ECONOMY

Property owners slam provisions for compulsory purchase compensation

The Finance Ministry is introducing new provisions regarding compensation for real estate that comes under compulsory purchase by the government, in a draft bill awaiting ratification by Parliament. The bill sets as «the main criterion» for determining the value of property the so-called «objective» prices, officially calculated according to area about every two years, but also takes into account prices in recent transfers of similar property in the same area. According to Stavros Paradias, president of the Panhellenic Federation of Property Owners (POMIDA), which has received an advanced copy of the document, the draft bill constitutes a blatant violation of the Constitution, undermining the rights of property owners and significantly reducing the amount of compensation they may be entitled to. «Fiscal pressures are leading the government to an unacceptable and entirely unconstitutional solution. Objective prices are a tool that has been used in Greece and elsewhere in Europe in the last 20 years but it is well known that they are often significantly lower than the actual ones. This fact is greatly relevant to protecting the rights of owners, especially in Greece where tax rates are very high,» he says. Objective prices are indeed low in many areas at present, but not great in disparity from market prices. However, owners fear that they may be amended arbitrarily by the Finance Ministry in the future. «The amendment of objective prices or the inclusion of new areas where the government has planned acquisitions into the system at very low prices essentially violates the constitutional provision which expressly stipulates full compensation for the owner,» says Paradias. It seems fair to assume that full compensation is taken to mean the property’s market value at the time of the acquisition by the government, excluding any capital gains that may arise as a result of any upgrade of the area by subsequent government projects. There is no doubt that residential market prices in Attica today are overvalued and owners’ demands often irrational. In the last two years, it appears that owners have cultivated excessively high expectations due to the flurry of new projects and the coming Olympic Games. Paradias accepts that actual prices are indeed overvalued in many areas but notes that in most cases the final transfer price is much lower than the initial asking price. He adds that though until 2002 the level of compensation paid was usually satisfactory and in near proximity with market prices, government pressure on courts has resulted in them adjudicating clearly lower compensation amounts. Further, he complains that the new bill violates a standing provision – never applied – that stipulates immediate payment of a reasonable sum in compensation before the property is taken over. He predicted that the owners who will seek redress before the European Court will be unequivocally vindicated.