Greek property owners and hoteliers at odds over short-term rentals bill

Property owners and the representatives of the hotel industry in Greece are in conflict over a regulatory intervention in the rapidly growing new market for short-term lodging rentals via online platforms such as Airbnb, HomeAway and others, as the relevant bill has already been tabled in Parliament.

According to the federation of property owners (POMIDA) and professionals in the real estate market, the bill will introduce significant restrictions to the short-term rental market, where tax evasion is common practice due to the fact that it is so easy for owners to operate under the radar. Hoteliers add that they are losing revenues to this unfair competition, which doesn’t provide the same quality of service as hotels and isn’t subject to health and safety inspections.

POMIDA’s criticism of the bill focuses on clauses such as that restricting owners to leasing out no more than two properties, while it foresees houses in cities of more than 10,000 people being rented out for a maximum of 90 days per year and in smaller towns and villages only for up to 60 days. If an owner wants to lease out more properties – or one or two properties for a longer period of time  – they will have to set up a company. The same applies should an owner’s annual revenues from leasing properties exceed 12,000 euros, irrespective of days leased. A so-called stayover tax – depending on the number of nights the property is rented for – will also be imposed.

According to POMIDA, “any quantitative or qualitative restriction imposed on a market that is impossible to inspect will naturally and by definition lead to illegality and tax evasion.”

Airbnb figures concerning property owners’ activity in the center of Athens show that out of the 2,116 property ads, 43.1 percent concern multiple posts by the same owners. For instance, one owner advertises a total of 46 properties. The average cost per night amounts to 58 euros, while the average monthly income is estimated at 466 euros. The average occupancy rate in the November-March low season is estimated at 29.1 percent, while advertised properties are leased out for 108 days per year on average.

Investors in old properties of central Athens

Estate agents say there are investors who have acquired old properties in central Athens, renovated them, and advertised them on Airbnb for tourists to rent. These investors are mainly Greeks, although there also are a number of foreigners who have invested in areas with increased tourism interest, such as Koukaki, Plaka, Psyrri etc, spending as much as 100,000 euros per property, to benefit from this new market without having to set up an enterprise, a practice that Airbnb discourages too as it goes against its property-sharing philosophy.

Furthermore, the Greek Confederation of Tourist Accommodation Enterprises (SETKE) and the Hellenic Chamber of Hotels (HCH) have voiced their concerns over the bill which was tabled in parliament on December 12 and are calling on the government to make further changes and withdraw several amendments.

SETKE noted in an announcement that the bill to regulate the sharing economy “not only fails to take a first step in the right direction but instead paves the way for tax evasion… while threatening the sustainability of thousands of small or very small businesses and room rental operations operating legally. It fails to provide for the obvious: the introduction of a special license for these operations and corresponding taxation equivalent to those applicable to room rental businesses”.

On the contrary, HCH welcomes the amendments as “a first step” but also underlines that certain points including revenue exceptions “perpetuate instead to tackling unfair competition especially for those thousands of very small accommodation facilities operating legally and declaring income less than 12,000 euros, already bearing the brunt of excessive taxation”.

In a letter to Finance Minister Euclid Tsakalotos hoteliers also urge for increased fines in case of violations: “5,000 euros is considered extremely low and not in line with national legislation and international practice. Furthermore, a 5,000-euro fine on villas rented out for 1,000 to 3,500 euros a day will not be a strong deterrent”. Instead, they propose a fine of at least 50,000 euros depending on the violation, recommending the imposition of VAT as well as of a special tax on night stays, and is requesting a legislative framework that clearly distinguishes between occasional leasing and professional rentals.

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