The number of properties up for short-term lease in Greece has soared from just 130 in 2010 to over 200,000 by the end of 2019, according to a survey by the Center of Planning and Economic Research. Despite the huge changes this surge has brought to the property market, however, the regulatory framework has resisted change and adjustment to reality.
Greece is one of just a few countries in Europe that have not introduced any restrictions to short-term property rentals – or effectively enforced those that already exist. There is no doubt that short-term rentals, led by US online platform Airbnb, have provided a solution for landlords struggling to pay taxes for properties they were unable to find any tenants or buyers for. However, the absence of tax regulations and rules does not just make life difficult for ordinary people trying to find a house to rent or buy, but also threatens the long-term prospects of online rentals themselves.
Chasing fast returns is not just transforming more and more property owners into aspiring hoteliers, but is also bringing a reduction to the revenues expected. According to data presented by Aimee Trusler, international sales manager at AirDNA – a company that monitors short-term rental trends – the supply of houses through the Airbnb and HomeAway platforms rose from December 2018 to December 2019 by 24 percent. The number of nights spent at such accommodation jumped by over 95 percent, but the occupancy rate declined by about 15 percent, illustrating that supply is higher than demand.
A recent study on the sector by the Institute of the Greek Tourism Confederation (INSETE) showed that total revenues from the leasing of homes in Greece through the Airbnb and HomeAway platforms in the 12 months from June 2018 to May 2019 reached 1.15 billion euros.
Nevertheless, the taxation of those revenues remains in the air, market professionals point out, as the owners of short-term accommodation must register their property in the relevant list on the website of the Independent Authority for Public Revenue (IAPR), where they are assigned a property registration number. The latest tax law by the Finance Ministry compels rental platforms to share the data of their hosts (name, surname etc.) with the IAPR. If they fail to do so, the tax administration can demand local internet service suppliers to deactivate their websites in Greece.
For the time being, however, the tax authorities are locked in discussions with the platforms over how above data will be supplied, according to sources, meaning that that crosschecking the data and identifying undeclared incomes remains impossible for as long as the talks drag on. Even so, an older check by the IAPR through a special web scraping program brought to light some 20,000 properties that had not been declared.
Notably, Greece still has no time limitations to short-term rentals per property, unlike in most other developed countries.
The impact on the conventional rental market, meanwhile, has been huge. The reduction of available apartments and houses due to the surge in short-term rentals has led to a dramatic hike in rental rates. A recent survey by the Spitogatos classified property ads platform showed that in 2019 the majority of Greek cities saw rental rates spike. The biggest increases were recorded in Piraeus (up 25.2 percent) on the Argosaronic Gulf islands (23.1 percent), in the prefecture Trikala in central Greece (21.4 percent), in the city center of Athens and its western suburbs (20 percent) and on the Ionian island of Corfu (19 percent). Few areas defied the trend by posting a decline in rental rates, namely Zakynthos, Thesprotia, Kastoria and Florina.
The Bank of Greece noted in a recent report that the rise in property values is the result of increased demand for houses due to the strong interest for properties that have acquired a commercial value thanks to short-term leasing and can offer returns close to the levels of actual commercial properties.
The drive for quick profits through short-term rentals has also sparked a kind of bidding war for properties that are up for sale and which would have been snubbed in past years. Estate agents typically cite the case of a flat of almost 30 square meters in Neos Cosmos, just south of the Athens city center, which had been put up for sale for 23,000 euros around a year ago. This same property was eventually sold for almost 30,000 euros after numerous buyers expressed interest and said they were willing to buy it without even seeing it.
Of course, the oversupply of homes has also drastically reduced revenues and yields. AirDNA data show that there are 10,281 properties available for short-term leasing, at an average rate of 52 euros per day. Across the country in 2019 takings per rented home declined 9.4 percent to 43.5 euros, from 48 euros in 2018, while occupancy dropped to 39 percent last year from 45.5 percent a year earlier.
The result of that decline has been a partial swing toward leasing for longer terms. This is despite the ensuing extension of the Return-on-Investment time, given that in most cases up to 20,000 euros have been invested in renovations.
Experts add that the owners of a short-term rental end up pocketing just 35 percent of revenues. The remaining 65 percent goes to cover taxes (15 percent), the online platform’s commission (5 percent), utility bills and cleaning costs. Expenditure also includes maintenance and repairs, while another – albeit minor – cost for the owner concerns getting to and from the rented property in that case that it is a significant distance from his or her residence. It is little surprise that some people liken the short-term rental of their property to a full-time job, when the task of running the property has not been assigned to a specialized manager.