Buy Greek Properties – Negotiating the Bureaucracy
Buying a Greek property can be a tricky process, as with property investment in any country, but it will allow you to realize the dream. If you have not already done so, please read the first article in the series, which gives a few tips about finding Greek lawyers and notaries, the key to success:
The Process of Buying a House
As laid out in the first article in this series, you should have a team of experts to guide you through the process of buying your luxury Greek property. Now that you have found the perfect real estate, the next challenge is to set the wheels in motion and look forward to receiving the keys to your dream investment property overseas.
The AFM Number
This number, effectively a Greek tax number, is an essential part of the process of buying property in Greece. Applying for this requires taking your passport and birth certificate to the tax office and filling in a form. In some parts of Greece, the staff will speak English, in others they will not, so you may need to enlist the help of your lawyer.
Opening a Greek Bank Account
You need a Greek bank account to purchase property and it is easy to open one by taking your passport, a copy of your Greek AFM number, and your birth certificate. In addition, they may ask for proof of where the money came from, so documents from the sale of a house, bank statements, and payslips will reassure the bank that the money is being imported from abroad and not from criminal activity!
- When transferring money from a country outside the Eurozone to Greece, transfer the money in foreign currency and change it at the bank. Whilst the exchange rates offered by Greek banks are not the most favorable, you can ask for the ubiquitous ‘pink slip.’ This will make filling in the end of year tax returns much easier and ensure that the Greek tax office will not attempt to tax money that has already been taxed in another country. This is where advice from your accountant is invaluable.
- Another little tip with Greek banks is applying for mortgages. Even if you have the money to buy the luxury Greek property outright, it is a good idea to apply for a mortgage, even if only for a small fraction of the cost. For a small fee, the bank runs all of the background checks upon the property and ensures that the legalities are in order. If there is the slightest issue, they will refuse to give the money and you can walk away from the purchase.
If you only have a mortgage in principle, make sure that the precontract has a clause allowing you to back out and recover your deposit if the mortgage falls through. This is fairly common in Greece and, if the vendor refuses, walk away and find a different Greek investment property.
I am with Piraeus Bank and have been absolutely delighted with the level of service.
Greek Residence Permits
If you are an EU national, you do not need a residency permit to purchase Greek luxury property unless it is in a sensitive area, usually near national borders or military installations. If this is the case, you can apply for temporary residency at the local Police Station. For EU citizens, it is a formality and your lawyer will be able to help you through the Greek bureaucracy, which has a habit of sending you around in circles.
For non-EU nationals, there will be few problems with buying property in most of Greece, but you will need permission from the Ministry of Defence in sensitive regions. It is also possible to set up an EU-based offshore company and use that to purchase the property, with few issues, although you will need to pay annual business fees of 1000 – 2000 Euros. If you wish to follow this course of action, you should seek advice from your lawyer and accountant.
The Tax Assessed Value of your Greek Property
The Greek government holds records of the taxable value of every property in Greece and uses this figure to assess your annual taxes. This figure is always much lower than the usual purchase price, so don’t be too worried by this discrepancy.
One scheme often employed by Greeks is to enter the lower, rateable value on the contract, reducing the amount of tax paid, and pay the outstanding balance on the ‘black economy.’ Whether you do this or not is entirely up to you, but the Greek government is slowly working its way through old contracts and intends to claim the outstanding taxes. As a foreigner buying high-end Greek real estate, there is a chance that you will be the first in line, so have an ‘unofficial’ chat with your lawyer about this.
Buy a House in Greece – The Summary
- Find your Greek property, via estate agent, the internet or a private sale. Check a few similar properties in the area to ensure that you have been quoted a fair price. You may be asked to pay a token deposit to take the house off the market, but this is perfectly normal.
- Ensure that the financing is in place. If you only have a mortgage in principle, ensure that you have the relevant clauses in the pre-contract allowing you to pull out, without losing your deposit, if the mortgage collapses.
- Find a solicitor, notary, land surveyor and accountant.
- Apply for any permits and your AFM number
- Open a Greek bank account.
- Once you are happy with the pre-contract, sign it. Bear in mind that this is watertight and, if you back out for any reason not covered by clauses, you lose your deposit. Likewise, if the vendor pulls out, he has to return your deposit and pay the same again, to prevent gazumping.
- Don’t be surprised if you are asked to pay the deposit in cash – this is common in Greece although bank transfers. The deposit is usually 10% of the value of the property.
- After the initial checks are complete and the property s clear of any issues, you will sign the final contract, pay the deposit and receive your keys.
Find a Real Estate Agent in Greece – A Few Tips
An estate agent is supposed to show you the deeds and plan of the property so that you can see that they are clean. Once you have seen the papers, they are protected from litigation if there are claims that the property was falsely advertised. However much they hard sell or ask you to pay a small deposit to take the property off the market, ask for copies to take away and study at your leisure, paying to have them translated into English if required. The main thing when buying a Greek home is to do things in your own time. If you feel that they are trying to rush you, walk away, as with a property purchase in any country.
Occasionally, if the Greek property has any outstanding fines from illegal construction or outstanding taxes, the vendor will attempt to demand that you pay half. Show them no sympathy; it is their problem and was their responsibility to ensure that the real estate was free of issues before placing it on the market. If they become insistent, point out that you can legally walk away from the deal, with your deposit intact.
The Next Stage of Buying a Home in Greece
Now that you have a good team of experts and you are aware of the process, the only other important factor is the costs. For a full guide to the taxes and costs involved, please see the next article in the series at: