How to Buy a Property in Crete
Buying a property in Crete is a relatively straight forward procedure. Basic steps need to be followed.
Local Lawyer & Notary Public
Property Title Deeds
Greek Tax Registry No & Transfer Tax
Greek Bank Account
Property Security & Insurance
Appoint a Local Lawyer
In Greece the buyer must have his own independent lawyer based in Crete, who will assist him during the house’s purchase procedure and will represent him in all legal matters, as far as the purchase of his house in Crete is concerned. It is recommended that the buyer gives a Power of Attorney to his chosen lawyer, enabling him to act on his behalf when the purchaser is not himself in Crete. If the buyer is not aware of any local lawyer, Action Constructing can recommend a selection of reputable multilingual lawyers, who have experience in matters of real estate conveyancing in Crete.
Appoint a Local Notary Public
In order for a property purchase agreement to be valid here in Crete, a notary public must be appointed. The notary public draws up the official purchase contract and it must then be read, understood and signed, in his or her presence, by the buyer and seller or their legal representatives. The notary public does not represent the interests of the buyer as this is the role of the buyer’s lawyer, but he is responsible for the verification and registration of the purchase transaction in the public records, known as Registry of Mortgages, so that the buyer acquires the official title deed of the property. Action Constructing can either recommend a number of notaries public for the buyer to select, or assign the one responsible for the official purchase contracts of a specific project subject to the buyer’s approval.
Property Title Deeds in Crete
Title deeds of properties are held at the Registry of Mortgages. The vendor must supply the buyer with a copy of the property’s title deeds in question. This is often done with the help of the buyer’s lawyer, whose duty is to investigate the title deed to ensure that:
1. The vendor holds the absolute deed of the property.
2. There are no claims against the property or encumbrances.
3. The vendor has paid his property tax.
4. The property was built strictly according to planning and building permits.
Only if the title deed is found to be clear will the buyer’s lawyer recommend that he proceed with signing the official purchase contract.
Greek Tax Registry No.
A tax registry number (pronounced “a-fee-mee”) must be issued for the buyer to be able to proceed with any transaction, including buying a house in Crete. The buyer’s lawyer can apply for a tax registry number, in buyer’s absence, as long as the lawyer has a power of attorney from his client. The tax registry number is issued by the Revenue Office.
Transfer Tax in Greece
Tax (VAT) in Greece is formed at 24% of the value of the property.
Transfer of Title Deeds at the Registry of Mortgages
The buyer’s lawyer makes sure that the title deed is transferred to the buyer’s name by obtaining the relevant certificate from the Registry of Mortgages.
Opening a Bank Account in Crete
Greek banks offer a wide variety of financial services. It is recommended that the buyer opens a bank account to a bank here in Crete. This can be done with the help of the buyer’s lawyer. Subsequently, money for the property purchase can be transferred from abroad into this bank account. Withdrawals from the bank account can be made by the buyer’s lawyer on the buyer’s order. Banks in Greece issue “pink slips” for funds that originate from abroad. These pink slips must be requested from the bank by the buyer or his Greek attorney and allow him to prove that the property has been paid with money transferred from abroad and not earned here in Crete. The pink slips are essential for the buyer’s yearly tax declaration and should cover the “assessed value” of the property (see below for details).
Crete Property Insurance
Property in Crete can be insured through insurance companies. Property insurance contracts cover all types of possible damages i.e. fires, earthquakes, natural disasters, storms, theft, third party liability etc. Insurance costs are normally billed bi-annually, though annual payments are also acceptable. Property insurance is not obligatory, but if you have taken a mortgage for your home in Crete from a local bank they normally require that you use an insurance company, stipulated by them.
Security of Property in Greece
The ownership of a property in Greece is secured by the state’s authorities called the Registry of Mortgages. Titles of all properties are kept there, as well as all encumbrances on properties. The property is filed under the name of the owner and the lawyer is entitled to check if the property belongs to any individuals or company. A title search is carried out in order to find out if there are any claims, bonds or encumbrances on the property. A title search will also show if the property was properly transferred.
Home in Crete
If the buyer, planning to buy a property in Crete, is from a country that is not in the euro area, then money transferred from his bank account in his country to his bank account in Greece will be converted into Euro currency with the current exchange rate.
When you import funds into Crete to buy a property, you should transfer the money to your own Greek bank account. The Greek bank will issue the corresponding ‘exchange certificate’, popularly known as the “pink slip” but you (or your Greek attorney) will need to specifically request them. You should present this certificate with your first tax return to prove that the funds for your house’s purchase originated from overseas in order to avoid paying income tax in Greece. People buying a property in Crete will need to do at least one tax statement. We can put you in touch with a local accountant who will submit your tax statement for you.
There are two main ways to finance the purchase of your property in Crete if you don’t have the total amount in cash. One is to remortgage your property in your home country and the other is to take out a mortgage on your Crete property. There are practical advantages in taking out a mortgage on your Crete property as interest rates on loans in Crete may be lower than in your home country and the lending bank, here in Crete, has to reassure that the property is properly valued offering adequate security for your loan. The local banks offer varying mortgage packages and the pros and cons of each one should be weighed. Action Constructing can give you the necessary assistance when it comes to the search of the best mortgage to buy your house or apartment in Crete.
With reference to the purchase of new buildings in Greece the tax is VAT at 24%.
Overseas House Insurance
Your house in Crete can be insured either locally, through a Greek agent, or it can be arranged by an insurance company based in your home country. Whichever your choice is, you should make sure that the insurance covers you for the periods of time that your property in Crete is unoccupied. Some insurance policies do not apply if your property is unoccupied for a certain number of days a year. Please note that if you have taken out a mortgage from a Greek bank on your home in Crete, an insurance policy will probably be mandatory anyway.