ECONOMY

Illegal housing is here to stay

Every year the state loses out on hundreds of millions of euros in taxes and contributions not paid by the industry of illegal housing, which may not be as massive as it was in the past, but remains strong and profitable for those involved in it. Profit margins are always very big and cannot be compared with those of legal constructions. That is the reward construction companies get for the risk they undertake. Illegal housing is divided into several categories. The most common one is buildings on plots that are outside town-planning zones. There also are houses considered illegal due to the use of land permitted in each plot, as one can find buildings used as shops or entertainment venues in an exclusively residential area. Other illegal houses have no building permit at all, or have one but do not adhere to it, with the building violating the size allowed for a construction. Other houses are illegal because they violate the General Construction Regulation (GOK) or special town-planning clauses in an area. Violations of special regulations such as protection from fire or connection with the natural gas network are also common. Yet even when someone starts building a house with the intention of honoring the law, it is very difficult to have a 100 percent legal building due to the complexity of legislation and the various regulations. There has been an unprecedented rise in construction costs for illegal houses. An engineer with experience in how the illegal construction market operates says that if a legal construction of 100 square meters costs about -300,000, in case of an illegal house this could reach -600,000, so the building of an illegal house will cost 50 to 100 percent more than a legal one. What is more, owners receive a product that adheres to no regulation (e.g. GOK, earthquake-proofing regulations, material control etc). The overall construction quality is much worse than that of conventional buildings, while the final costs grow from a series of factors: For instance, owners buy concrete of dubious quality from small companies at prices that are 30 to 40 percent higher than those in the market. There are four reasons for this price hike, experts say. Firstly, there are all kinds of bad construction, which force owners to proceed often within a few months to maintenance work. Secondly, the structures usually lack an engineering study, which may initially save money, but had it been there it would have spared the owner from many troubles. Thirdly, the materials and especially labor are costly. Fourthly, some so-called «experts» are used to ensure there will be no problems in the completion of the construction; they obtain money from the owner that will be used to bribe state officials, who will then ignore that rules have been broken. Of course no one knows where this money actually ends up, other than in the pockets of contractors. According to an anonymous contractor, this industry takes advantage of the lack of inspections and policing and sells to the owner at the price of the risk at hand. There are even companies which promise delivery of the house complete with utility connections. This network remains anonymous as it also tries to keep all sides happy. For instance, materials for construction come from the closest supplier, who threatens to go to authorities. Therefore the supplier raises the prices of materials, practically trading his own risk, as this is all about an illegal construction. There is usually an understanding between the supplier and the builder which often works against the owner. The contractor buys the materials on behalf of the owner – even the contractor doesn’t own a company. The industry achieves its balance by distributing the areas to various contractors’ groups, or go-betweens. For example, areas such as Kalamos, Oropos or Artemis in northeast Attica have their own companies and they are not allowed to operate in other areas of Attica. If they do, they risk being reported to authorities. To find someone to build your illegal house, you would need to check with a kiosk or minimarket close to your plot and ask the right questions. Soon, middlemen will emerge to arrange a meeting with contractors and get their own bit of cash. Sadly, owners of illegal dwellings believe they are somehow getting a good deal, when in the end they are the ones who lose. Many owners of illegal homes are poor and cannot pay for construction, so the buildings are left unfinished. Any agreement between a contractor for an illegal home and the people who hope to own it is often only verbal. Nevertheless, the construction of new illegal houses has recently abated, according to market observers. That may be due to higher fines, but market experts say that a key factor has been the completion of major infrastructure projects such as Attiki Odos, the Varis-Koropiou Avenue and Athens International Airport. Big projects have made several areas of Attica much more accessible and so have drawn in a great deal of traffic. This focus of attention has worried owners and contractors of illegal homes, since their lawbreaking is now much more visible. Consequently, they are going deeper into remote areas to build. Areas of choice In Attica, illegal houses are mostly found on the coastline, in areas such as Kalyvia, Keratea, Markopoulo, Marathonas, Koropi, Porto Rafti, Rafina, Mati, Kalamos, Aghioi Apostoli, Oropos, Dilesi and Halkoutsi. Besides these areas, illegal houses can be spotted throughout eastern Attica, with many bordering on legal areas in the hope they will soon become legal, too. Illegal houses have multiplied due to the lax monitoring mechanisms of the state and to the combination of two very important factors – the years of delay it takes to enter new areas into town-planning districts and the population explosion that has created housing needs and pressures in areas that could not meet them. No one knows how many illegal houses exist. Applications for electricity connections bring their number to about 40,000 around Greece, though this is probably only a fraction of the true figure.