Incentives for landlords to reduce rents

Incentives for landlords to reduce rents

The Finance Ministry plans to offer property owners incentives to agree to rent cuts for businesses affected by the pandemic, given that mandatory cuts are now limited to an ever decreasing number of sectors and will probably be completely abolished after June, provided there is no new need for a new lockdown.

More specifically, the plan foresees tax breaks for landlords who voluntarily reduce their rent by at least 30%.

Discussions are under way with owners with the aim to bring the measures into force from June or July, on the condition that the government agrees to cover part of the damages that the owners will suffer.

The tax deduction on the original rent will be offset against other tax liabilities.

This measure had in fact been introduced last October, but had never been implemented due the renewed forced closure of stores sparked by the pandemic, prompting the Finance Ministry to proceed with the mandatory reduction of rents. This included rent cuts to the tune of 40% and zero rent for closed businesses.

The reactivation of this measure now is set to bring a wide range of changes as it stipulates a reduction of at least 30% in 83 sectors of the Greek economy, provided that both parties (owner and tenant) agree. What’s more, the state will compensate owners with a tax deduction of 12% on the original rent (through tax offsets). A necessary condition so that the measure is properly implemented is that the remaining rent must be paid to the landlord within the agreed deadline, at most within the month to which it relates.

Broken down, the plan means that the coverage from the state, for a rent of 1,000 euros with a reduction of 300 euros, amounts to 120 euros or otherwise the percentage of coverage reaches 40% of the losses.

Meanwhile, according to the intentions of the Finance Ministry, gyms, playgrounds and possibly restaurants will not pay rent for June.

Zero rents will apply in May to companies active in retail, catering, culture, sports, tourism and transport.

A 40% rent reduction is valid only for the main residence of employees who have been placed on suspensions. This also applies to the student residence of their dependent family members.  

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