Greece’s thriving all-year tourism sector continues to make its property market a popular choice for investors looking to buy-to-let. However, recent regulatory changes, stricter compliance requirements, and new taxes are reshaping the landscape, particularly for short-term rentals. To navigate these changes and capitalize on opportunities, understanding the new rules is essential. Below are some key considerations for anyone looking into buy-to-let investments in Greece;
New Restrictions on Short-Term Rentals in Athens
Starting January 1, 2025, Greece will pause issuing new licenses for short-term rentals in central Athens for one year. This restriction applies to neighborhoods where short-term rentals exceed 5% of the housing stock, targeting the following Athens areas for 2025:
- 1st Municipal District: Koukaki, Plaka, Kolonaki, Syntagma, Omonia, Monastiraki, Exarchia, Ilisia, Neapoli
- 2nd Municipal District: Mets, Neos Kosmos, Agios Artemios, Pangrati
- 3rd Municipal District: Votanikos, Metaxourgeio, Gazi, Petralona, Rouf, Thiseio
The ban aims to address housing shortages, stabilize rental prices for residents, and ease the strain of over-tourism on local infrastructure. If effective, the moratorium could be extended or expanded to other areas – so staying up to date is crucial for investor looking into buy-to-let options.
Higher Standards for Quality and Safety – coming soon
In addition to new restrictions, Greece is planning to raise safety and quality standards for short-term rentals. These measures aim to protect residents, enhance tourist experiences, and ensure compliance with modern regulations.
Key requirements include:
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Minimum Property Size: Each rental unit must offer at least 25 square meters of living space to ensure guest comfort.
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Prohibition of Basement Rentals: Renting out basement or semi-basement spaces is no longer permitted, addressing concerns about natural light, ventilation, and overall habitability.
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Fire Safety Measures: Properties must comply with updated fire safety protocols, including the installation of fire extinguishers, smoke detectors, and clear emergency exit signage.
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Mandatory Disinfections: Regular disinfection of rental properties is now required to maintain high hygiene standards, especially in high-traffic tourist areas.
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Liability Insurance: Owners are required to obtain liability insurance to cover potential accidents or issues, providing protection for both guests and property owners.
These standards are still pending approval and implementation, but it seems they will be imposed within the next year.
Taxes and New Fees for Rentals and Hotels
Rental income in Greece is subject to standard tax rates:
- Up to €12,000: 15%
- €12,001 to €35,000: 35%
- Above €35,000: 45%
A 5% depreciation deduction is available, slightly reducing the overall tax burden.
In addition to taxes, Greece has a Climate Resilience Tax for hotels and short-term rentals, aiming to address the environmental impact of tourism and fund infrastructure improvements. The fee and was introduced in 2023, and fees are set to rise significantly by 2025:
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Current Rates (in 2024): Small short-term rentals: €1.50 per room/night in high season (March–October) and €0.50 per room/night in low season (November–February).
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Future Rates (starting in Jan 2025): Small short-term rentals: €8.00 per room/night in high season (April–October), and €2.00 per room/night in low season (November–March).
Larger short-term rentals, villas, and luxury hotels face even higher fees, significantly increasing operating costs. This emphasizes the need for robust financial planning for property owners.
For operators managing three or more properties, new regulations introduced in January 2024 impose additional taxes and fees, including:
- Value Added Tax (VAT): 13%
- Transient Guest Fee: 0.5% of turnover
Unfortunately there is no way of knowing how tax levels and fees will evolve in the future, meaning investors need to have a buffer in their calculations.
Exploring Opportunities Beyond Restricted Areas
While central Athens faces tighter controls, many regions in Greece remain promising for new investors. Expanding the search to unrestricted zones can uncover lucrative opportunities, with possible areas to consider being:
- Southern Athens Suburbs: Coastal areas like Glyfada, Voula, and Vouliagmeni are popular with both tourists and long-term renters, offering upscale amenities and year-round demand.
- Thessaloniki: Greece’s second largest city features a growing rental market supported by cultural attractions and urban redevelopment.
- Coastal Regions and Islands: Key tourist areas incl. the Cyclades islands continue to yield strong returns, with steady tourist demand and fewer restrictions compared to central Athens (for now).
Long-Term Rentals: A Stable Alternative
Long-term rentals can offer a simpler, more stable option than short term rentals, that is also more inline with Greece’s evolving regulatory environment. Although generally not as lucrative, newly renovated properties can get good rental income in e.g. expat heavy areas such as the north and south suburbs of Athens. Some key considerations to keep in mind regarding renting out properties long-term are;
- Lease Agreements: A minimum lease duration of three years is required by law, offering stability (but also reducing flexibility) for tenants and landlords.
- Rent Adjustments: Landlords and tenants can negotiate annual increases, often tied to the Consumer Price Index.
- Tenant Protections: Evictions require a court order, and landlords are responsible for major maintenance, creating a well-regulated rental framework.
Income from long-term rentals is taxed at the same rates as short-term rentals but avoids additional fees like the Climate Resilience Tax, simplifying financial management.
Conclusion: Adapting to Greece’s Changing Market
Greece’s buy-to-let market continues to offer attractive opportunities, but evolving regulations require adaptability. From the new Climate Resilience Tax to licensing restrictions in central Athens, investors must stay informed and plan strategically to navigate these changes.
Whether focusing on high-quality short-term rentals in unrestricted zones or exploring the stability of long-term leases, Greece’s dynamic property market can still offer good potential for returns.
