Greece: Overview

RENTAL YIELDS

Last Updated: Aug 06, 2009

Athens yields are very low

Gross rental yields on properties in Athens are very low, ranging from 2.48% to 3.8%. Yields have fallen substantially since 2007, when they were ‘moderate to good’ at 5% to 7%, but are little changed over the past year.

Athens suburban houses have average yields of 2.94%.

Apartments in central Athens of between 60 square metres (sq. m.) and 120 sq. m range in cost from €343,680 to €794,640. Apartments in the suburbs are slightly less pricey, ranging from €257,400 to €439,560 for similar sized apartments.

In Crete, the average apartment price is €1,837 per sq. m., with average yields of 4.17%

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TAXES AND COSTS

Last Updated: Jan 15, 2009

Effective income tax ranges
from high to low in Greece

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	2.8%	12.7%	22.8%
Click here to see a worked example
Source: Disclaimer

Rental Income: Rental income is taxed at progressive rates, from 15% to 40% depending on the taxable income. Rental income is further subject to 1.5% surtax.

Capital Gains: Capital gains realized from the sale of property held for less than 5 years are taxed at 20%.

Inheritance: Inheritance tax is levied at progressive rates, ranging from 5% to 40% depending on the relationship between the deceased and the beneficiaries.

Residents: Residents pay taxes on their worldwide income at progressive rates, from 15% to 40%.

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BUYING GUIDE

Last Updated: Apr 03, 2007

Total transaction costs are high in Greece

The total roundtrip transaction cost, i.e., the cost of buying and selling a property, ranges from 11.4% to 19%. The buyer pays a total of 10% - 16%, whereas the seller pays a miniscule 1.25% - 3%. The agent’s commission (2% - 3%) and transfer tax (7% - 11%) make up the bulk of the cost. Properties constructed after January 2006 are subject to 19% VAT instead of a transfer tax.

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LANDLORD AND TENANT

Last Updated: May 30, 2006

Tenant protection laws are neutral in Greece

Rent: Rents are freely negotiable between the tenant and the landlord. There is no legal limit on the deposit.

Tenant Security: All residential rentals have a minimum legal duration of three years. If a contract for a lesser period is negotiated, the three years period applies to the landlord, but not to the tenant. A contract for three years or longer terminates automatically at the end of the contract period, without need for notice.

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ECONOMIC GROWTH

Last Updated: Feb 28, 2008

Capitalizing on ancient glory

Greece had a population of 11 million with annual growth rate estimated at 0.21% and GDP per capita of US$30,500 in 2007. The glory of the civilization of ancient Greece still resonates in numerous ruins and archeological sites throughout the country.

But of course, this is not the only lure that has captured visitors from all over the world. With about 1,400 islands, Greece has good food, wine, and good beaches!

With more than 16 million tourists annually, tourism accounts for about 15% of GDP and 16.5% of total employment. It is the main source of foreign exchange earnings.

Average annual GDP growth from 1995 to 2006 was 3.78%, among the highest in the EU and OECD. The economy grew by 3.8% in 2007 and is expected to weaken in 2008 before edging up to around 4% in 2009. Greece joined the European Community (now the EU) in 1981, and joined the economic and monetary union in 2001.

Greece has not for a single year since the introduction of the common currency had an inflation rate within the ECBs much vaunted 2% target. The 3.8% rate of inflation in 2007 is still stubbornly 1.43bps above the 2% target.

In May 2007, mortgage rates on new loans ranged from 4% to 4.56%, while rates for outstanding loans ranged from 4.70% to 5.56%.

Kostas Karamanlis, president of the conservative New Democracy party, won a second term as Prime Minister in September 2007, having initially taken power in March 2004. However his party gained only 152 out of 300 seats in Parliament, a slim majority.

Karamanlis has brought a steady change in direction to the Greek economy. Everything from the high unemployment rates, heavy taxation levels and endless red tape are now changing for the better.

However state spending will continue to be important. Housing and building construction have always played a key role in Greece's industrial sector; accounting for approximately 7.5% of GDP. The government traditionally has seen the construction sector as a way to boost employment, income, and domestic demand.

This is likely to continue. The current Minister of Tourism, Aris Spiliotopoulos is championing the promotion of Greece abroad. He said that he intends to show the world that Greece has the same capacities, services and infrastructure as the rest of the EU‘s developed countries. Translation: more cement.