In today’s announcement by POMIDA regarding the new Local Government Code, the key changes affecting real estate and property owners—as they stand following its passage by Parliament—are outlined.
The Federation highlights the key points of the new framework, as well as the impacts it anticipates they will have. Specifically, the announcement states:
The main changes compared to the current regulations are as follows:
1. The Real Estate Tax (TAP), which is levied on property owners, and the Tax on Electrified Spaces, which is levied on building users (tenants), are consolidated into the new Local Development Fee (TTA), with a tax rate of 0.30–0.70‰. Starting January 1, 2027, this fee will be collected through energy bills. If paid by the tenant, it will be deducted from the rent, unless otherwise agreed in the lease agreement.
2. The Cleaning and Lighting Fee (CLF) for vacant and unelectrified properties is calculated by the municipality’s finance department as one-tenth (1/10) of the amount that would be due if they had an electricity supply:
- for enclosed spaces that do not have electrical wiring and are not in use,
- for properties that have an electricity connection, which has been disconnected, and which are vacant.
Eligibility for the reduced rate is granted automatically as of the date the electricity supply is disconnected, for which the Hellenic Electricity Distribution Network Operator (HEDNO) or the liable party notifies the relevant municipality without delay, whose competent department carries out the transition within one (1) month of the notification.
3. The “right to build” is exempt from the new Local Development Fee; this right has been rendered obsolete by our urban planning legislation and no longer holds any substantial value in most cases.
4. Leases of private real estate to municipalities and regions throughout the country will have a term of up to 12 years, and if the municipalities or regions wish to continue them, they may extend them for up to 12 additional years by a decision of an absolute majority of the Municipal or Regional Council, provided the lessor expressly consents to the terms of the extension proposed in the decision.
5. Collection of municipal property taxes through “other means.” A last-minute measure added during the passage of the Code, but one with serious consequences for both property owners and municipalities, was the addition of the possibility of eventually replacing the decades-old system of co-collection of municipal property taxes via energy bills with “other methods” collection methods that are not specified in the law and may include billing and payment through a special platform operated by the municipality, the Central Union of Municipalities of Greece (KEDE), or the Independent Authority for Public Revenue (AADE). Under this measure:
- For owner-occupied properties, owners (who are up to date on their payments) will have to add an additional payment step to their monthly obligations, whereas until now this was handled automatically through the payment of the energy bill.
- For rental properties, however, the fees must be billed exclusively to the tax identification numbers (AFM) of the actual debtors—that is, the occupants of the buildings, namely the tenants. If it is decided to bill these fees to the owners’ tax identification numbers—requiring them to pay the fees out of their own pockets and then seek reimbursement from their tenants through the courts— this would be yet another serious disincentive for owners to rent out their properties, with obvious tragic consequences, particularly for the supply of rental housing.