Anybody who reads a newspaper, or surfs on the net, will be aware that the Greek economy is at crisis point and that the incoming government has to slash the country’s spending, immediately. Amidst a raft of measures designed to cut spending, increase taxation, and tackle the endemic corruption that has fuelled the black economy and reduced tax receipts, PASOK has announced that it is to shift the burden of Greek annual property taxes.
Greek Property Taxes and Inheritance Tax
The main thrust of the changes to property taxes is a change to the passing on of property from parents to children. Currently, the level of taxation is 1% after a €95 000 threshold, but the new administration intends to adjust this in an attempt to raise more tax for the beleaguered economy. The tax bill is expected to be tabled in March but, in an interesting development, perhaps a sign of the dire state of the Greek economy, the government has announced the possibility of a retrospective tax. Faced by a rush of families attempting to pass on property before March, the PASOK administration announced that it would temporarily tax people at the current level, but reserved the right to apply any new rate of tax at a later date.
(From: Kathimerini)
Greek Property Taxes - Changes for High-End Buyers
Greek Property Taxes – Annual Taxation Rates
The other major change is in shifting the annual tax burden from small and medium property owners and businesses towards the higher end. In a move supported by 70% of Greeks, this tax restructuring is intended to target individuals owning many large properties and offshore companies holding property portfolios. For these target groups, the new laws propose a tax hike of up to five times the present level.
These particular changes will affect over 350 000 properties in Greece and the tax restructuring should not affect the vast majority of foreign property owners in Greece, most of whom will fall well below the taxation threshold. However, there is one potential stumbling block on the horizon, and that involves the finalization of the real estate tax registry in Greece.
Greek Property Taxes – Rateable vs Market Value
Currently, most Greek property has two values, the market value and the government value, which is usually considerably lower than the market value. For example, I know of one house that is for sale at 150 000 Euros but is officially valued at 55 000 Euros. This is the value that is used for taxation purposes.
Thus, some people may have a house with a market value above the threshold but has a rateable value way below the threshold. If the government steps up its drive to reform the land registry, which will involve raising the rateable value of houses to better represent market values, then some properties will become taxable, at an annual rate on a sliding scale of between 0.3 and 0.9%.
However, despite the noises for quick reform, there is one immutable law in Greece, namely that bureaucratic inertia will act as a brake. Currently, there is little need to panic if your property portfolio is on the threshold of the new taxation limit – it will be a couple of years, at least, before anything changes, as the next valuation review is not due until 2012. However, there is a strong possibility that the administration will prioritise high-end properties, so a potential rise in Greek property taxes is an extra cost that you will have to bear in mind over the lifespan of this government.
Whilst tourism across Spain has fallen by a figure of 8.7% nationally during 2009, according to official government figures released yesterday, the popular holiday destination of Lanzarote has managed to buck this negative trend. With the number of tourists arriving on flights to Lanzarote from the UK actually increasing during the course of November 2009 by nearly 7%.
The British market has long been the power house of Lanzarote´s tourist and property sectors. With visitors from the UK traditionally accounting for around 50% of Lanzarote´s 1.5 million annual foreign tourist arrivals. During the course of 2009 this market had shown clear signs of meltdown – as British consumers were squeezed by the double whammy of the credit crunch and the weakness of sterling against the Euro. With total arrivals from the UK falling by as much as 20% in the months running up to the peak summer holiday period.
But this negative trend has been turned around since then – making particularly happy reading for the many thousands of overseas owners of Lanzarote villas and apartments. As British arrivals rose for the first time during the course of the year in November – according to figures just released by the Spanish airport operators AENA. With Lanzarote welcoming a total of 63,753 visitors from the UK – a figure up by 6.97% from the November 2008 figure of 59,601 arrivals.
The number of tourists visiting Lanzarote from Eire – the island’s third largest market – also increased during November 2009. Up by 1.47% as the island welcomed 11,382 visitors from the Republic. However the picture was not entirely rosy as arrivals from Lanzarote´s second most important market of Germany continued to fall – down by 10.28% to 26,843 visitors.
However the increase in British visitor numbers remains extremely positive – not least as this bucks the national trend in Spain. Where tourism has declined by 8.7% during the course of 2009. This turnaround is being attributed to the ‘Ryanair effect’. As the budget airline turned their attentions to the Canary Islands last autumn in order to take advantage of the suspension of airport taxes and charges by the Spanish government. As they sought to revive the country’s flagging tourist sector.
In late October Ryanair started flying 17 new services to Lanzarote from across the UK. Which have proved so successful and popular that by the end of November the airline was instantly established as he largest carrier of tourists to the island. Accounting for a total of 44,232 passengers.
As a result Ryanair recently confirmed that they will continue to operate flights to the island well into 2012. Providing a further boost for the Lanzarote property market. Which is largely powered by foreign investment in holiday properties.
Well, one thing 2009 bought is a potentially vast pool of foreclosure property to invest in. So – where is the best foreclosure market to invest in?
The United States? The amount of bank owned property sloshing around is quite stunning. Not including the ongoing devaluation in the commercial sector, the US banks now own an estimated 22 million foreclosures and are likely to add another 7 million to that over the next 2 years. No one really talks about this and industry insiders refer to it as “shadow inventory,” because much of it is not actively for sale. Where do you think all that lovely federal reserve money went? What little that did not make it’s way to a numbered bank account in the Cayman’s went to prop up the banks deemed “too big to fail,” and allow them to keep these TWENTY TWO MILLION residential properties off the market. Much of this “shadow inventory,” is in Nevada, California, Florida and will not appeal to the overseas buyer unless it is within a few hours of an international airport – which much of it is not. The other question is – if it ever gets to the point where these properties are released onto the market – any one holding any stock is going to see that value plummet overnight. Caveat Emptor.
Spain? A similar story is unfolding in Spain, where the big banks are now that largest property owners in the country. This cost the European Central Bank €60 BILLION. I will say that again – SIXTY BILLION EUROS were dumped into the Spanish covered bond market to prevent the Spanish banks from collapsing – and they are dribbling these properties through to selected staff members at a discount, but that still leaves an unspecified (some are saying that even the banks do not know how many properties they are sat on) amount of repossessed property in Spain.
Dubai? Holy moley, the ongoing shenanigans and bullshit coming from that tiny Emirate should be enough to put any but the most hardened investor off for life. Still – if you happen to be an international bank, I have a feeling the amount of foreclosures in Dubai will start to rival Spain any time soon, and might be worth a punt. Values have fallen about 70% in the last 18 months and much of this stock was only part paid for off-plan.
Most of the people I know in the process of buying have simply walked away from their deposits. Some of which were substantial, but the word is there will be no recovery for years, despite the amazing quantity of government issue press releases to the contrary.
Happy New Year.
When investors look at Greek property investment, they normally think of Mykonos Crete or Attica, places with a well-established market that generates quick profits. Certainly, for higher end property investments, the kudos attached to these places is guaranteed to generate interest and has fuelled a development boom. However, the recent economic crisis has caused the market to stagnate, a little. Developers and investors are finding it increasingly difficult to make a profit, especially when the new government is threatening to increase the taxation burden upon high-end property portfolios.
The Peloponnese Property Boom
Because of this market flat lining, investors are looking away from the islands and the commuter belt around Athens and seeking growing markets. One such area is the Peloponnese, which has seen price values shoot up since infrastructural improvements. Wealthy Athenians, seeking second homes and country retreats, have taken advantage and are pushing prices up, with Nafplio and Corinth the major beneficiaries. Tripoli, in beautiful Arcadia, is undergoing heavy investment and prices there are on the rise, making it a great Greek property investment.
Sparta – Untapped Potential
Greek Property Investment Sparta
Many middle and high-end investors are looking further still and have set their sights upon Sparta, a town steeped in history and blessed with some of the most beautiful scenery in Greece. Properties here have long been undervalued and the Spartans are beginning to understand that they are living in a property goldmine, so the town has seen many residential developments over the last decade.
With improved transport links to Athens and to the coast, now is the right time to look for investments in the area, which offers a range of options, from traditional Greek stone houses and renovation projects, to entire apartment blocks and commercial properties.
Nearby Mystras, a UNESCO World Heritage site has long been an area for the wealthy and this trend has spread into the affluent villages of Magoula and Amikles, where prices have risen steeply. These areas offer the opportunity to turn properties around and generate profits by aiming at the luxury Greek property investment market.
Sparta and Low End Greek Property Investments
Even for lower end investors, the villages around Sparta offer some excellent opportunities for first time investors with limited budgets. Land and houses are cheap and are a great option for the long term as infrastructural improvements drive up prices.
As a hotspot for Greek property investment, Sparta is certainly worth looking at and is a long way from saturation, unlike the cities and islands.
Image Courtesy of: Markussep
Mixed sentiments and news snippets at the moment are causing uncertainty in most markets.
The United Kingdom
British Banker’s Association mortgage approvals increased once again in November rising a further 5.1% to 44,713 units from an upwardly revised 42,552 in October (originally reported as 42,238). At this level approvals are up 152% year on year from the cycle low last November of 17,738. More significantly at these levels they are 0.7% above the November 2007 level when re-mortgaging was rife, as opposed to almost non-existent today. This is at best a recovery based on the stamp duty holiday and we will probably see another fall in January.
Last week’s UK GDP revision show that the economy was flat in the third quarter, which makes a lot of sense in the light of other data. This brings the peak to trough decline to 6.03%, marginally deeper than the 1979/81 fall of 6.0%, which was, until now – the strongest drop on record and brings into question any possiblity of a short term recovery.
The UK third quarter GDP had been revised upwards but not by as much as expected . The contraction over the quarter was limited to 0.2% rather than the 0.3% first revision and the 0.4% original estimate. Year on year total output remained 5.1% below the year ago level.
The UK third quarter savings ratio shot up to 8.6%, well above its long term average and a mile away from the minus 0.7% recorded just before the recession began .The change was helped by a 3% rise in real disposable income as mortgage repayments and interest rates collapsed, leaving more for the consumer to both save and spend. Sadly unsustainable.
The UK third quarter current account deficit came in at £4.7bn after a the announcement of a downwardly revised £4.4bn shortfall in Q2, a figure originally reported as minus £11.4bn.
Major UK banks mortgage approvals rose to a total of 63,000 in November from 60,000 in October (revised down from 61k originally). These figures do not equate with those released by the BBA and are no more than a guide to mortgage activity.
The number of UK first time buyers registering with estate agents last month was approximately 20% of the total according to the National Association of Estate Agents, a substantial drop. The New Year is expected to show a further decline as the stamp duty holiday comes to an end and there are suggestions that most fort timers are still priced out of the market. The average number of house hunters registered per branch fell back to 279 in November from 287 in October, whilst the number of sales was steady at 8, a positive signal, despite the fact that one on 6 estate agents has gone to the wall.
The Bank of England semi-annual Financial Stability Report, explains that British banks will need to refinance more than £1,000bn of wholesale funding including a large proportion provided through the government’s Credit Guarantee and Special Liquidity schemes. Much of the funding has been to alleviate stressed asset lending with those assets now difficult to sell. However nearly 50% of all private lending is to the commercial real estate sector which is not looking healthy at the moment.
According to the FT, November’s public sector net borrowing came in at £20.3bn – up from £15.5bn a year ago . This brought the shortfall in the first 8 fiscal months to £106bn from £85bn a year ago, on target for the £178bn (12.6% of GDP) expected for the full year. This sum exceeded total government borrowing in the first 11 years of the labour government. However in November central government cash receipts were up 3.6% year on year – the first such increase since the start of the crisis – thus although borrowing exceeded £20bn it was nevertheless below the £23bn forecast by economists. Spending a pound to save a penny.
Total UK business investment has been revised up to a fall of 0.6% in the third quarter, some 19.9% below the year ago level following what was originally thought to be a quarterly drop of 3.0% and a year on year fall of 21.7%. This should mean a further up-grade to Q3 GDP is on the way from a decline of 0.3%, itself revised from minus 0.4%
UK Money supply as defined by M4 was unchanged in November and just 9.2% above the year ago level down from an annual increase of 10.8% in October.
UK Retail sales fell by 0.3% in November to stand 3.1% above the year ago level . October’s figures were revised up from a monthly increase of 0.4% to 0.6% and an annual rise of 3.4% to 3.7%. In this light the November outcome is respectable.
GFK consumer confidence index moved to a level of minus 19 in December from minus 17 in November.
The price of an average house in the UK has increased by £1,517 this year to a level of £205,591 after falling by £31,355 last year according to the property website Zoopla. This adds £39.1bn to the total housing stock following last year’s fall of £811.3bn, which now amounts to £5,300bn, a fall of 13.1% from the 2007 £6,100bn peak. Thus the peak to trough decline was 13.8%. Zoopla adds that prices in England during 2009 went up by 0.9% (minus 13.9% in 2008) and in Scotland by 0.6% but fell by 2.5% in Wales. The company predicts a burst of activity and higher asking prices in the spring, followed by a fall after the Election to leave prices little changed in 2010 as a whole.
According to the FSA – there were just short of 400,000 UK households in mortgage arrears at the end of the third quarter- up 16% year on year. Unlike the figures from the CML these statistics include unregulated mortgages (second charges), whilst the FSA uses a narrower definition of arrears. The FSA puts sub prime lending at less than 0.5% of all loans and mortgages in excess of 90% LTV at 1.6%. They put the level of repossessions at 14,000 – a rise of 2.8% during the quarter but a decline of 5% when compared to Q1 and largely due to teh banks holding off.
UK unemployment increased by just 21,000 in the 3 months to end October to 2.49m, the smallest rise in 18 months and equal to 7.9% of the labour force according to the ILO definition . A close ally of Gordon tells us we don’t really understand why US unemployment is rising faster when they have such a flexible labour market. Could it be their housing recession and the decimated car market or the fact that they are a manufacturing economy and we are financial services!
UK unit wage costs in the 3 months ended October rose by 3.0% year on year following an annual rise of 3.5% in the quarter ended September.
Average UK earnings excluding bonuses rose by 1.7% year on year in the 3 months ended October , a similar figure to the quarter ended September. Including bonuses the increase was 1.5%, up from 1.2% in the third calendar quarter again year on year.
The DCLG housing market index, always somewhat behind the other agencies, reported a 2.2% annual decline in average prices for October following a year on year drop of 4.1% in September. The index is based on the Land Registry model but adjusts for the indices of the majors.
All inflation measures picked up a tad in November with the CPI adding 0.3% to leave the year on year rate at 1.9% , up from an annual 1.5% in October, whilst the core CPI edged up to a 12 month rate of 1.9% from 1.8%. The RPI added 0.3% on the month and over the year after an annual decline of 0.8% in October. The RPIX, which excludes mortgage repayments, recorded an annual rate of inflation of 2.7% after 1.9% in October as last year’s steep decline moved out of the comparison.
Dubai property values have fallen (depending who you ask) between 50-70% from peak and at any other time, in any other market, this would almost certainly be signal to jump in with both feet. But – and this is a huge but – Dubai has probably got a long way to fall before bottom is reached, and our opinion is that we are nowhere near there yet.
Perhaps selected up-market developments that are well established – if anything could be called well established in Dubai – may be an attractive proposition, but the ongoing collapse of the property developers, lawsuits flying in all directions and the willfully obtuse government do not make Dubai an attractive proposition despite large falls in value.
Thorough the year, a barrage of press releases and advertorials written to confuse and disguise the financial problems of that country do not encourage us to take the latest “We have now reached bottom,” versions with any sort of seriousness. These latest press release are all along the same lines and this is a typical example. “Year 2009 was a year of “price correction” for Dubai’s realty market, transforming it into a matured and favorable one for end-users.”
We are not certain who exactly is likely to fall for these types of press release and there is no question prices will continue to fall through 2010. The Dubai property crash is firmly under way; there is an enormous over supply in almost all markets and unless the banks find another magickal $100 billion or so, credit will remain tight.
No bottom until Q4, 2010 and no recovery until 2012 say we.
Many people buy properties abroad and hope to recoup some of the cost by letting out the property to holidaymakers. Considering the high price of property in many of the tourist hotspots, buy to let property Greece makes sense when you only occupy the home for a few weeks of the year.
Certainly, buy to let can be very lucrative, but there are a few things to watch out for, especially in ensuring that you have legal protection. Whilst many Greeks and foreigners choose to let property on the black market, without any major problems, if somebody has an accident in a property then there could be severe legal repercussions. Whilst the bureaucracy can be a little tiresome, it is well worth ensuring that your buy to let property Greece is legal and above board, to avoid potential fines and prison sentences.
What is Required when Looking for Buy to Let Property Greece
The most important safeguard, when purchasing a home with the intention of buying to let, is ensuring that you have a good lawyer. The British Embassy has an excellent list of lawyers and it is worth checking there or asking trusted expatriate friends. For more details on purchasing Greek property, see our Guide to Buying Property in Greece
Personal Documents:
Buy to Let Property Greece - A Good Long-Term Investment
- Certificate or letter from your home country stating that you do not have a criminal record
- Proof of healthcare, if a non-EEA national
- Your latest tax return, and it is a good idea to keep payslips, pension receipts and bank statements to show where your income comes from
- A completed application form and a signed and officially stamped declaration of your intention to let out your property
Documents for the Property
- An environmental survey, performed by a qualified architect, stating that the property is suitable to let. Some of the requirements can be strict, so it is wise to check this before signing the contracts to buy the house; making alterations can be costly
- A fire certificate: The local chief of the fire department will check the premises and ensure that they have the required fire escapes and fire extinguishers. This check must be performed annually.
- A copy of the building license, which you should have as part of the buying process
- A proof that the local taxes on the building are up to date, another requirement that should have been taken care of during the purchase process
- A copy of the proposed rental agreement or contract – your lawyer should be able to provide you with a standard tenancy agreement
- A certificate from an architect stating that the building meets all of the appropriate earthquake legislation
As with most Greek bureaucracy, the process will require going around in circles for a few days, although a good lawyer and architect will be able to smooth the process considerably. Despite the bureaucratic wrangles, investing in buy to let property Greece is a good way to generate a regular income, especially if you find a trusted letting agent to help you find clients.
Photo Courtesy of neopicture: http://www.sxc.hu/photo/663621
The National — All Property Type Aggregate Index recorded a 1.5% price decline in the month of October. The index now stands 43.7% below the peak measured two years ago, in October 2007.
October measured an uptick in transaction volume compared to previous months. 97 repeat-sales totaling $1.4 billion were used in calculating the monthly index.
The eastern office market was dragged down by the poor performance in New York over the past year. Office prices in the East fell 37.3% annually and 40.6% from the peak.
The South had the worst performance of any region, with three of the four property types measuring annual declines greater than 30%. Apartments in the South saw the largest drop of any sub-index, with prices cut in half over the past year.
Southern California properties saw relatively mild price declines with no property type measuring an annual decline above 30%.
New York offices saw the largest annual price declines of the three MSA-level office indices. Office prices in New York fell 38.1% over the past four quarters, and have dropped 39.3% overall.
·Prices on Florida apartments have been falling for the past three years and this year, prices plummeted 46.1%. Florida apartment values are now 51.6% below their peak.
Full report available here as PDF download – Commercial property prices indices Dec 2009
Notice to the holders of the U.S.$3,520,000,000 Trust Certificates due 2009 (the “Certificates”) of Nakheel Development Limited ISIN XS0277553052
Unless otherwise defined in this Notice, terms shall have the meaning ascribed to them in the Declaration of Trust dated 14 December 2006 between Nakheel Development Limited (in its capacity as Issuer and Trustee) and Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLC.
Deutsche Bank AG, London Branch, in its capacity as the Transaction Administrator pursuant to the Transaction Administration Deed between, among others, the Transaction Administrator and the Nakheel Development Limited (in various capacities) dated 14 December 2006, hereby notifies theCertificateholders of the following:
1. On 14 December 2009 the Issuer published an announcement on the NASDAQ Dubai CAP and CANDI system stating that: “it will honour all obligations related to the 2009 Nakheel Development Limited Sukuk using funds that will be provided by the Dubai Financial Support Fund. In accordance with the terms of the Sukuk, the repayment will occur within the next 14 days”.
2. The Principal Paying Agent has advised the Transaction Administrator that on 14 December 2009 it received (albeit well after close of its business day) payment of the Sukuk Issue Amount, the Final Distribution Amount and the Additional Distribution Amount on the Scheduled Redemption Date pursuant to Condition 6.1. and that the Principal Paying Agent distributed the payment to the Clearing Systems on the same day (well after close of their business day).
Deutsche Bank AG, London Branch 15 December 2009 As Transaction Administrator
So last week media commentators were talking about a busy holiday season in Australian property – now it appears that all is doom and gloom again. Frankly I wish newspapers would stop treating the whole of Australia as a single property market and making meaningless broad statements which may indeed to be right for some small part of the sector but is probably incorrect for the other 90% of the Australian property sector!
Now we have this gem from the Queensland’s Courier Mail:
“Australia’s housing market is heading into a deep $14 billion hole as house prices escalate, the first-home owners grant stops and banks tighten lending requirements.”
Hmm really – well from a West Australian point of view – I don’t think so – houses are definitely selling – maybe not at record prices but selling, and the state is braced for a renewal of demand from all those over-paid resource sector workers who are already sucking skilled tradesmen out of Perth and back into the North-West and, to a lesser extent the Pilbara, oh and the gold price is still going from strength-to-strength as well seeing the precious metal sector booming across the state.
Superpit Kalgoorlie - Valuable WA Property!
So we have lots of people arriving in Western Australia, needing accommodation, with the money to pay. As huge projects such as the Gorgon Gas field start to ramp up even over the Christmas period – I don’t see that the demand is going anywhere but through the roof. Meanwhile supply side is going from bad to worse. From one side the industry is again suffering shortages of practically any trade you can name, on the other site the state has a planning system which is positively antique – and not in a good way. So yes I would say that prices are set to increase sharply in WA for properties which appeal to resource sector workers and their families.
So the argument is that the banks have tightened their lending requirements – well I doubt it quite frankly in an industry where the average worker is on a A$200,000+ package. Perhaps people need to close two or three credit cards before applying and pay off a couple of small personal loans they might have paying off the third car or the jet ski – but this is hardly a lending crises – to any but the most cynical.
Owning your own home is still most Australian’s main financial dream. So long as they have jobs, and there are banks wanting to make money from mortgages – there won’t be anything terribly wrong with the Australian housing market.
