for real property amongst Greek and European prospectors. The reasons behind such trends are mostly found:
1. In shifting trends amongst investors active in the Stock Market Turbulences that shook the Stock Market have triggered a landmark shifting of trends amongst investors who turned away from stock and embarked on real property investing activities, perceived to be safer and better performing under the circumstances.
2. In falling interest rates and a higher facility for credit More than ever in pursuit of higher profit, Banks are willing to grant "new generation" housing loans at very attractive interest rates, allowing for the purchase, construction or completion of homes or professional activity premises. Such attitude has understandably come to be quite popular amongst prospective real property buyers.
3. In the optimization of the quality of constructions destined for sale The use of technologically advanced construction materials in all stages of the building process, in conjunction with adequate architectural planning meant to cater to the needs of the purchasers and therefore making new constructions esthetically more attractive, competitive and structurally safe.
4. In the phenomenon of migration for professional purposes. The possibility to acquire real property in frontier-bordering zones for citizens of EU member states does indeed open tremendous opportunities for the purchase of old, traditional homes and residences, even in those remote islands and villages of the Dodecanese where demand for such assets had been rather low. On the other hand, many agencies – both in Greece and abroad – grasped this opportunity and capitalized on the new conditions in order to launch large and medium scale projects, to the purpose of catering to the needs for holiday villas or main residences.
5. In the scarcity of urban land available for development. The ongoing delays in the integration of new zones and quarters in the urban plan system triggered higher prices, hence an increase in sales prices for real property lying in zones bordering the limits of the approved urban plan.
6. In the imminence of the increase in fiscal cost for real property. Effective as of 01-01-2006, VAT will be imputable on the price of new constructions, which is turn is expected to booster taxable values of all real property. This essentially translates in that by the end of 2005, real property values will escalate, eventually to peak within the last quarter of this year. All of the above circumstances and most and above all the lack of urban land available for development, resulted in an outlook of saturation, hence the fact that whatever plots still available and within the urban plan system, (mostly in locations within the so-called "northern triangle" of the island, that is to say in such communities as the City of Rhodes, Ialyssos, Koskinou and Pastida) were overexploited whilst prices on whatever plots still remained – scarcely any – simply skyrocketed. A further consequence of such situation was that private prospectors, along with businesses and land development agencies oriented themselves towards land available beyond the approved urban plan limits, eventually engaging in the construction of buildings capable of catering private or commercial housing needs. Demand is rising, however, so much that the actual offer simply does not suffice to meet the needs of he market for the acquisition of real property. This is therefore the context of the whole debate on where the applied developmental policies of the government are leading. Currently, projects like those of "Rodopoula", "Asgourou" as well as those of the "Kleovoulos" self-financed housing cooperative project or the projects for housing purposes launched by the Association of Bank Clerks and Officers, the Aegypt Repatriates Association, the "Theotokos" and the "Vacchos" Association, are still pending, most of them left to stagnate somewhere along the endless bureaucratic ramifications that all too often paralyze the best of efforts. One is therefore given to some wondering as to whether the government will ever be in a position to establish a land development system, such as to ensure that urban land is equitably distributed and the environment rationally managed, so that each investor be is a position to safely assess the potential of his or her investment. The government should promptly engage on a truly consistent, comprehensive policy and this can only happen if regulatory interventions are coupled with strategic space management and valorisation plans. This could be an optimal instrument for a harmonious, bureaucracy-free coordination of all investment ventures launched by the public and / or the private sector in specific land development domains (housing, industry, arts and crafts, offices, commerce etc.) along with some realistic projections as to future needs for expansion in the future. Building on this model should lead to a more rational functioning of the urban tissue as well as of all zones, both within and beyond the approved city plan, new investment opportunities are created without risk for unmonitored extensions whilst needs for land (be it for housing or for industrial purposes) will be catered to in the best way possible.
What should buyers expect to pay for a holiday house in Rhodes?
Buyers should expect to pay between €150,000 – € 240,000 for a small 2 – 3 bedrooms new villa in organized residence on the east coast. Stone houses in villages are priced starting at € 70,000 but renovation could reach € 30,000 – € 50,000. In the Medieval City of Rhodes and in Lindos a decent stone house to restore could start at € 100,000. Two bedroom apartments cost about €100,000
The Ktimatologio (land registry)
The Ktimatologio (land registry) is a modern and better organized public registry for titles of all kinds of immovable property in Greece. Not every place in Greece has until now the new land registry office yet. In fact, most towns and villages in Greece still have their "House of Mortgages" (called Hypothykophylakion), which is the old public registry, an office which has ensured and continues to ensure everybody's rights over immovable property.
What do you have to know about those public registries?
The land registry office is a data base of legal and technical information and descriptions for the accurate assessment of real estate property in Greece. It ensures legal security and certainty regarding immovable property rights and obligations, so that every person of good faith is protected if he/she gives faith to the registrations.
The land registry office operates along side with the "House of Mortgages" in the same area
In some areas in Greece, where the land registry has been organized up to its final stage, every transaction, sale, purchase, mortgage etc. on real estate is ONLY registeres in this land registry (e.g. Chalkida, some places in the Athens area). In theory, all real estate owners SHOULD have already declared and registeres their property with the local land registry, where it already exists.
But there are still thousands of all kind of real estate properties (lands, lots, apartments/condominiums, houses, undivided properties, inheritances, etc.) in above mentioned areas which are NOT been registered with the new land registry. What now?
It can be either that nobody has declared the property so far. In this situation the property is registered as "Property of unknown owner".
If you are the owner of such property, you have the right to file an action at the court against the organization of the land registry, in order to prove that the property in question is legally yours and that it should be registered in your name.
It can be that trespassers have declared the property as being their own property (worst case scenario). Those wrongdoers are attempting to take advantage of the lack of information of the real owners and are trying to make these 'forgotten' properties illegally theirs, but under the legal veil of the land registry.
If you are the owner of such property, you have to file an action at the court against that person, to prove that the property in question is legally yours and not theirs.
In both cases the time limit to file the action is 5 years from the time that the land registry office has started its full and exclusive operation in that area. If your domicile is outside Greece, the time limit is 7 years.
The time limits passed without filing an proper action?
Automatically you are loosing your property rights over the immovable property and you have only the right to claim fiscal compensation.
Here's a contribution from meauxna regarding police certificate:
The Athens Consulate has just this month changed the type of Police Report they want. We had already procured the original, simpler type and had to re-apply for the new one. Fortunately, it only takes 2 weeks to get, and you order it on the phone (from within Greece). The number to dial is 1502, which is not a "normal" number here. The number they gave us to call for follow ups is (+30) 010-77-14833. This might give someone joy if calling from outside Greece. The Police Report is called Pinikou Mitrou and you MUST request Typo Beta. Tell them it's for the US Embassy. They request your father and mother's names, place of birth, basic details like that and in Greece, bill the 2.50euros as a COD (pay on receipt at the post office). You must sign for the envelope in person.
Both times we used the call in service, it was very prompt, the people were knowledgeable and it went very smooth. The one time we tried to get the report in person, as the Embassy recommends, it was a disaster and waste of time. NB: Alien spouse is a UKC residing in Greece. We also had to get a UK Police Certificate.
"If applying from outside of Greece, both Greek and foreign nationals must apply to their local Greek Embassies and include in their written application the full details of theri identity.
Non Greek applicants visiting or living in Greece and foreign born Greek applicants should apply in person to the Ipiresia Pinikou Mitrou for foreigners, Mesogion 96, 101 79 Athens Greece, tel 7713.503, 7712.837 and 7759.294"