Buying a Greek Property explained ...

If you intend buying a property in Greece it is essential to retain an English-speaking lawyer with thorough knowledge of Greek conveyancing procedures.

The purchase process

Once a price has been agreed, a deposit (typically 10 per cent) is paid and a pre-contract agreement signed. When all searches are complete, buyer and seller sign the final contract of sale before a notary public, and the balance of the purchase price is paid. The new ownership is then registered.

Fees and costs

The cost of purchasing property in Greece is relatively high. Allow around 13–15 per cent of the purchase price for fees and taxes, including transfer tax (resales only), municipal tax (paid to the local authority), lawyer’s and notary’s fees, and land registration. VAT (at 19 per cent) is payable on new builds.

Financing your purchase

When deciding how to finance your Greek property purchase, consider all the options. Paying cash, if you can afford to, is the simplest way. The other possibilities are remortgaging your UK home or arranging a mortgage on your new property through a UK or Greek lender. Remortgaging generally offers the easier solution. Releasing equity in a UK home means that your Greek property can be purchased for cash, without the need for another mortgage. However, this may only be feasible if you own your UK home outright. The mortgage market in Greece has opened up hugely in recent years, and interest rates currently sit below the levels of the UK. This has resulted in many buyers now taking the option of a Greek mortgage.

Euro mortgages

Euro mortgages, which are tied to the rate set by the European Central Bank (ECB), currently lower than the Bank of England base rate, may seem an attractive option, and several UK lenders offer them. However, because of the volatility of the currency markets, a euro mortgage may not be the best option for many people, who cannot afford to lose heavily should the currency move against them. The fact that the ECB’s base rate is at present lower than the Bank of England’s does not guarantee savings on repayments for those taking out a euro mortgage. As the UK mortgage market is competitive, there are many good deals available on sterling loans, so it is wise to shop around.

Taxation

Greece’s taxation arrangements are particularly complex, so be sure to seek advice tailored to your personal circumstances. Even non-residents may be liable for property, wealth, income, inheritance and gift taxes. The UK has a double taxation treaty with Greece; tax is paid in one country or the other, not both. You will need a fiscal number (known as an AFM) to, for example, rent or buy property, purchase a motor vehicle, or work in Greece. Once you have one, you are registered with the tax authorities and are required to submit an annual tax return, regardless of your income. Those resident in Greece (including pensioners receiving a pension from another country) and those with Greece-sourced income (including rent) must also complete returns.

Property: some taxation issues

The government has introduced several methods to discourage speculation, among which is capital gains tax. It applies to properties purchased after 1 January 2006, and is levied in inverse proportion to the length of time for which the property has been owned, penalising those looking for a quick profit. Wealth tax is levied on certain assets, including property. If the total value of an individual’s Greek properties, based on the official government valuation, does not exceed €243,600 (£164,527), no tax is payable. Above that, tax is levied progressively, at between 0.3 and 0.8 per cent. Local taxes are usually from 0.25–0.35 per cent of a property’s official value annually. Other fees and taxes, direct and indirect, are also levied, to pay for local services.

Money matters

Greece’s currency is the euro (EUR). The current exchange rate is EUR1.10 = £1.00 sterling. Standard banking hours are 8:00 am to 2:00 pm, Monday to Thursday, and 8:00 am to 1:30 pm on Fridays. ATMs are widely available. Foreign currency can be exchanged at banks, bureaux de change and post offices, and in many larger hotels. Banknote exchange machines can be found in tourist areas. Banks will cash travellers’ cheques. To avoid additional exchange rate charges, carry them in euros, pounds sterling or US dollars. Credit cards are welcomed in commercial and tourist areas, but are less acceptable off the beaten track. There are currently no restrictions on the import or export of local or foreign currency.

Passports, visas and residency

Passports and visas

Those with passports endorsed ‘British Citizen’ can visit Greece for up to three months without a visa. Passports must be valid for the duration of the visit.

Residency

Those wanting to stay for more than three months must apply for a residence permit, which is valid for five years, after which it can be renewed. If you plan to work in Greece, you have three months to find employment or set up a business. Once you have done so, you must apply for residence within a week. Carry your passport or residence permit at all times, as you are legally required to be able to prove your identity if asked to do so by the police.