Financial Matters – a buyer’s guide

Since joining the EU it is possible for EU citizens to purchase property in Greece. EU citizens have the same rights and obligations as Greeks wishing to buy property (either for a holiday home or permanent residence) in Greece.

NB: Any monies imported into Greece for property purchase should be documented and receipted – commonly referred to as pink slips. You need this documentation to show that monies were not earned in Greece and hence are not taxable in Greece.

THE LAWYER:

You will need to appoint a lawyer to handle all the legal work for you. The simplest way is to grant him or her Power of Attorney to act on your behalf.

A Power of Attorney enables the Lawyer to deal with all the necessary paperwork and money transfers in order to purchase your chosen property, on your behalf, in your absence. The Power of Attorney can be cancelled at any time.

It is usual for the lawyer to open a bank account in your joint names to enable you to transfer monies to Crete as and when required and for the lawyer to draw on those monies to fund the purchase costs as necessary.

MORTGAGES:

Should you require additional finance to purchase the property, then it is possible to arrange this either in the UK or Crete.

Finance from the UK:

In the UK we work with the London Branch of the Emporiki Bank of Greece S.A. who are able to advance loans against UK property (re-mortgage) or against the property you are buying in Crete, including build to order. The mortgage can be provided in London or if you prefer, through the branch that is nearest to your property in Crete. Full assistance with surveys, land registry and other legal and local requirements as well as banking and insurance services are provided by the Bank as required. Leaflets with full details will be enclosed with our information packs. Their website is at www.emporiki.co.uk

Finance from Crete:

In Crete, very similar deals to the UK are available, because of their attachment to the Euro, interest rates are currently more favourable than those on offer in the UK. However, if repayments have to be sent regularly from the UK then the risks of exchange rate fluctuations and transfer costs must be borne in mind. Typically, loans of up to 60% of the property’s value can be secured with interest rates varying between 3.5-4.5%. Clients must be in a position to provide proof of income for the previous 2 years.

FIRST STAGE – PRE CONTRACT DOCUMENT:

As soon as you have found a property you wish to buy, you can make an offer. If the vendor accepts your offer you pay a deposit of 10% as a down payment to secure it. This applies whether you are buying a re-sale property or whether you are buying new and off-plan. To secure this deposit you will have to make a pre-contract agreement with the vendor. This pre-contract agreement will detail the conditions of the sale and the purchase price. The purchaser will lose the deposit if he backs out of the deal. If the vendor backs out, he will have to pay the deposit back plus a sum equal to the deposit, as an indemnity to the purchaser. The pre-contract has to be made by a Notary Public.

CONTRACT:

A Notary Public will execute the contract for the property transaction and calculate the assessed value of the property. The assessed value is usually lower than the actual purchase price.

DEEDS/ LAND REGISTRY:

A very detailed and precise set of deeds will establish correct ownership and freehold title of all property. These can be translated into English for a small fee. There is also a Land Registry system in Greece and new owners are registered after the exchange of contracts stage.

EXPENSES:

Unlike in Northern European countries, the purchaser bears the full costs of the transfer of property - these fees are - purchase tax, the fee for the Notary Public and the legal fees (although the seller will pay his or her own lawyer’s fees for signing the contract). These are calculated on the assessed value of the property.

As a guide you should allow 10% to 15% of the assessed value to cover the purchase fees, in addition to the cost of the property.

TAX DECLARATION:

All property owners in Greece are required to deliver an annual Tax Return whether or not you are resident in Greece and whether or not you have income in Greece. You will need to engage an accountant to do this. The tax year ends on 31st December. Fines are imposed for failure to deliver a Tax Return. NB – all businesses in Greece need to be licensed in order to operate legally. Renting out property on a short term basis is classed as a business and a licence (EOT) is required.

PROPERTY TAX:

Property tax only applies if the assessed tax value is higher than 175,000 Euros or 350,000 Euros for couples.

LOCAL TAXES:

There is no council tax in Greece. A small amount of local tax is collected via your electricity bill which is issued every two months.

CURRENCY / MONEY TRANFERS:

You may choose to transfer the funds to purchase your property using a high street bank but it is generally cheaper to use the services of a currency exchange broker. We recommend AFEX (Associated Foreign Exchange) who can make one off transfers or regular monthly payments to your overseas account at the commercial rate. Their website is at www.afex-uk.com. We will send you a leaflet if you ask for one of our information portfolios.

BANK ACCOUNTS:

Your lawyer will usually open a bank account for you in order to receive monies transferred from the UK for the property purchase.
Once you have purchased a property it is useful to have a local Bank Account. You can for instance arrange to pay your electricity bills directly from your bank account.

PROPERTY INSURANCE:

It is advisable to insure your property against damage, theft, fire etc. You can do this in Greece or you can apply for a quote to Intasure, our recommended insurer based in the UK.

Intasure offer a policy designed specifically for holiday homes abroad – see their website at www.intasure.com or we will provide you with a leaflet and application form if you ask for a copy of our information portfolio.

PROPERTY MANAGEMENT SERVICES:

We can put you in touch with professional firms who will be able to provide whatever property management services you need such as regular inspection visits, pool maintenance, cleaning services, gardening, payment of bills and other services upon request. We will send you details if you ask for a copy of our information portfolio.

RENTING YOUR PROPERTY:

We offer a rental service for our clients and will be pleased to provide further information of our services, please ask. In order to rent out your property legally you will need an EOT licence. You will need to be clear from the beginning of your search whether you intend to rent out your property as there are some cases where this is not currently possible.

WILLS:

As a property owner in Greece, it is advisable to make a Greek will.

Crete Escapes Ltd – registered in the UK – REGN NUMBER 5207604