Why Greek homeowners do not choose long-term leasing

The property market in Greece is going through a period of intense change, with taxation and renovation costs having a significant impact on owners’ decisions. Despite the challenges, short-term rentals continue to attract a large number of homeowners who are reluctant to return to long-term rentals. Recent research carried out by Kapa Research on behalf of POMIDA reveals the reasons behind this decision.

Taxation as a deterrent to long term rentals

According to the survey data, 82% of landlords consider ENFIA to be an unfair tax, with 71% calling for it to be abolished altogether and a further 20% calling for it to be reduced. At the same time, 46% of respondents identified a reduction in letting tax as the most important incentive to increase the supply of housing.

These taxes make renting less attractive, especially when combined with high renovation costs. 54% of homeowners who own empty dwellings say that they remain unused because they need renovation, with 61% of them estimating the cost of renovation at between €5,000 and €20,000. In addition, 12% of landlords say that taxes make it unprofitable to rent, while 10% say they do not trust tenants.

Reluctance to raise rents

Contrary to the widespread perception that landlords are recklessly increasing rents, the survey shows that six out of ten (62%) landlords who let residential properties have not increased rents in the last three years. This figure rises to 58% for commercial properties and 68% for family homes. Even where increases have been made, in 86% of cases they have not exceeded 20%.

The dilemma of converting to long-term leasing

A significant proportion of owners (48%) are satisfied with the incentive proposed by POMIDA of a three-year tax exemption for converting a short-term lease into a long-term lease. However, 33% are concerned about the possibility of losing the tax relief if the tenant leaves early, while 30% consider the tax relief insufficient.

Why homeowners stay in the short-term rental business

Despite the challenges, short-term rental is still an attractive option for many homeowners. Key reasons include:

• The potential for higher returns: Despite fluctuations in tourism demand, short-term rentals still offer greater flexibility and profits than long-term rentals.
• Tenant control: Unlike long-term leases, where the process of evicting a bad tenant can be difficult and time-consuming, short-term leases allow homeowners to have direct control over who stays in their property.
• Security of payment: Unlike long-term rentals, where late rent payments are common (21-31% of the time according to the survey), short-term rentals are paid in advance.

Changes in homeowners trends

Despite the challenges, 59% of landlords now consider renting a property to be beneficial, compared to just 12% in 2014. In addition, the proportion of those considering selling a property has fallen from 34% in 2007 to 14%, reflecting owners’ greater confidence in the property market.

Taxes and renovation costs are the main deterrents for many homeowners returning to long-term rental. Short-term rental remains an attractive option despite the uncertainties in the market. The results of the Kapa Research survey suggest that homeowners are unlikely to abandon short-term rentals unless there are significant tax breaks and incentives, continuing the trend that has prevailed in the Greek property market in recent years.

The ShortStay Conference 2025, which will take place on the 14th and 15th of February 2025 at the Ancient Eleonas Conference Centre of the University of Western Attica, will provide all the necessary tools for owners and managers of short term rental properties to develop their business more efficiently. Book your seat now!