ECONOMY

Incentives being provided for voluntary rent reductions

incentives-being-provided-for-voluntary-rent-reductions

The Greek state will be more generous in covering landlords’ losses from rental revenues when they voluntarily reduce the monthly rent for their commercial properties, compared to the offsetting of forced losses, according to a bill tabled in Parliament last Friday.

Property owners who strike an agreement with their tenants regarding a rent reduction will be compensated with a tax cut that could reach up to 40% of their losses, depending on the level of rent reduction agreed.

However, there is the necessary condition for the payment of the remainder of the rent within the agreed timeframe, or within the month it concerns. According to the federation of property owners (POMIDA), this is the first time that the reduction of rent depends on the timely payment of the amount due.

Consequently, in the case of a monthly rental of 1,000 euros, for example, a €300 reduction will lead to the state returning €120 euros, or 40% of the landlord’s losses. The more the rent reduction rate grows, the less the state benefit will be: Therefore, if the landlord agrees to reduce a €1,000 monthly rent by 50%, i.e. incurring a loss of €500 for the owner, the state’s offsetting action will remain at €120, amounting to 24% of the rent lost. The bill’s clause provides for the state to cover a fifth of 60% of the monthly rent.

The new regulation concerns a rent reduction of at least 30% for the months of September, October, November and December 2020, following an agreement between the landlord and the leaseholder that is declared to the Independent Authority for Public Revenue. The same could apply for the rented apartment of a student with at least one parent whose employment contract has been temporarily suspended.

The draft law also provides for the mandatory maintenance of the 40% reduction this month for tenant-companies in sectors that continue to be hurt by the coronavirus pandemic – i.e. in tourism, food service, transport, culture and sport, as well as for workers who have been furloughed.