Greek Tax Trap changes

[Kilkis]

The friends who told me about the housing situation in Plaka were talking to a young Greek lady in a shop in Chania about three years ago. She asked them where they lived and when they told her Plaka she said that she would love to live somewhere like that but couldn't afford it. After a short pause she then said, "Not to worry. When all you foreigners go home we can buy your houses for €100,000 and then we can live our dream". I must stress that this was not said in a nasty way just factual.

I agree with you Jon that the big problem is when people have to go back for some reason. It is also true that a house doesn't have to fetch what it was bought for in Euro to get back the price in sterling but I think most properties would need to drop more than the difference in exchange rate to sell. Figures I've heard have been around 50 % but it does vary quite considerably. When my neighbours sold in mid 2011, so pretty far into the crisis, I think they took a hit on the Euro price but got back pretty much the price they paid in sterling. They left just about everything in the house for the new owners but worked out that it would only cost about £2,000 more than the removal price to re-equip in the UK so not such a big deal.

Warwick

[Topdriller]

I think another problem for some people is they bought a seemingly cheap house at the time only to find out later why it was so cheap i.e. shoddily built.

This is not surprising since prior to the housing boom there were very few experienced construction, building workers here on Crete. Come the boom and quite naturally every able bodied Cretan saw building houses as a means to cash in and make some money for themselves.

Of course, there were and still are exceptions to the above but if you're unlucky enough to have bought a shoddily built house then it's going to be far harder to sell in a depressed property market because of the competition around you i.e. better built houses are also up for sale and their owners have also had to reduce the price to get prospective buyers through the door.

There's something else, a lot of people who came here in the boom years decided to buy a new build, rather than look around for a second hand property. Again, there are reasons for this i.e. the unrealistic prices of potential buyers then, the fact that far fewer people were selling and the ease - or so it seemed at the time - to have a house built to your specification. There was also no means of knowing how much a ready built house was worth (no registered surveyors as in the UK) and, just like the land for sale at the time, the owner could and would put any price on his 'pride and joy'. This put a lot of people off and so they went down the new build route.

What's more, "the crisis" has meant the market for smaller houses has virtually dried up. Northern Europeans have far less money and what money they do have they're keeping for a 'rainy day'. Also, and in the past, they may have been tempted to take out a mortgage to buy / build an overseas house but this market has also virtually dried up.

The housing market today is for the larger, more expensive house i.e. people who have significant amounts of cash and are worried about keeping their savings in banks - and why shouldn't they worry? - are deciding to put it in property. Most houses being built around this area are expensive, designer houses and are being built by rich Russians and the like. These potential investors rightly believe they can strike a deal over the price of land and the build because they have cash and the people here might just need some.

Most Brits have seen house ownership as a safe bet i.e. the price will generally appreciate far more than money in the bank, the rate of inflation etc. and in the past this has been true, particularly in the UK property market of the last ten years. Seven or eight years ago it looked as if it might have been the same here but the global recession has put paid to that idea and it's hard to know when things might change around again - if ever!

Jon

[Tim]

Sorry, been away for a few days -

I think a major concern is the imposition of capital controls. It would only take a minor crisis in the banking system (and you get the feeling that's never far away in Europe in general and the Med in particular) for these to be put in place.

Then, not only would it be far more difficult to sell your property, but you wouldn't be able to get the proceeds out of the country.

Capital controls are, of course, always temporary. They were imposed, temporarily, in Iceland after the banking crash of 2008. 5 years later, they're still in place!

Tim

[filippos]

Capital controls are, of course, always temporary. They were imposed, temporarily, in Iceland after the banking crash of 2008. 5 years later, they're still in place!

Wasn't UK income tax introduced as a temporary tax?

[Tim]

Yes, I believe that's correct. Introduced to pay for a long-ago war if I remember right. Of course, you could argue that as a country we've been almost permanently at war with somebody or other ever since.

Tim