House Building

[annabanana]

We have recently bought a plot of land in Crete and are trying to negotiate build costs with builders. It would seem that with the current problems in Greece the costs have suddenly increased dramatically. For a 100m2 house finished to a basic standard with no central heating, air con or solar heating for hot water, no landscaped garden,we have been quoted 100000 euros plus VAT for materials and National Insurance for the builders. Does this sound ok, please reply with any information about building costs.
Thank you

[StuartS]

That's E1,000 per m2 for a basic finish, but you don't say whether the architect's fees/permits are included, or electricity/water connections.

I would not agree that "costs have suddenly increased dramatically" - we are feeling the costs of fuel rises on materials (but more importantly, suppliers going bust so competition is reduced), and some materials have increased a little.

We charge E1,350 per m2 for a good quality house including aluminium doors/windows, solar hot water, central heating etc. I don't know how that compares to your specification.

However you need to add approx a further E200 per m2 for "state" costs - architect/permit, IKA, VAT, etc.

You should be looking at around E1,500 - E1,600 for a legal completed home, with all taxes paid, and paperwork ready for water/electricity connections.

Stuart
http://www.crete-perfect-home.com

[bobscott]

You should be looking at around E1,500 - E1,600 for a legal completed home, with all taxes paid, and paperwork ready for water/electricity connections.Stuart
http://www.crete-perfect-home.com

Stuart is right. You also need to know what else is involved, like concrete/tarmac driveway, stone walls etc. Usually a builder draws a line around the house and any work done outside of that line is an extra. Worth checking.

[annabanana]

Thanks for the replies. The 100000 euros includes the house plus 1-2m of concrete all around, a gravel drive and parking space, water connction and sewage to a septic tank. On top of this we know that the architects fees including overseeing the build to completion will be about 8000 euros and that we have to pay our share of getting electricity to the site.
How much do you think VAT and IKA would be on top of this?
Thanks

[filippos]

The architect/civil engineer normally calculate the IKA payments and that's affected by the number of hours worked by specialist and non-specialist tradesmen.

VAT is currently 19%, soon increasing to 23%. Other taxes on property or property ownership could be introduced.

[StuartS]

How much do you think VAT and IKA would be on top of this?

As filippos wrote, the architect/engineer calculates the IKA. In round terms, it usually averages around 7% of the build cost.

Although VAT is 21%, soon to increase to 23% and then 25%, this is usually also calculated by the architect/engineer on the taxable value of the build - usually around 25% of the actual cost. So you'd be looking at about 21-25% x 25% = 5.25-6.25% of the actual build cost.

You should determine who is responsible for obtaining an electricity supply, and get a quote for the cost of "your share"(?) of it. This can be expensive, and you may find that the "first person in" pays this cost on behalf of all the others (if it's a shared plot). Note that this cannot be obtained if IKA and VAT are not full paid up.

All the above should be put into a written contract drawn up by your independent lawyer, including requirements of monthly evidence that your builder is paying the IKA as he goes along, and that he will produce the paid-up IKA and VAT documents, ready for electricity connection.

****
Clarification added 10/05/2010:
IKA and VAT should be included in our average costing of around E1,500-1,600 per m2, not additional. Apologies if this caused you any panic!
****

Stuart
www.crete-perfect-home.com

[StuartS]

plus 1-2m of concrete all around, a gravel drive and parking space

Some further thoughts ... a "wake-up call", really!

- what do you mean by "1-2m of concrete all around"? You should specify exactly: where, width, depth, footings, reinforcing, etc ... that can make a hell of a difference to costs. Otherwise, you will end up with 1.0m x 0.01m depth of cheap non-reinforced concrete all around some unspecified object (maybe a small garden gnome?).

- ditto regarding a specification for "a gravel drive and parking space". Would you be happy with a 2m x 4m bumpy area scattered with a handful of stones? Legally, the builder would have met your requirements.

You need to be fair to yourselves and the builder - specify exactly what you mean, in writing, in a contract, with plans or sketches and dimensions as necessary. How else can any builder (Greek or otherwise) understand and give meaningful costs?

If it means you need to pay for your contract and specification to be professionally translated into Greek, so be it - it's peanuts compared to the build cost, and is then clear and binding on the builder. And the existence of a clear written contract is a good deterrent against any attempts at manipulation, either by the builder or yourselves.

Always consider this last resort: if things go wrong and you have to go to court, do you have clear written evidence (understandable in Greek) of what you ordered and paid for?

If you don't, misunderstandings or manipulations will certainly occur, and you and/or the builder will be unhappy by the end of the project.

Stuart
www.crete-perfect-home.com

[annabanana]

Thanks for all the advice. We are visiting Crete soon and will be drawing up a contract with our Solicitor, architect and builder. We will ensure we get it done as you have suggested so hopefully we won't have any major problems or dissapointments.
Once again thanks for the advice and any other thoughts on the matter will be greatly appreciated.

[Kilkis]

The developer who built our house used a table to define what was in the contract and what was not. It's quite useful to see items listed with "not included" next to them. Makes you think.

We spent almost five months refining the design and finalising what was and what was not included in the contract. In my opinion the "I'll have that one" approach to choosing leads to a lot of the subsequent problems.

Warwick

[StuartS]

We spent almost five months refining the design and finalising what was and what was not included in the contract.

A very wise approach, five months well spent! All potential buyers should take such a considered approach.

We have had to rectify the aftermath of so many horror stories - where buyers were enticed into a subsidised and escorted "fly-in" weekend visit, coerced into signing on the dotted line, and ended up with a poor-quality, below-spec, or unfinished, disaster. Then, they have had to pay tens of thousands of euros extra, to finish what they thought had been agreed.

Stuart
www.crete-perfect-home.com

[karpathoskate]

What exactly does one have to pay for when buying land and building on it? The price of the land, forestry commission permission, architect, IKA, VAT, lawyer - and approximate cost per sq metre. Have I missed much out? Thanks.

[Kilkis]

When you buy the land you pay for the land itself, the fee for the Notary, the fee for your lawyer, the transfer tax, the fee for the estate agent, possibly, in some cases, the seller's estate agent fee and the fee to register the land. Some ideas on these costs are given on http://www.globalpropertyguide.com/Euro ... ying-Guide The variation in the transfer tax depends on whether the plot is within the area of a fire department. It is also split with the first X thousand Euro taxed at one rate and the rest at a higher rate. All these fees are a percentage of the amount shown on the contract which is normally an objective value, based on the area of the land and where it is located and is normally a lot less than the market value, but may, in some cases, be the actual market value. If the contract says 15,000 Euro and you are actually paying 45,000 Euro it doesn't mean that you are being ripped off. This is normal. It just means that the government is being ripped off but they accept being partially ripped off rather than being totally ripped off.

In our case, ALL other fees were included in the contract to build the house. We went through a process of refining the design where we bounced the plans backwards and forwards between us and the architect, via the developer, until we had a design we agreed on. The developer then quoted us a fixed price for building to that design including all fees, architect, civil engineer, building permission, IKA any other taxes, electricity connection, water connection etc etc. Until we signed this contact we were not committed to any fees. If we walked away at this stage the developer would have taken the hit on any architects fees for the design process. The contract included a detailed specification that formed part of the contract between us and the developer. This defined exactly what was AND what was NOT included. After the build we paid for some extra paths, some extra railings, connection of agricultural water and some extra cupboards that were not in the original contract. There was never any argument about what we were responsible for paying and what he was responsible for providing.

The contract was paid in stages. This effectively meant that the developer was free from cash flow problems, i.e. he had all money up front for each stage, and we were only exposed to the risk of him defaulting on one stage. Not perfect but not a bad compromise. I suspect that if you push for better terms or penalty clauses this will be reflected in the original price? Ours was a bit late being completed but we stressed all along that time was not an issue for us and we were more concerned that everything was done by the book. Part of the delay was due to us not attending to make selections when requested. At each stage payment there was a short delay on our part in transferring the funds, it involved a couple of bank transfers that were not immediate, but the developer continued working, i.e. we trusted each other.

The cost after buying the land worked out at 1,310 Euro per sq m. This is not really a fair assessment since it included extensive tiled patios, a large tiled roof terrace and a pergola. Also the number of cupboards was way beyond a normal Greek build especially in the kitchen. If these were not included it would work out at significantly less per sq m.

Not everything you asked for but I hope it helps.

Warwick

PS It is perhaps worth noting that there are some strange anomalies regarding land pricing.

Firstly the price depends more on what you can build on it rather than the area. Three plots for example. One very small inside a village, one of about 2,000 sq m close to but outside a village boundary and one around 4,500 sq m well outside the village boundary could all have building capability of 200 sq m. All would probably cost about the same.

Secondly there can be big variation with location for no obvious reason. We looked at two identical plots. One was a few km north east of Chania and one a few km south west of Chania. Both in villages. Both within easy reach of the sea but with no sea view. Both with identical potential build area. The one north east of Chania was double the cost of the one south west of Chania. The one to the north east was close to the university and large military bases so there was much higher demand.

[karpathoskate]

Thanks. It is amazing what you can think of but what you can also forget to query!! Tried to buy a lovely property but as so often in Greece, problems with the land, so decided to look for land. Found a couple of pieces but really need to know exactly what you do and don't pay for, so this Forum is a real help.