Buying Property In Greece - Avoiding The Pitfalls And Disappointments

Buying Property In Greece - Avoiding The Pitfalls And Disappointments

Many of us dream of owning a home in the sun, but with property developers springing up everywhere never has the advice "Buyer Beware" been more appropriate. It is true that you can get much pleasure and make good money out of overseas real estate but you have to do it in a realistic way to avoid pitfalls and disappointments and buying property in Greece is no exception. Inflated Prices The price of a property is often dictated not by the market, but by what the seller feels like asking, or what they think a foreign buyer might pay. Complicated Planning Laws Planning laws are very complicated and all sellers will claim that you can build on their land. The requirements are most flexible for land located within the city or village plans. Be aware, however, that to build on land located within the village plans it is essential that you have public road access and you must have a paper confirming this from the municipality signed by the mayor. To build on land within 500m of the boundary of the village plans, you will need a minimum 2000m2 plot but this zoning is not available everywhere on the island, typically, only around mountain villages. To build on land out of the plans the basic rule is that you need at least 4000m2, however, it can be less if the plot is adjacent to a national or main provincial road. In all cases, if the plot is out of the plans, it is essential that you have a Certificate to Build from the Forestry Authority confirming that the plot is not designated as forestry. Simply because the land has no trees on it does not mean it is not affected by this. To complicate matters further the rules are different and vary from one zone to another in the area of the National Marine Park of Zakynthos. Ownership Issues If title deeds are not held in the Land Registry, for example, as is the case for land that has not changed hands since the records were destroyed in 1953 extra care must be taken to confirm the seller is entitled to sell the land and that if there are multiple owners all agree to the sale. On plots outside the village plans it is common for multiple villas to be constructed and as long as the total built area does not exceed the maximum permitted for that plot the villas are built perfectly legally. Unfortunately, if they are then sold separately by the owner or developer there is no individual title to the villas as it is not permitted to sub-divide the land. This means that ownership of the land and all buildings on the land is shared by all the owners. In other words, the plot and the buildings are in law a single entity with multiple owners each owning a share. Only when villas are attached can title be given separately but even then only to the villa not the land which is still jointly owned by all the owners. Building Licence Irregularities You must have a building licence to construct a property and a separate licence to build a pool. For an existing villa the building licence must accurately reflect what is built including the position in the plot, the layout, the dimensions, the area and the number of floors or it is not legal. Poor Construction Materials and Techniques Using poor materials and techniques is an easy way to save money. The result can simply be higher repair bills in subsequent years or it can result in needless damage in a minor earthquake. Once finished two villas can look as if they have been built to the same standard but closer inspection is required as how well a villa is built will determine if it increases in value over time or if it decreases in value and costs you money in the process. Good materials and techniques save time and money in the long run. Be particularly careful if a metal frame rather than a reinforced concrete frame is used. Although both are equally reliable when properly constructed it is far easier for poorer quality materials to be used with a metal frame and the cost savings are rarely reflected in the price. Uncompetitive Exchange Rates People buying homes abroad lose thousands of pounds in currency exchange because they use high street banks rather than specialist foreign exchange brokers. High street banks offer uncompetitive exchange rates and levy hefty fees on foreign exchange transactions in effect charging up to 4% or 5% over the odds. Specialist brokers offer commercial rates not retail rates and absorb costs. Exchange Rate Fluctuations If the pound weakens during the time it takes to complete the purchase or construction, you would pay more for than you were expecting the reverse is that if the pound strengthens, you would pay less. For peace of mind specialist foreign exchange brokers allow you to fix the exchange rate often for up to two years which means you can avoid currency fluctuations which if they go against you can have a big impact on how much you end up paying. Tax Implications Greek taxation is very different to UK taxation. If you own a property in Greece you must complete an income tax return even if you have no declarable taxable income. If you are domiciled in Greece the taxation is a complicated matter and you should consult a tax advisor. WHAT SHOULD YOU DO? 1. Do sufficient research. Don't be in too much of a hurry, always avoid hard sell tactics and don't consider buying, least of all from someone you meet in a bar who has suddenly become your best friend, without doing your homework. 2. Get professional help and advice before you buy Always use a civil engineer to advise you on all aspects of buying a property whether you intend to renovate an existing villa or buy land and build a new villa. Appoint a lawyer to represent you who will check the title deeds and will check for any encumbrances or liens recorded against the property you intend to buy. 3. Proceed quickly once you decide to buy If you decide to go ahead don't delay too long as good properties at the right price don't remain on the market too long and Greek sellers can increase prices or change their minds altogether on a whim. 4. Use a currency exchange provider Don't use your bank to transfer money use a currency exchange provider. Fix your exchange rate early. 5. Use a financial adviser If you need finance consider a euro mortgage. Get advice about taxes and inheritance laws and if applicable check out the implications of living or retiring in Greece. 6. Check out the construction company Whether you are renovating an existing property or building a new villa check out the credentials of the construction company. Local developers, generally, have more to lose if things go wrong while developers from the mainland or overseas can always go elsewhere. Don't assume the lowest price is the best, check if everything is included. 7. Get a written contract Get a properly drawn up legal contract for any building works that fixes the price and timeframe, clearly specifies what is to be built, documents the standard of materials, fixtures and fittings and includes adequate protection if things go wrong. 8. Stay in control Make your payment in stages and ask for photographs to verify each stage of the building works and to ensure the quality of the building work and the materials used. Be suspicious if none are available or if there is a lack of openness as cost savings are often made by skimping on materials and the developer may have something to hide. A photographic record of the construction of your villa also makes a great memento. Consider appointing a representative on the island to check materials and techniques and be prepared to fly out to check how the work is progressing.