Greece: Overview

RENTAL YIELDS

Gross yields in Greece are moderate

Yields from properties in Athens range from 5.5% - 6.9%, while properties in the suburbs have similar yields, from 6% - 6.6%.

Yields on seaside properties on the main islands range from 5% to 6%. The rental most of these properties is seasonal, reaching its peak between June-September. During these months, the yields can go as high as 30%.

The costs of apartments in Athens can range from €80,000 to €280,000 on apartments of between 50 sq. m. and 200 sq. m. Seaside properties on the main islands are more expensive, with prices ranging from €80,000 to €350,000, for similar sized apartments.

There are many off-plan properties, as well as very old stone houses in Crete. Villas and houses that were recently renovated cost from around €100,000 to more than €600,000. The average price is at €2,225 per sq. m.

Global Property Guide does not cite rental yields figures in Crete because rents here are seasonal.

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TAXES AND COSTS

Effective income tax rates range from low to high in Greece

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	3.8%	15.6%	22.8%
Click here to see a worked example
Source: Disclaimer

Rental Income: Non-resident individuals earning Greek-sourced rental income are liable to pay tax in Greece. The tax rate ranges from 0% - 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 tax on their worldwide income.

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BUYING GUIDE

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

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

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.