Guide to Buying Property in Greece

Greek Property Investment

For anybody thinking about Greek property investments, the tortuous Greek property laws can be a bureaucratic and financial nightmare. Part of the problem is caused by the language difficulties, the rest by the nuanced nature of buying real estate in Greece. Despite this, there are some real bargains to be found in Greece, and knowing a little about the underlying principles will allow you to negotiate from a position of strength.

The one unbreakable rule, as with buying a property anywhere, is to walk away if you are not happy with anything. Property contracts in Greece are cast iron, and will be adhered to strictly, so make sure that you research thoroughly before signing anything. Do not let this put you off, as the cases of people being ripped off are no more common than in the UK, the US or Germany, and the law offers a lot of protection to the buyer, too.

The key is to ensure that you are surrounded by trustworthy professionals, the key to cracking the bureaucratic Greek legal system. You are in a different country, with different customs and procedures, so make sure that you understand the whole procedure. The system works very well, if you understand it, and the only important rule is to find a good lawyer. Once you find a trusted legal expert, everything else becomes easy.

Looking For Good Greek Property Investments

There are two ways of looking for good Greek property investments, through the internet, or by visiting Greece and looking in person. This is the safest option, and visiting the beautiful country is never a hardship. Many people fall into the trap of falling in love with a place, whilst on holiday, and rush in without hesitation or common sense. As with any major purchase, stop, think, and cool off before committing to any financial decisions.

If you decide to use estate agents, they receive a large percentage for selling a house, so do not be afraid to make them work for it. In Greece, you do not need an estate agent, and a private sale is often cheaper. This can be a way of saving thousands of Euros, but make sure that you follow the entire process, or you risk becoming a defrauded horror story.

Buying At The Right Price

Property values are diffilcult to evaluate, because prices in Greece vary wildly by location and by the age of the house. The Government does set a rateable value for any property, but this is always much lower than the asking price. Generally, estate agents in Greece are extremely unreliable, and also put a premium on any property they sell.

Greek estate agents, like everybody else involved in the process, receive a percentage of the fee, so it is in their interest to inflate the price. Private sales are the best way of finding good property, but try to avoid impulse purchases and hard-sell. Let your lawyer do their job and check all of the legalities and potential problems. A good lawyer is worth their weight in gold, and will be happy to check out similar properties in the area. They will give you a realistic price for any Greek property investment.

One useful tip is to allow your lawyer to handle all of the process, from making first contact with the vendor, to the first contract signing. The Greeks have the irritating habit of assuming that everyone from Northern Europe and North America is extremely rich, and will double the price without blinking. Your lawyer, or a Greek friend, can circumvent this particular problem, acting as a dummy bidder.

The Most Important Part Of The Process – Finding A Lawyer

The single most important part of the Greek property investment experience is finding a reputable and trustworthy Greek lawyer (Dikigoros). They will guide you through the entire process, from obtaining a tax number, to negotiating contracts and paying the property taxes. Finding a reputable lawyer can take a little time, but is worth it.

First of all, avoid any lawyer suggested by the estate agent or vendor. Whilst much rarer nowadays, you may still hear, “My cousin Kostas is a lawyer……” Ask around, especially amongst the ex-pat community, and find a lawyer fluent in your own language. In remoter areas, be a little more careful, as the nepotism shown in Greece can raise its ugly head, and you may find yourself stitched up. If you are unsure, the British and American Embassies possess lists of English speaking lawyers.

The AFM Number

Before buying a Greek property, you must obtain a tax number, called the AFM (aah-fee-mee). This number is an essential part of life in Greece, and is required for pretty much everything. You can go to the local office and apply for one yourself, taking your passport and birth certificate. Within the EU, this is enough, whereas rest of the world buyers will also need their residence permit. If you are an overseas non-resident, ask your lawyer about the necessary steps.

You are advised to take at least a dozen passport photographs and photocopies of your passport and birth certificate. To speed up the process, your lawyer will happily apply for your AFM, making life infinitely easier. You will be given a couple of sheets of paper with an official blue stamp. Hold onto these, as losing them is not an option, and you will need copies for the utility companies and tax office.

A Greek Bank Account – The Ubiquitous ‘Pink Slip’

The next stage is to open a Greek bank account, from which all of your payments and fees will be taken. Most Greek banks are very good, and are a little more customer friendly than UK or US establishments. They tend to remember that the money is yours, not theirs. You will need your passport, birth certificate and AFM before opening an account. Every Euro used during your Greek property investment should pass through your account, to avoid problems with the tax office.

Any money sent from abroad should be recorded upon a ‘Pink Slip’, which proves that the money arrived from abroad, and you are not to be taxed upon it. If you bring large amounts of foreign currency into Greece through an airport, make sure that you declare it at the airport or ferry terminal. Always send money from your bank as your own currency, if possible, and covert it at the Greek bank. If needed, there are companies specialising in large money transfers, and they often give a very good rate. Of course, if you are within the Euro zone, transfers from your bank should be a low cost transaction. Piraeus Bank are a reputable and efficient institution, with excellent online banking facilities.

Researching The Property

Assuming that you have found the house that you want, there are a number of necessary checks. Firstly, engage your lawyer to research the land-registry for you and check that there are no illegal buildings on the property. Verify that the deeds are only held by one person, the vendor. If two or more names are on the deeds, make sure that the lawyer confirms that all of the interested parties have given written permission to sell, or will be present at the contract signing.

Illegal buildings are common, and will attract a large fine once the plan is submitted to the registry. If you have signed the contract, you will be liable, so it is vitally important to make sure that this is all in order before the final contract is signed. Illegality can be inserted as grounds for annulment of the contract, if desired, so listen to your lawyer’s advice on this. Once you have decided to place a bid, the estate agent may ask for a small payment to take the property off the market. This is a normal practice once the vendor has accepted your bid in principle. Make sure that you receive a receipt, and confirm progress with your lawyer first – usually, it is not a major problem.

The Civil Engineer

The engineer (Politikos Michanikos) will check the property and ensure that it matches the plans drawn upon the original deeds. They will survey the size and boundaries of the property, highlighting any areas that are questionable or illegal. They are not structural engineers, so have little to do with checking the integrity of the building. If you want to have the building surveyed, you must do that yourself and find a private contractor or builder to have a look for you. Between them, the lawyer and the engineer/mechanic should be able to organize a reputable building surveyor. If you are intending to undertake a lot of building and renovation as part of your Greek property investment, their advice is invaluable. If the roof needs replacing or repairing, the earthquake proofing regulations insist that a qualified architect is used. Check the building regulations in the area, because many areas now insist upon local building materials only, and this can be an unforeseen expense.

Finding A Notary

For buying any Greek property investment, a notary (Symvoleografos) is an essential part of the process. Most notaries are female, and you must remember that they are experienced and skilled legal practitioners in their own right. Their loyalty is to the state, and so they tend to remain neutral, letting the lawyers get on with the discussions. It is advisable to seek one who speaks English, or at least employ a good translator, who will be named in the contract. The notary prepares the pre-contract and also supervises the signing of the final contract. Their fee consists of their personal fee and a small registration deposit, paid back after the final signing. You cannot buy a house without a notary and, if anybody suggests otherwise, walk away and report them to the police. This is highly illegal, and you could be arrested and charged.

The First Contract

This is the first major stop towards buying your dream Greek property investment, and is the most important. Once you have put your name on that piece of paper, you are bound to buy the house. Usually, you will be expected to pay a deposit of about ten per cent, witnessed by the notary. Be warned, if you back out, you lose this money and will have to pay the same again, as compensation. This also applies to the vendor if they back out without good reason, the house is found to be illegal or the deeds are not in order. This protects the buyer from the vendor accepting a higher offer, so gazumping is not common in Greece.

It is usual to insert clauses here which will give you some protection – for example, it is normal to insert a clause allowing you to pull out and receive your deposit back if the mortgage falls through. You can also have clauses inserted allowing you to back

out of your Greek property investment if there are any structural problems. Consult with your lawyer on this, and make sure that you understand the consequences. One other word of advice is to ask for an English translation of the document, from an official source. A government approved translator stamps the translation with the ubiquitous blue stamp, notarising the document as official.

This might cost you a hundred Euros or so, but gives you a lot of protection. If the document is found to have been mistranslated or misleading, the Greek law will look upon your case favourably. If the vendor and his lawyer are reluctant to allow you to take a copy for translation, they are probably hiding something, so thank them and then look elsewhere. Also insist upon a time limit, so that if there are any problems with the building, such as illegality, and they are not resolved, you can pull out without penalty.

Paying The Taxes

Traditionally, Greeks used to put the lower rateable value on the contract, so that both vendor and buyer paid less tax. This is not good practice – always pay the taxes on the value paid, rather than the rateable value; the government is catching up on this loophole and will backdate taxes. You may also have read that an EU citizen should not pay tax upon their first house, enjoying the same rights as the Greeks.

Technically speaking, this is true, but in practice is a lot more difficult. The Greeks side-step such European directives by making you jump through so many hoops, and produce so much paperwork that you die of boredom first. Take the tax on the chin and remember that even if you did avoid it, they would charge you with a Capital Gains tax when you came to sell your Greek property investment. You are merely paying upfront.

To pay tax, the tax office will read the value from the contract and assess your tax according to location. They will give you their bank details and you need to go to your bank and draw a banker’s draft for the full amount. After returning to the office, you pay the amount at the cash-desk. Walking from office to office, then back to the bank is a recurring theme of Greek bureaucracy. Get used to it. You will generally pay the taxes just before you sign the final contract, which should not take more than a month or two.

Insurance

Considering the fires of a couple of years ago, it is wise to insure your house against fire and flood, although it is difficult to find insurance against theft if the house is unoccupied for long periods. If you have a mortgage, the bank may well insist upon it, although there is nothing to stop you from shopping around, rather than taking the bank’s affiliate program.

How Much Does It All Cost?

This is always the crux of the matter, and it can vary wildly depending upon area, age of the house and value. Most fees are a percentage of the sale price, and it is best to allow up to twenty percent extra. It will very rarely reach this level, but it is wise to leave yourself a little leeway.

PURCHASER’S TAX – This varies between 9 and 14%, depending upon whether your house is classed as rural or urban, including 3% to the municipality. Insist that the tax is paid upon the full value paid for the house, rather than the rateable value.

LAWYER’S FEE – This is usually 1 or 2%, but could be the best money spent, as the lawyer is the most crucial part of the equation. This also includes a fee to the Bar Association, and will usually include the fees incurred for checking the land registry.

NOTARY FEE – This is usually around 1%, and includes the fees for registering the deeds in the relevant land registry. It is perfectly normal for the notary to ask for a part of the fee upfront, to cover the costs, so do not worry too much about this. You will have this money returned once the final fees are paid.

ESTATE AGENT FEES – This will usually be 1 – 2% of the price, depending upon what is agreed. Do not hand over any money until the final contract is signed, and make sure that you have a properly stamped receipt.

Hopefully, this guide has given you a good overview on the process of making a Greek property investment. Visit the blogs for relevant information, including a few tips about using the bank as a free surveyor and secondary registry check.