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Greece: The true cost of buying property in Greece - Mike Saunders, Snobby Homes

The true cost of buying property in Greece

When you buy a property in the UK you know there are additional costs you will have to pay on top of the sale price. It’s only natural to fall back on this house buying experience to give you some sort of feel for the cost of buying a property abroad. In England, as a buyer, you don’t pay for an estate agent. You can shop around and get the conveyance done by a specialist firm for about £260 including VAT and stamp duty on a house purchase of £180,000. That’s all you pay.

So how come when you buy a property in Greece – say a two bedroom house for 140,000€ - you end up paying around 20,000€ ON TOP of the buying price to cover the purchase costs!

BUYING THROUGH AN AGENT
Unlike the UK an estate agent in Greece will charge around 2.5% to the seller – and another 2.5% to you, the buyer! Sometimes, especially if you’re buying from a canny old villager, you can end up paying for the lot, because the seller ‘does not wish to participate’ in the cost. On a two bedroom house that can mean forking out an extra 7,000€.

THE BUYING PROCESS
So you’ve decided upon buying a resale – whether from a local or an ex-pat. The seller should have instructed a lawyer to represent them, have a topographic survey of the land produced by a structural engineer and have the original sales contract ready. It is their responsibility to arrange with the local Government Notary to draw up a new contract.

Your lawyer will then check out the contract, ensure the property has a building license confirming it was built legally, there are no outstanding problems or debts on the property and there are no rights of way registered, or owners of olive trees on the freehold land. It is a quirk of Greek property law that you can own the freehold of a plot, but not the olive trees on it.

However, the buyer does have the legal right to purchase the trees – generally around 400€ each – and the contract will be drawn up confirming the site is clear of such encumbrances.

Generally a 10% deposit is paid, which is legally binding by both parties, with the balance due approximately 30 days thereafter on completion of the contract.

If you are buying a new build, off plan, most developers will ask for stage payments. Thus your money is always at risk. Snobby Homes is the only builder in Crete who legally secures your deposit – and then you simply pay the balance on completion, so there’s never any risk you will lose your money.

THE BUYING COST
The Government Notary will ascertain from the tax office the objective value of the property – which is markedly lower than the market price. It is this value which is written into the contract. The taxation due varies depending on several technical criteria, but tends to be around 10%. Thus a 140,000€ house will perhaps have an objective value of say, 60,000€ and the Transfer Tax payment would therefore be around 6,000€.

There is also a Registration Fee charged of 0.475%, which would amount to 285€.

The Government Notary charges a set fee of 1.2% of the objective value for drawing up the contract and liaising with the lawyers. Thus on an objective tax value of 60,000€, this equates to 720€.

For the conveyance your lawyer will charge a percentage of the property purchase price - invariably around 1%. On a house of 140,000€ this will equate to 1,400€.

LAND PURCHASE
Find a piece of land and you need to have it verified. The good news is that in Greece all land is freehold. The bad news is that your piece of land may be owned by several people and ALL have to consent to the sale. What’s more, in Greek property law, the olive trees on your land may belong to somebody else – which can make building somewhat of a problem. You should appoint an engineer, who will meet with the owner and neighbours of all adjoining land to ascertain boundaries and make a topographic survey, depicting all boundary measurements. The cost of this will be around 500€.

NEW BUILD
And then, if you are building a new house or extending a derelict, there’s the additional cost of a building license for planning and charge for utility connections, plus the cost of IKA which is a national insurance cost for workers and charged on all new build properties in Greece. These costs can total anything up to 12,000€ or more, dependent upon the size of the property. And don’t forget there is VAT of 21% charged on all transactions – which may be rising to 23%.

CONFUSED?
It all sounds very confusing, but don’t let it put you off. The positives of owning your dream home in Greece far outweigh the negatives. Just consider your options carefully and go the route where you know precisely what the final budget will be – inclusive of purchase costs. In that way you will not receive any sudden or nasty financial shocks.

Mike Saunders

Mike is Marketing director of Snobby Homes, www.snobbyhomes.co.uk

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