New home sharing tax set to see owners revert to longer tenancies

New home sharing tax set to see owners revert to longer tenancies

The taxation of the peer-to-peer property rental market and the intensification of inspections by tax authorities from early 2018 are expected to discourage some property owners who use online platforms to lease their assets on a short-term basis to boost their income.

Property market professionals say that the popularity of such lettings has increased considerably over the last couple of years, offering Greeks the opportunity to avoid paying taxes without violating the law.

The financial incentive has been very strong too: Apartments in high-demand areas of Athens such as Koukaki, Gazi, Thiseio, Acropolis and Plaka can attract a high number of visitors, sending revenues soaring for owners. In those areas a conventional rental contract fetches between 200 and 450 euros per month, depending on the size and features of each flat. The same property could fetch an average of 40-50 euros per night if leased through a platform such as Airbnb or Homeaway.

As things stand, that means it takes between five and 10 nights for the owner to secure the same revenues as with a conventional rental without having to pay any tax, as the monitoring mechanism is currently unable to cross-check such takings.

In other areas of Athens, however, where demand is lower, the situation is different: In Exarchia, such rentals bring in an average of just 25 euros per night, so properties have to be let for more nights per month for this option to be sustainable.

Given that taxes are now set to be added to the equation, it is very likely that many owners will revert to seeking tenants for longer periods of time. After all, short-term lettings via online platforms require the coverage of the expenses of a furnished apartment, such as utility and heating bills, as well as other costs that tenants pay in conventional rentals.

Consequently, for home sharing to make financial sense, compared to conventional rentals, the owner will need to invest both time and money to expand his or her personal clientele.

A recent Airbnb statement said the average annual income of Greek owners in 2016 was 2,375 euros, while the average occupancy rate was three nights/month. A Grant Thornton study put the number of properties made available for home sharing across Greece at 42,155.