POMIDA: Tax exemption for property owners is a “trap”

POMIDA considers the provisions of article 9 of the Ministry of National Economy and Housing Law as absolutely deterrent, without substantial benefit for the economy and society and destined to condemn the effort to solve the housing problem to failure. The draft law from the Ministry of National Economy submitted to the Parliament for adoption was entitled “Tax exemption for 36 months for the income of individuals from the rental of real estate declared as vacant or allocated for short-term rental”.

Scope of the tax exemption

The Panhellenic Federation of Property Owners said in a statement: “It is impressive that the dozens of comments of those who participated in the preceding consultation were completely ignored and the article was submitted to Parliament in its original unacceptable form, resulting in the specification of this exceptional social measure announced by the Prime Minister at the TIF, with the main ‘beneficiaries’ being tenants, will result in the complete cancellation of its potential as the only measure that can quickly bring ‘houses on the market’, since a huge number of urban dwellings will remain outside the scope of this regulation since:

1. The three-year “vacancy” of the property remains as a condition, while it is necessary to set the year or at most two years for the three-year tax exemption.
2. The three-year short term rental of the property remains a prerequisite, without any reason and in a complete “divorce with logic”, instead of specifying that it is sufficient to obtain an A.M.A. (Short Term Rental Property Registration Number) even the day before the announcement of the measure by the Prime Minister at the TIF. Because of this, almost all of the fully renovated properties that would normally immediately enter the rental market are excluded. Three years ago the number of apartments that acquired an AMA was minimal in comparison to those that exist today. It is safe to assume that  anyone who maintains the AMA in their apartment for three years is obviously happy with the performance of the short-term rental, and will have no real intention of making that property available for long-term rental. Therefore, the three-year “prior service” provision in the short-term rental should be removed altogether.
3. Remaining outside the scope of the regulation, due to the requirement to conclude a three-year lease of the main residence, a large number of tenants who have the most pressing need for housing, especially on the islands and in the periphery, such as substitute teachers, rural doctors, police officers, border guards and many other categories of civil servants and private workers in tourist facilities, construction sites, etc., who are interested in annual leases only. Therefore the provision on initial three-year leases should be deleted as it unnecessarily ‘deprives’ tenants of homes, and landlords of tenants!
4. Ultimately, most homeowners remain outside the scope of this regulation which, instead of linking the 36-month tax exemption to the property, links it to the random first tenant. The majority of homeowners, realising that if they allocate money to modernise and rent out their homes, this regulation will become a real “trap” and they will become “hostages” to the dispositions of their tenants. Tenants who, even if they sign a three-year lease, can withdraw from it for any personal reason without any consequences to them, or they may even refuse to pay the rent and in extreme cases use blackmail, ultimately being released from the lease, since as the provision provides, if the residence is vacated for any reason, the exemption ceases to apply not only for the future, but also for the year in which the property was vacated. In order not to create insecurity and complete abstention to the owners, the 36-month tax exemption should be explicitly and exclusively linked to each property and not to the individual person and the dispositions of that original tenant, regardless of any owner rotation of subsequent tenants within the total period of 36 months.

The result of the above regulations unfortunately proves POMIDA’s point that, in a country that does not have a single social housing unit, the legislator should be much more interested in how to solve the major social problem of tenants’ housing, which is wisely targeted by the Prime Minister’s announcement of this regulation, based on POMIDA’s proposal, rather than how best to ‘police’ the tax exemption, “lest he lose a few euros, resulting in its cancellation in its entirety. ..”.