Buying in Greece guide A comprehensive guide to buying a property in Greece
Judicare Law International Limited is a company incorporated in England & Wales under Company Number 10043006 and is authorised and regulated by the Solicitors Regulation Authority with number 630930 2
contents Introduction 4 Buying Property in Greece FAQ s 5 Costs and Timings 6 Mortgages 7 Surveys 8 Currency 9 Powers of Attorney 10 Fractional Ownership 11 Title Deeds 12 Who Should Own the Property? 13 Miscellaneous 14 Wills 15 Inheritance 16 Ongoing Obligations 17 Tax Residence 18 Fees and Taxes 19 Buying in Greece Checklist 20 Why Use Judicare 21 3
introduction Whatever your reasons for buying a property this is probably the first time that you have bought a property in Greece or even abroad. We have put this guide together to help you understand a little more about the process of buying in Greece. This guide is aimed at providing some basic information about buying in Greece and tries to answer the majority of the common questions that we are asked about. Although we hope that you will find it useful it is important to remember that it doesn t cover all legal issues involved and certainly isn t a step by step DIY guide to buying in Greece. It is still recommended that you seek advice from a professional before proceeding after all we do this every day and have been doing so for many years and therefore know all the tricks and pitfalls that you may come across. We also know the practical solutions to the problems that exist and also know how Greek Law interacts with UK law. 4
buying property in Greece faq s Is the legal system in Greece the same as the UK? The Greek legal system is mainly influenced by German and French Law, thus significantly different from the legal system in the UK. The acquisition of real estate property in Greece is subject to specific requirements, such as execution of the purchase agreement in a notarial form, payment of relevant applicable taxes and registration of the respective notarial deed in the Land Registry and/or the Cadastre where the property is located. Do I need a lawyer to help me buy in Greece? In the past, it was compulsory for both parties ( seller and buyer) to engage a lawyer in case of transfer of real estate and the relevant legal fees were regulated by the local Bar Associations. Although this requirement no longer applies, it is strongly advisable for the buyer to engage a lawyer, in order to have the ownership title verified and to further ensure the property is free from encumbrances and any third parties rights. Please note that in order to buy a property in Greece, you also need to have a Greek Tax Identification Number. Normally, your lawyer will take care of that as well. I have heard that there are problems with buying property in Greece; What is the situation? Certainly there are potential problems when buying in Greece, just like there can be in any country including the UK. Most of the potential problems that you read about can be avoided by using common sense and by instructing an independent lawyer to advise you on the purchase. We often see people with problems with their property and they invariably tell us that they didn t use a lawyer or used the lawyer given to them by the seller or estate agent. Are the costs more in Greece than in the UK? Yes, the total costs in addition to the purchase price are higher than you will be used to in the UK. It is therefore important to factor these into your budget from the beginning. Generally speaking, property prices in Greece are currently reduced from levels a number of years ago which not only reduces some of these additional acquisition costs but also makes the purchase price much cheaper. 5
costs and timings The total cost of acquiring a property in Greece are the following; Transfer tax of 3% of the purchase price ( or value of the property as calculated by the Tax Authorities, whichever is higher), save for the case where VAT applies, as mentioned below. VAT is 23% of the purchase price ( or the value of the property as calculated by the Tax Authorities, whichever is higher) in case for buildings for which a building permit has been issued after January 1st 2006 and which are sold for the first time by a constructor or a professional in this activity. Notarial fees of approximately 1% of the purchase price ( or the value of the property as calculated by the Tax Authorities, whichever is higher) plus VAT at 23%. Civil engineer s fees for certifying the building s compliance with respective building permits and eventual construction restrictions etc ( approximately 500 depending on the property, plus VAT at 23%). Please note that the seller could possibly bear this cost, depending on the parties arrangements). In case the buyer plans to move permanently to Greece within two years following the purchase, then he might enjoy an exemption from the above transfer tax under certain conditions. Please keep in mind the above list is subject to change as the tax system in Greece is currently under review. 6
mortgages There are two ways of financing your purchase in Greece through a mortgage. The first is to release equity from your UK assets to buy the property in Greece. The second is to mortgage the property in Greece. Each has advantages and disadvantages but getting it wrong can cost you dearly so take advice on this. The latter is more difficult at this present time as explained below. If you wish we can put you in contact with mortgage brokers either in the UK or in Greece. We do not receive a commission for doing so and are not tied into a particular broker we simply recommend them because they have given our clients good service in the past. Obtaining a mortgage in Greece is more difficult than it has been in the past. Greek banks have been under a recapitalization process following their financial difficulties. In any case, even when the banks are successfully recapitalized, given the liquidity constraints resulting from the economic crisis and the austerity haunting the country, it will take a long time for the banks in Greece to return to normal business conditions, including offering financing facilities etc.. 7
surveys If you are buying a property we would always recommend that you obtain a survey. If you obtain a mortgage the valuation carried out for the mortgage company will only look at whether the property is worth the amount you have negotiated. Any defects in the property which do not affect the value will not normally be shown on the report. A survey will rate the condition of all permanent structures and will highlight any important problems that could affect the property value. Besides the legal advice to be sought from an independent lawyer, who will complete a legal due diligence of the property, including conducting necessary searches within the competent Land Registry/ Cadastre, we would always recommend that you also obtain a technical due diligence report from a civil engineer, who will check with the competent City Plan Authorities whether the property is appropriate for the scoped use and complies with all legal requirements, including any building restrictions for reasons related to the protection of the environment etc, as well as with any building permits already issued. 8
currency Buying any property involves a lot of money. When you are converting from one currency to another the difference between one exchange rate and another can literally make a difference of thousands of pounds on your purchase. We know people who have sold properties and have made more money on the exchange rate difference than they have on the sale of their property. Currency dealers have increasingly sophisticated products. You can agree rates for the future. You can get them advising you when to buy or agreeing to buy for you when the rate hits a certain level. You can even agree a fixed rate for longer periods of time if you make regular payments abroad (for example for a mortgage or moving your pension money). We work with Currencies Direct who can give you a good exchange rate for your purchase and whom we have known for years. We will normally receive a commission for introducing them to you. This does not cost you anything more as they are simply paying us part of what they make. This commission is costed into our overall charges for providing our services. When buying a property in Greece, the buyer must be in a position to verify the source of the money corresponding to the purchase price. In order for your income in the UK to be considered as valid evidence for this purpose, certain formalities need to be taken care of upon transferring money from the UK to Greece. 9
powers of attorney When it comes to buying real estate property in Greece, the sale agreement needs to be signed before a Notary Public in Greece ( or the Greek Consul in the buyer s place of residence, which is normally an option when the seller is based in Greece). Having said that, it seems preferable for the buyer to grant a Power of Attorney to a third party ( usually a local lawyer) to sign the purchase documents on his/her behalf rather than travel to Greece to sign in person. A power of Attorney is a document which allows a third party to do something on your behalf. The Power of Attorney is drafted by the buyer s lawyer and needs to be notarized and Apostilled in accordance with the Hague convention of 1951. Granting a Power of Attorney has several advantages; You are normally busy and haven't got time to go out to Greece to sign the paperwork. Signing various contracts is not particularly exciting and most people prefer to use their time enjoying the property rather than signing pieces of paper, and usually works out cheaper. You should only give Power of Attorney to somebody you trust as it allows that person to do things legally on your behalf. 10
fractional ownership Fractional Ownership is not a new concept and has been around for many years although back then we called it Co-ownership. Put simply Fractional Ownership is where several people buy a property together. This can be members of a family, friends, work colleagues or even complete strangers. You buy a share in the property and also share the running costs. The best Fractional Ownership schemes are those where the cost of buying is closest to the value of the actual share in the property i.e. the ones where there are not huge margins built into the sale. Timeshare is a type of Fractional Ownership but Fractional Ownership is not necessarily Timeshare as there are strict definitions as to what Timeshare is. 11
title deeds The notarial purchase agreement is the equivalent in Greece of the Title Deed in the UK. Transfer of ownership from the seller to the buyer takes place once the notarial purchase agreement is executed and registered with the competent Land Registry/ Cadastre. 12
who should own the property? This is probably the most important decision that you can make. Getting this right can save you thousands in costs and taxes. Getting it wrong can be an expensive mistake. The way that you would buy a property in your home country is not necessarily the best way to buy in Greece so don t assume that you can adopt what you have done here to your purchase in Greece. There are many options ranging from personal ownership to company ownership but there is no one size fits all solution that works for everybody. Your circumstances and priorities are different from the next person. We are able to look at your circumstances and your priorities and advise you who should own the property based on that information. The solution may not necessarily be immediately obvious When deciding on the best form of ownership we would need to take into consideration both Greek and UK tax and also a range of other circumstances such as your plans for the property in the future. 13
miscellaneous Residents Association If you are buying in a complex then there will be a Community of Owners. We would need to make sure that all Community charges have been paid up to date before you buy. Water and Electricity It is important to check that there is a connection and that the charges are paid up to date. If you are buying a new property we will need to check that the property has the appropriate Habitation Certificate which allows the services to be connected. Town Hall Checks should be made at the Town Hall to make sure that the Council Tax has been paid up to date. Moving in Just like back home you will need to arrange to have the utilities and services in your name and often have to set up a direct debit at your Greek bank to pay the bills. You also need to inform the local Council and the Residents Association that you own the property. Controlled Areas For some areas located close to the country s borders, certain restrictions apply in case of transfers to third country ( Non EU) nationals and a specific licensing procedure has to be followed. 14
wills Greek inheritance laws are probably very different to those that you are used to in your home country. We can advise you on the various different options regarding your Greek Will. It is possible to have two wills one in Greece covering your Greek assets and one in the UK covering your other assets. Both Wills need to be drafted carefully to make sure that they do not revoke each other. You can leave your assets in Greece to somebody with a UK will but this doesn t make sense the cost of the subsequent inheritance will be more and it is possible that you will inadvertently cause inheritance tax problems. The cost and extra complications of leaving no Will at all is a potential headache and should be avoided. Whilst as a foreigner you do not have to follow the same rules that Greek people do in terms of who you have to leave your property to, it often makes sense to do so as this can save your beneficiaries huge amounts in tax. The Greek Will can be signed in the UK or in Greece however the safest way to proceed as far as the Greek will is concerned is to have this drafted before a Notary Public in Greece. Please note that given that inheritance disputes are subject to lex patriae, you might need to comply with any UK compulsory legal provisions. 15
inheritance For property located in Greece, Greek inheritance tax shall apply The rate of the transfer tax depends on the relationship between the deceased ( the person who has died) and the beneficiary ( the person inheriting) Current rates are; From parents to children ( including grandparents and grandchildren) and vice versa as well as between spouses, For a value up to 150,000-0% For a value up between 150,001 300,000 1% For a value between 300,001 600,000 5% For a value higher than 600,001 10% Especially for the spouses, when the marriage has lasted at least 5 years, and minor children, the tax free amount is up to 300,000. Between siblings and other close relatives For a value up to 30,000 0% For a value between 30,001 100,000 5% For a value between 100,001 300,000 10% For a value higher than 300,001 20% 16
ongoing obligations After you buy a property in Greece there are ongoing obligations that you need to meet; Insurance Although not compulsory, It makes sense to insure your property and contents. Municipal Duties These are included in the electricity bills and their amount depends on the location and the size of the property Utilities You will be responsible for the utility charges electricity, gas, water sewerage, rubbish collection etc. from the time that you buy the property Community Charges You should pay these otherwise the property can be confiscated and auctioned in order to settle the debt. Income Tax If you are non-resident you must declare any income you have earned in Greece. This applies even if you receive this income by renting out to people from your home country and the money never touches Greece. You will also normally have to declare this income in the country where you are tax resident but can normally offset the tax paid in Greece through Double Taxation Treaties. In any case, even if you do not earn any income in Greece, you should file annual tax returns as long as you own real estate property in Greece. 17
tax residence The taxes that you pay when you buy a property in Greece will normally depend on whether you are tax resident there or not. Tax residence is a determined by a number of factors; How long you spend in that country? Is it 183 days or more a year (not necessarily continuously). If so you are likely to be tax resident there. Is your main home there? If it is then you are likely to be tax resident there. Is your immediate family (spouse and dependent children) based there? If so you are likely to be tax resident there. Is your main economic interest there? If so you are likely to be tax resident there. If you do become tax resident in a country then you will normally stop paying taxes in your home country and start to pay taxes in the new country. Do not be tempted to have selective amnesia when it comes to declaring taxes the authorities in both Greece and the UK are clamping down on people who do not do not do things properly. Sometimes you should declare something for tax purposes in one country and also in another. Greece and the UK have a Double Taxation Treaty which means that you don t normally pay tax twice and can offset the tax paid in the other country against the tax that you would otherwise pay in your home country. 18
fees and taxes Our charges. We charge 1% of the purchase price subject to a minimum of 1,500 + VAT If the property title is defective or unexpected additional work is required then there may be additional charges. We would inform you before incurring this cost Our charges include; Legal advice on the terms of your offer to purchase Searches regarding any due payments for electricity, municipality charges etc Searches at the Land Registry/ Cadastre Obtaining certificate from the Community of Owners (if appropriate) Checking the legal status of the property and the seller s right to sell If appropriate checking the guarantee provided by the vendor Preparing a report on our searches and advising you on the purchase Arranging the signature of the title deed Arranging payment of the relevant taxes Arranging registration of the property at the Land Registry General General hand holding and advice throughout the transaction 19
buying in Greece checklist To do Completed 1 Decide what you are buying, where and why. If necessary take advice on this. 2 Instruct your independent lawyer (hopefully Judicare) 3 Look at the cost of buying. Fix a budget. Stick to it. 4 Investigate finance and think about how to finance deposit. 5 Learn about the process of buying 6 Look at who should own the property. 7 View properties / choose a property. Be honest with the estate agent about what you are looking for that will save a lot of time for you and them. 8 Survey and valuation 9 Send any contract to us to check prior to signature. 10 Speak to currency dealer about getting the best rate for your purchase 11 If it is a reservation contract pay a small reservation fee 12 Obtain a Greek Tax Identification Number 13 Payment of Full purchase deposit 14 Lawyer deals with purchase 15 If you are moving to Greece arrange removal company 16 Arrange Power of Attorney if needed 17 Arrange insurance contents / buildings / health 18 Signature of title deeds and registration at the Land registry/ Cadastre 19 Make a Greek Will and review your English Will 20 Arrange for Fiscal representation 21 Enjoy a well deserved holiday in your new property 20
why use Judicare Greek lawyers A highly experienced Greek legal team. We are Solicitors We are a UK based firm of Solicitors regulated by the Solicitors Regulation Authority and who specialise in international legal issues. We understand both sets of laws Because we understand both sets of laws we understand the difficulties that come when two sets of laws meet.. This is particularly important when it comes to issues involving ownership, taxation and inheritance. We are members of AIPP The Association of International Property Professionals was set up to improve standards of professionalism in a largely unregulated overseas property market. Experience Our Greek team has many years of experience dealing with a whole range of legal issues with Greece. We speak your language You need a lawyer who can speak your own language. More importantly you need somebody who can explain and discuss often complicated issues in terms that you understand. Independence We are independent. We are not allowed to act for the buyer and the seller at the same time. We are not linked with any Development Companies, Builders or Estate Agents 21
Contacts A member of the Judicare Team can be contacted either by phone, email or post. t: 01438 840258 e: admin@judicaregroup.com w: www.judicaregroup.com