Mortgage loan advertisements by most banks aim at «wasted» rent money when with the same amount one can pay off the monthly installments of a mortgage to obtain a house of one’s own, without having to conform to any landlord’s terms. «Effectively, each mortgage loan issued means one potential tenant less from the market,» says property consultant Nikos Yiannoulelis. The storm of adverts, the particularly low interest rates and Greeks’ strong desire to own their home have increased the number of house owners compared to tenants in recent years. «If we note that the vast majority of bank customers taking out mortgages for the purchase of their first house are families, the biggest and best section of the tenants’ market, then we see why rents in flats with three bedrooms or more are going down,» says Yiannoulelis. A recent Kapa Research poll clearly showed how strong pressures are on the rental market while the number of tenants is falling. The poll found that 21.2 percent of respondents own property that they rent out and just 5.5 percent seek property to rent. Those figures show there is an oversupply and particularly low demand, which are also reflected on rental rates that in the last three years have dropped by 15 percent, mainly with houses that have a large surface area. Yiannoulelis suggests smaller apartments of up to 50-60 sq.m. more easily resist the downward course of the market and appear stable. Yet pressures are also expected to soon affect smaller flats, since supply is rapidly increasing. Many mortgage borrowers used to live in a two-bedroom house and, after receiving the loan, move into a bigger apartment which better satisfies their new needs. Market professionals stress that the declining course of rental rates is evenly spread geographically. Even in neighborhoods close to metro stations, rates are at best at the same level with fewer and fewer tenants. What could alter the level of lease is the age of the property for rent. The rate landlords of a newly built house can secure is 1.50 to 2 euros more per square meter per month compared to a similar property aged 20 years or more. So do landlords earn more by renting their flats? As an investment option it does not appear particularly attractive, since, compared with 2000, the yield of rents has dropped from 5 percent to about 3.5 percent, a decline of 30 percent. In this sense the revenues from a possible sale of the property and the placing of the capital in some other investment product can offer better returns. Given the big supply of houses for rent, tenants now have the upper hand in negotiations. Estate agents actually report that in many cases where a lease expires tenants renegotiate their contracts with more favorable terms, usually with the same rent. Still, there are very few examples of rent reduction. Yiannoulelis argues that most landlords show they realize the situation and usually lower their requirements when a flat is up for rent. When it is already rented and they are satisfied with their tenants, they then make an extra effort to keep them. After all, as the Panhellenic Property Owners’ Association advises, «a good tenant is always preferable to a good rent.» Obviously, the loss for a landlord is greater when a property remains empty for a long period, than if it is rented earlier at a lower rate, since even an empty apartment has expenses. Particularly for bigger flats agents report many cases where landlords have been seeking tenants for five or six months – and finally find one when they have dropped their requirements by about 30 percent. Another factor affecting the returns of renting out a flat is related to the landlord’s income. If this is high, then the tax of the property could reach up to 40 percent, which is the highest bracket, while the lowest one is 5 percent. Experts believe the key for a rebound in the market can be for it to accept the rise of interest rates when it happens. A rise, which would have to be 50 basis points in total at least, will render the issuing of a mortgage much more expensive, and less attractive, than renting. Dimitris Kapsimalis, head of the Constructors’ Association, believes that the imposition of value-added tax on newly built houses for rent will raise their rental rates by 50 percent. Only time will tell whether this prediction is right, although the great supply of houses for rent combined with the fact that tenants are not immediately interested in living in a new and very expensive building do not coincide with Kapsimalis’s forecast.