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Since 1990 citizens of the European
community have been allowed to own property in most areas of Greece. For Non-European Union Community
citizens, permission has to be sought from the Council of Local Prefecture
who is empowered to grant permission, provided that the property does not
fall within prohibited areas.
Prices are considerably lower than in other parts of the
Mediterranean, but are estimated to rise considerably in the future, making
the purchase a particularly good investment at the present time.
Legal Aspects of Property Purchase
Buying property in Crete is in no way like
the cutthroat market practices of some parts of Europe. However, be assured that the legal
protection of our customers is among the highest of our concerns.
The basic process requires that you place a
deposit of 10% upon the property that you are interested in purchasing which
guarantees sole negotiation.
This eliminates the risk of being gazumped. On payment of the deposit an agreement is signed which
confirms both parties’ details, the description of the property and other
conditions pertinent to the sale. The appointed lawyer holds all monies until
all the requirements have been satisfied and the sale is authorized. The deposit is non-refundable should the
prospective purchaser back out after the agreement has been signed. If the vendor backs out of the sale
the deposit is refunded plus a 10% indemnity paid by the vendor if a pre
contract states this.
Property transactions are always executed by
a notary and in the presence of two lawyers who represent the vendor and the
prospective purchaser. The new
owner is registered in the land registry immediately after the exchange of
contracts and the key is handed over.
The lawyer of your choice and the Notary will carry out the necessary
searches to ensure that the property has a clean title. Your lawyer will deal with the
local regulations concerning the "assessed value" [see below] for
tax purposes, and carry out the searches. The Notary will not allow any sale
to proceed should any of the papers or deeds not be in order. This process is
relatively straightforward and can be completed in little more than a week
(however in practice this never happens). Usually allow 2 months.
Should the prospective
purchaser not be present, the usual procedure is to give Power of Attorney to
the purchaser’s lawyer. Power of
Attorney can also be arranged in the respective purchasers country of origin,
via the Greek Consulate. Should
the purchaser change his/her mind then this Power of Attorney can be
cancelled at any time.
Expenses
Notary's
Fee: 2% of purchase price.
Lawyers Fee 1.5%-2% of purchase price.
Purchase
tax: This is a one-off tax, currently 9% on the first 15.000 €
Thereafter it is between 11% and 13% depending on assessed value as set
by the local tax office.
Architectural Survey (Topograph): This is a
formal document prepared by an architect and gives a technical description of
the property. Based on this the
Notary Public makes the written description of the property and a copy of
this forms part of the contract. The cost of this document is approximately
290 € depending on location. The prospective purchaser meets the above
expenses.
N.B. The assessed value for tax purposes is
usually lower than the actual purchase price. This is an advantage to the
purchaser. However, this will change in the future when Greece falls
into line with European Community Regulations. This will shortly result in some small
changes to the way property is assessed.
N.B To
guarantee the purchasers interests on dimensions of property etc. we always
advise clients to have a Topographical survey done even where the owner has
presented one.
Property Taxes.
There is no significant cost of ownership of
property in Greece. There
is a small public tax, which is incorporated into the electricity bill every
second month. The exception to
this is if the assessed value of the property is significantly high. Should the assessed value of the
property exceed 176.000 € or 352.000 € if there is joint ownership, then the
property will be subject to a small property tax payable each year. As an example a jointly owned property
of 352.000 € would be liable to a yearly property tax of approximately 480 €.
Transfer of Funds.
When you have transferred funds from your
bank account to Greece, it is a good idea to retain the documentation,
sometimes referred to as the "pink slip", in order to ensure that
you are exempt from local taxes.
Building Costs Building costs can vary. Account has to be taken of the size, materials used and location. A typical example of a newly built villa would be around 110.000 € for a 2 bed villa plus the price of the land. A useful guide for a fully fitted villa is 1200 m2 inclusive of all licenses and IKA (national insurance) of the building workers. Under Greek law it is the owner of the plot who is legally responsible for this. Building permits are approximately 4% of the cost of the building and are included in the architects quote. Please note that some builders and architects may give a quote that is not inclusive. We have contact with experienced and reputable architects on the island and will be happy to arrange an introduction. We also have in house builders who will give an exact quote for work on a renovation property. There has recently been a rise in the V.A.T on new builds this will inevitably be passed on to the purchaser in the future.
Planning Permission
for New Construction:
Inside villages and towns planning permission can, on the
whole be granted for any plot, although some laws are specific to a certain
area. Planning permission can be
granted for building on land of 2000 m2 or less if the plot is situated
within the town-planning zone, or fronts a municipal road. For plots outside of the zone,
planning permission can be granted if the land is a minimum of 4,000 m2 and
there are no forestry or archaeological restrictions. There are many reputable architects
and engineers who will take care of these procedures and give advice.
Outside Village Boundaries: Usually 4000 m2 is required for planning permission outside of village boundaries. The total m2 that you are allowed to build is set by individual planning authorities and follows a sliding scale. For instance on the minimum plot size of 4000 m2 you would be allowed to build approximately 220 m2, this then increases with the size of the plot. However this can sometimes be adjusted and is dependant on local rules and negotiation. Generally a building has to be 15 metres away from the plot boundaries unless it fronts a municipal road. The exception to the 4000 m2 rule is if a plot of land fronts a municipal road. If this is the case, then only 2000 m2 is required to satisfy the planning regulations. These regulations are in place to stop the concrete box mentality we have seen in some parts of the Mediterranean. They insure that Crete will not become a concrete jungle. On a 4000m2 plot there is always the option of building 2 villas...one for resale or rental income.
Inside Village Boundaries.
If a new dwelling is being built the plot
has to be the minimum size and this is normally around 500 –1000 m2. The total build area is normally
around 70-80% of the plot size on 2 floors and is usually up to a maximum of
400
m2. This generally has to be 2.5
metres from plot boundaries.
However this can be expanded depending upon negotiation and history of
the plot.
Building Commercial Property
If
the land is being developed commercially i.e for hotel/apartments. Then
allowed building is approximately 70% of plot size on 2 levels even where the
property lies outside of the village or town limits. NB It is advisable to take professional advice on individual building plots to ensure maximum build size.
For Renovation.
Planning permission is not required
if the property is basically habitable, unless there were going to be
significant extensions, again extensions would be allowed up to 70-80% of the
plot size usually to a maximum of 400 m2. Renovating an old stone house or ruin can be less
expensive than building a new property and is very often found in idyllic
locations. For the cost of
renovating a rule of thumb guide is 600-700 € per square metre. Unless of course you are undertaking much of the work
yourself. See below for examples of renovated property. Taking on a
renovation property is not onerous. A reputable builder will give you an
estimate and money is paid over in stages. The local agent will oversee
the works for you. Final payment is made when all works have been
completed satisfactorily |
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