Short-term leases: What changes, who is affected, how the real estate market is affected

Major shake-ups are on the horizon in the short-term rental market, following the government’s decisions to move forward with further regulation, aiming both to align as far as possible the obligations of those offering properties through short-term rental platforms with those who own hotels or rooms for rent and to curb oversupply in order to stimulate the long-term rental market.

These changes come at a time of an acute housing crisis, with properties for rent falling and prices soaring as a result of the rapid and often unregulated spread of short-term rentals.

The new regulations, according to the government and the relevant ministries, aim to restore balance to the property market by emphasizing support for long-term rentals and strengthening safety and quality measures for short-term accommodation. It is worth noting that measures have preceded measures to ensure equal tax treatment of short-term rental property managers with other forms of accommodation rental.

In this context, stricter rules for the licensing and operation of short-term rentals are introduced, as well as significant incentives for landlords who choose to switch to long-term rentals. These initiatives, while eagerly awaited, should address the issue of increasing pressure on the housing market in the hope that they will provide a sustainable solution to the crisis that has affected a large number of households.

Despite the broad expectations, housing market participants believe that the new regulations will have a limited impact on the overall housing crisis. Although the government’s incentives for landlords to convert their properties from short-term to long-term leases are enhanced, it is estimated that only 10% of properties will switch to the long-term market, at least according to industry representatives.

Given that Airbnb in Greece is approaching 120,000, this translates to around 12,000 to 15,000 properties returning to the traditional rental market.

According to the government’s announcements at the 88th Thessaloniki International Fair (TIF), and the elaboration of these by the relevant ministries, the new regulations include significant changes, with winners and losers for landlords, depending on the direction they choose.

These actions include:

1. Restriction of new short-term leases:From January 1, 2025, there will be a temporary freeze on the issuance of new short-term leases in specific areas of Athens, such as the city center, Pagkrati and Neos Kosmos, for at least one year, with the possibility of extension.

2. Incentives for long-term leasing: Owners who convert their properties from short-term to long-term leasing will be exempt from income tax for three years. The measure applies only to properties owned by individuals and not by businesses. The estimated loss of revenue for the state will be about €3 million in 2025 and €13 million per year for the years 2026-2028.

3. Strict requirements for short-term rentals: Short-term rental accommodation will be subject to strict minimum requirements for their operation, including setting a floor area threshold, a ban on the use of basements, mandatory fire safety and safety certifications by qualified engineers. The requirements also include the obligation for civil liability certification, installation of security systems, fire extinguishing systems, smoke detectors and regular disinfection of the accommodation before any new lease.

4. Stricter requirements for apartment buildings: Apartment buildings will require elevator certification for commercial use, and restrictions will be placed on the number of accommodations available for short-term leases.

The new regulations are expected to be implemented before the start of the 2025 summer season, setting a new standard for short-term rentals in Greece and creating a more balanced and secure market. While these changes aim to improve the quality of accommodation and strengthen long-term rentals, their ultimate impact on the housing crisis will depend on the effectiveness of their implementation and the ability of the market to adapt to the new conditions.

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