How to let property for rent in Greece?
Greece property guide
Some people buy a property in Greece just because they love the country, the little whitewashed island houses, the relaxed lifestyle. It's somewhere they can stay every year and perhaps eventually retire to.
But others want to invest in a property that they can let out. How does Greek property stack up as an investment? And what rules and regulations apply?
What about rental yields?
In Greece, you'll generally get better returns from a holiday let than from a long term rental agreement. For instance, some of the best returns are on the islands - Mykonos is an expensive place to buy, but rentals there can deliver 8% yield, with Santorini and Paros coming close at 6.5%. Rhodes is another good investment, with yields at 5%, particularly for holiday apartments.
That's not the best yield you can get for your money if you look at all the competing asset classes - for instance, property crowdfunding in France could make you 8.5-10% a year - but it compares well with other Mediterranean destinations such as the French or Spanish coast. On the other hand Crete, with an apartment rental yield of 3%, doesn't look like a good place for investment right now, but things could change as new developments come on stream.
Greece's home ownership rate of 74% is among the highest in Europe; renting isn't normal, particularly in smaller towns and rural areas. However, the larger cities of Athens and Thessaloniki do have long-term rental markets. Athens doesn't have a particularly good return, at 4.2%, though smaller apartments get a higher return, and certain areas, such as Kolonaki (central) and Glyfada (coastal suburb) can score 6% on the right property. Thessaloniki might be a better place to look for bargains, as prices haven't been boosted so much by AirBNB potential or by 'golden visa' buyers - but as a gateway to the Balkans it has steady demand.
It's still possible to find bargains, even in Athens, where some sellers have tax problems or high debts and are willing to entertain creative deals and suboptimal prices. But if you want to go this route, you'll need your wits about you, and you'll need a local partner who knows the market.
Regulation of property rentals in Greece
Long term rentals are regulated in Greece, with a minimum 3 year period which terminates automatically without the need to serve notice. Law has usually been somewhat in favour of tenants, but a relatively recent change speeds up eviction if tenants don't pay the rent. However, Greek law courts work rather slowly at the best of times.
Short term furnished rentals have traditionally been less regulated, but that's changing as AirBNB has put many property markets under severe pressure. If you're renting for a month or more, you won't need a permit from EOT (the Greek tourism office); if you're renting on a weekly basis, you will.
The one thing that you'll need to do whatever kind of rental you're involved in is to register the contract with the tax authorities. If you don't, the contract isn't valid. If you rent out a Greek property, you'll be liable for Greek tax (see below), but foreign owners aren't required to have a VAT number or charge VAT if the property is let to foreign renters for up to three months. However, you'll have to prove your case by submitting the passport number, nationality and permanent address of your guests.
The negative consequences of an AirBNB gold rush in Athens and on the islands have included a wave of evictions as landlords decided to swap long-term tenants for holiday bookings, as well as an overheated property market in Athens. The government has enacted legislation that limits short-term rentals, but it's clear whether it's actually being enforced. The new limits are:
• 90 days maximum overnights per year - 60 days on islands with under 10,000 population;
• maximum two properties per owner (individual or corporate)
• maximum total income of €12,000.
You can probably live with that. However a recent legal case gives more grounds for concern if you're AirBNBing an apartment. Tenants who found an AirBNB rental was causing recurrent problems in their apartment block were given the right to stop any 'professional' (ie short term rental) use of the apartment. The case could go to appeal, but if it stands, it could be a major threat to property owners who want to generate income from tourist rents.
What taxes would you pay if you let out a property?
If you rent out a property in Greece, whether long or short term, you'll be liable to pay tax in Greece on your rental income. You'll need to file a Greek tax form every year. At least, when you bought your property, you'll already have got your tax number and access to the on-line tax system, so you're well ahead with the practicalities.
Rental income is charged in three bands:
• 15% on all rental income up to €12,000
• 35% on rental income from €12,000-35,000
• 45% on rental income above €35,000.
There are no deductions for costs, however. If instead you register as a tourism business with EOT, you can offset all your operating costs such as advertising, insurance, maintenance, and advisory fees. For those with a high rental income but significant costs this could be the better choice.
Who can help?
There are a huge number of rental agencies in most of the areas of tourist interest. Levels of service vary and the amount you'll receive reflects the amount of work the agency puts in. For instance, you could contract your property to a tour operator. They'll manage the bookings, guests, and registrations; all you have to do is deliver your property in good order. Obviously, the return you'll get will be lower if you take this route.
You could also employ a local agent to manage your property. The usual commission is 10%, but some services could be charged on top of that, for instance if there are maintenance issues or if the garden needs looking after.