BUSINESS

Objective value conundrum

PROKOPIS HATZINIKOLAOU

TAGS: Taxation, Property

The Finance Ministry is facing difficult decisions regarding the rationalization of zone rates on which the property prices used for tax purposes (“objective values”) and the Single Property Tax (ENFIA) are calculated. There are many areas for which the surveyors that participated in the adjustment project recommended hikes in excess of 100%.

For instance, in the Athens district of Psyrri, around Koumoundourou Square, there are surveyor proposals for a 120% increase in the zone rate, meaning it would soar from just 1,200 euros per square meter today to €2,640/sq.m.

Areas that have enjoyed a significant commercial upgrade in recent years, either through food service enterprises or the blossoming of short-term rentals, which has boosted investment interest, still have zone rates that haven’t changed since 2007. This will require a major intervention so that the objective values match market prices.

On average, the recommendations for the center of Athens, which has benefited greatly from the rise in demand over the last five years, range around 50%-60%. For the northern suburbs, the proposed hikes come to 20%-30%, but there are also the cases of Nea Penteli and Lykovrysi, with proposals of a rise of 60.5% and 85% respectively.

The southern suburbs of the capital are also in for major hikes if the recommendations are followed (up to 78.5% in Argyroupoli), as they have benefited from the increased demand for housing by foreign investors, as well as from the Elliniko project. Estimates also point to large hikes for the western suburbs, which have remained stable for decades for social policy purposes. Therefore, in the seventh zone of Aigaleo, surveyors have recommended a 73% hike, from €1,100/sq.m. today to €1,900/sq.m.

Notably, the surveyors’ recommendations have not factored in the pandemic’s effect on the market, as they were submitted to the Finance Ministry in the first half of March, just before the spring lockdown.

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