Government, Taxes and Illegal Homes – Concerns for Greek Luxury Property Investors

As the new government attempts to make sense of the mess left by the outgoing administration, a belligerent Georges Papandreou laid down his vision for the future. As Greeks listened, waiting for a sign of optimism and hope, the new Prime Minister shared his vision for tackling the real economic problems faced by this small country.

Faced by an unacceptable level of public debt, a stagnating economy, and a population ready to destroy Athens if he does not deliver on his pre-election manifesto, Papandreou promised change. Using similar hyperbole to his father, Andreas, he warned of an economy set to explode, stating, "We have reached a point where we either will defeat the deficit, or the deficit will defeat us."

Amongst promises of educational reform, tackling corruption and a move towards a green economy, some of the reforms are of great interest to Greek property owners and to foreign investors thinking of buying property in Greece. These are mostly beneficial, but high-end buyers and those looking for Greek luxury property may have some concerns. The PASOK government is aiming to shift the tax burden from the middle class to the affluent classes, so it may be wise to hold fire for a while to see how things pan out.

Greek Luxury Property - Higher Taxation?

Greek Property Investors – Check your Deeds

The most important pledge was a promise to adopt a zero-tolerance approach to the perennial problem of illegal buildings springing up on protected land, taking advantage of the fragmented nature of the land registry and the notorious Greek bureaucracy. The forest fires of the last two years were the suspected work of arsonists, hoping that corrupt local officials would rezone protected forest as building land if it was burnt.

This is the one promise that he must deliver upon, because another season of fires will also reignite a particularly ugly mood amongst Greeks, fed up of watching their environment systematically destroyed. According to the respected newspaper Kathimerini, seven out of ten Greeks are against any attempts to legalize such properties, an opinion that the new government will surely take on board

For anybody buying property in Greece, make doubly sure that you find a reputable lawyer and make sure that the deeds, plan and land registry are in good order. Finding out that your house is illegal, after the fact, is not a place that you want to be; you will face a very steep fine or you will risk home demolition, at your own expense. Our guide to buying property in Greece highlights some of the potential pitfalls.

A Warning for Greek Luxury Property Investors

For investors in Greek luxury property, the new burden of annual taxation may be a concern, especially for those with a large portfolio. Papandreou promised to replace the standard property tax, ETAK, with a ‘Large Property Tax.’ In addition, there will be a clampdown on tax dodges by overseas property investors, which may see some of the larger concerns shedding excess property onto the market.

Of course, as with any new government, these promises are never entirely forthcoming about where the money will come from. It remains to be seen whether PASOK can balance the budget and tackle corruption, but the next few months will provide some interesting times.

Image courtesy of sorinetzu, sxc.hu/photo/1081659