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BUYING PROPERTY IN CRETE

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This piece was written before the financial apocalypse of 2008, but still holds largely true apart from the future being slightly more unpredictable than it seemed at the time. This applies to the world at large, but is particularly more pertinent to Greece, which has not come through recent events very well. So what of the future? Well current expert financial opinion, which it should be noted, comprehensively failed to predict the last financial meltdown, is somewhat divided. Recent events have exacerbated the fundamental problem of the Euro, in that it is a one size fits all currency and interest rate for a variety of autonomous economies, and as such denies these individual economies control over the relative value of their currencies, as obviously these individual currencies no longer exist. If they did then you can be reasonably certain that the Greek and German governments would be pursuing differing economic objectives in this regard.

Some doomsayers have predicted that this inherent flaw will bring about the end of the great European dream, argueing that there are now two ways forward. Either a Unted States of Europe is formed that surrenders individual countries political autonomy to a central government. Or the experiment is deemed to be over, and countries revert back to their individual pre Euro currencies. As the former would involve the richer EU countries having their economies diluted by the poorer ones, the latter seems the most likely of these two options. However given the enthusiasm for the European Union globally (amongst politicians anyway) a third, and most likely course of events is that things will continue as they are with struggling countries being baled out by the richer ones with a series of loans. So will begin a long and tedious route back to financial stability.As far as Britain is concerned the economy still has a long way to go with serious weight of opinion being behind phase two of a double dip recession due any time now.

On a brighter house buying note, the pound has recovered to some degree against the euro, and interest rates are predicted to remain low for at least the next five years. Prices of property in Crete seem to be fairly stagnant at the minute, and sales could not be described as brisk. Many would determine this to be a good time to buy were it not for the recent turbulent events, that are some way yet from being behind us.

Buying a house at any time is not a commitment that should ever be entered lightly, and the current global uncertainty adds a new dimension that we would all be better off without, so give it the contemplation it deserves. Though ultimately you must bear in mind, that for good or ill, if the future could be accurately and consisitently predicted Las Vegas would be a remote town in the Nevada desert that you would never have heard of.

Since Greece joined the EU in 1981 it has been possible for fellow European citizens from EU member states to buy and own property in Crete on an equal footing with Greek citizens. After a fairly slow start the second home bandwagon is now truly up and running with lots of building companies, property developers and estate agents dedicated to this specific market. Naturally this kind of boom becomes a magnet for the fast buck merchants, so if you are thinking of buying here then take your time, do your homework, get a lawyer, and don't part with any money until you are completely certain of what you are getting into, and your lawyer is happy with the deal.
That said the Crete property market is not the shark infested lagoon that some countries are host to. This is a small island with small communities and an excellent grapevine that exerts a positive effect on competition and tends to preclude the cowboy outfits from prospering. It doesn't however prevent them from existing and acquiring a bad reputation. So before you part with an amount of money you don't see very often in one lifetime, take your time and do your homework ( did I mention that already?).
If you are looking to make a killing, then I'm afraid you've probably missed the boat, as the huge increases seen since the market opened up are starting to stabilize. The signs are good though for sustained, steady year on year increases for the forseeable future. Which should take some of the risk out of buying property here, in so far as there is every chance of getting your money back, and possibly realising a small profit if things don't work out.
There are many options of buying property in Crete, from buying a plot of land to buying an existing property. The first thing you need to do is figure out what you want, and indeed if you really want to buy property at all. This may seem patently obvious, but a surprising amount of people form bizarre abstract ideas of their ideal property. A house set in splendid rural isolation whilst within walking distance of all amenities, close to the beach and the mountains, set in sprawling grounds, yet cheap to maintain, is collection of paradoxes that cannot possibly coexist. So rather than waste an awful lot of time looking for something you are never going to find, its worth sitting down and drawing up a practical and attainable vision of what it is you want. Look at what’s on offer and see which features tick your boxes. Ultimately you can only buy a property that actually exists, and is also for sale. Whilst considering property features you also need to bear in mind the practicalities of maintaining a property from several thousand miles away.
On top of the agreed purchase price you will need a further 10% to 15% of the price of the property to cover taxes and legal fees. Running costs are fairly low in Crete. There is a small standing charge for water and then it is charged by usage. Electricity is charged by usage and the bill includes a small charge for public utilities such as refuse collection and street lighting etc. There are no rates payable on properties of less than 150 sq. mt.
If you live in a country that does not use the euro as currency and you are going to fund your purchase by a mortgage, then you will have a decision to make as to which currency to take your mortgage out in. This is a decision only you can make. Just bear in mind that the exchange rate will fluctuate over the course of a mortgage. So if you are paying a euro mortgage from a sterling salary this will be another variable to consider.

 

WHAT TO LOOK OUT FOR


First and foremost you need a clean title to the land, secondly you need to be certain that all relevant permits are in place. This is the job of the lawyer. On no account accept the assurances of the builder’s brother in law, some bloke down the pub, or the author of a web site.
As a slight aside here the land registry in Greece is a comparatively new innovation and not all land is as yet registered. Historically land sales were made on handshakes and ownership in small communities that did, and largely do still exist was public knowledge. For as yet unregistered  land the person occupying or using the land for the last 20 years is assumed to be the legal owner. In practice this is not quite the recipe for disaster that it may sound and ostensibly it seems to work very well. As always in these matters take professional advice, it's more expensive than the bloke down the pub but worth it.
Most houses will have a water and electricity supply and either mains sewerage or a septic tank. If you are buying a plot of land or an older renovation property this may not necessarily be the case. The cost of providing these facilities varies greatly according to location, so it’s as well to investigate the cost and practicalities of this before committing yourself.
Pay attention to the building specifications, of both existing and proposed buildings. Crete can be quite cool in winter, and also has a high and often torrential rainfall. The mountain tops can stay snow covered until late May. Make sure the walls will offer adequate insulation, which will also help keep it cool in the summer as well as warm during the winter months. Make sure also that good quality double glazed doors and windows are included.
If the plot or house you are considering is adjacent to vacant land with the potential to be built on, consider what the future may have in store regarding development. Your views and sunny terrace may disappear.

BUYING EXISTING PROPERTY


This option has the advantage of immediately seeing what you’re going to get, and quite often the furniture is included in the price. This may or may not be so advantageous depending on your respective tastes, but it does alleviate some of the pressure of setting up home in a foreign environment.
It is worth having an independent survey commissioned by a civil engineer. He will not be able to give you a formal valuation but he can point out structural defects and potential problems. Ask him also to check the building against the original building permit to make sure no illegal alterations have been made. He should also be able to advise you on compliance to EOT standards, if this will be a requirement.
Any defects found, providing they don’t put you off will of course be a bargaining tool. Look around as many agencies as you can because often the same property is advertised by different agencies at different prices.

BUYING OFF PLAN

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This seems to be by far the most popular means of property purchase by foreigners at the moment, and there is no shortage of companies offering comprehensive packages. Most companies will have a show home or finished house available for inspection and as many cater almost exclusively to foreign buyers they will "hold your hand" through the buying process. Before finally settling on a building company, do as much research as you can. As well as seeing some of their finished properties ask to talk with the owners and get their opinions. Bear in mind though that some customers may have unreasonable expectations whereas others may be far too easily pleased. Subjective opinions will need an element of interpretation.
Buying this way requires a bit of a leap of imagination to envisage the finished article from the plans, computer mock ups are generally available these days, but they tend to be an indication of what you will end up with rather than an exact depiction. An advantage of this method though is that you can put a certain amount of personal input into the design and decor. 
Building usually takes one to two years with payments staggered according to progress, which may be advantageous. Then hopefully when it is handed over you will end up with a house worth slightly more than what you paid for it.
Penalty clauses for late completion and the timing of payments are included in the contract, make sure you are happy with these before proceeding. Check over the building specification in the contract as well. For example, don’t just assume the house will have interior doors just because houses usually do, make sure they are stipulated in the contract. I’m not suggesting that Cretan building companies resort to such shallow tricks, but it doesn’t hurt to make certain exactly what you’re getting, and a reputable company would not object to making such inclusions in a contract, however unnecessary they might deem them to be..

 

BUYING A PLOT


First of all you need to know that all relevant permits are in place. A document outlining the building regulations, square meterage allowance and any restrictions in place can be obtained from the planning authorities. Check the feasibility and cost of providing utilities, water, electricity and sewerage. Consider the effect of future development on adjacent land.
Having got your plot you then need to build a house. You can leave the entire thing in the hands of a building company, or you can build it yourself. Not an option for the faint hearted, but it does put you in control of proceedings. Planning permission and budget not withstanding. The main problem with this is that there will be a lot of issues requiring your personal input, which can be a difficulty if you live relatively nearby. If you live in a different country then this problem is severely compounded. However if you can find an architect or project manager you can put complete faith in then this problem is not insurmountable, particularly given the effectiveness of internet communication these days. It remains though an option requiring a good deal of contemplation.

BUYING A RENOVATION PROJECT

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There are quite a lot of these on the market and many appear ostensibly at least to be bargains. There is also a certain romantic appeal about old decaying buildings.
Restoring an old property is always going to cost more than you estimated. This remark may appear to be a rather presumptuous, unfortunately it’s invariably true. The other great drawback is that such a project will undoubtedly throw up lots of issues that require your personal attention and if you are not resident on the island addressing them will carry a degree of difficulty.
My personal view is that restoration projects with good investment potential will be snapped up by local builders who will be able to complete the renovation quicker and cheaper than you can, so if they are still on the market there is a reason.
That said with a reliable architect or project manager it’s not unfeasible, and there’s sometimes more to life than pragmatism and money, but do be very cautious.

RENTING YOUR PROPERTY


Many second home owners rent out their properties to offset their expenses, and a comprehensive infrastructure exists to facilitate this.
First of all if you rent out a property in Greece for a period of less than one month you will need what is known as an EOT (Ellinikos Organismos Tourismo) license from the Greek Office of Tourism. To obtain this your property will have to meet various  standards laid down by the tourism office, which are mainly concerned with safety. This is a legal requirement, which the tourist office regularly check by searching through internet and other advertisements for rental properties and checking them against their database. There are quite substantial fines for failing to comply with this law.
If holiday rentals is your intention you should give consideration to the EOT license when choosing a property. Some houses will come with a license, and if you are having a property built you can specify that is constructed to EOT standards. If you are buying an existing property without a license then you should take professional advice as to what will need to be done to obtain one.
Obtaining a license generally involves the services of an architect and a lawyer, and the process is usually quite lengthy and bureaucratic and can be expensive depending on the architect and lawyers fees. Once the application is in, and a protocol number has been issued, renting can legally begin, prior to the issue of the license proper.
You can of course rent out your property to family and friends on an informal basis without a license. Strictly speaking compliance with the law in regard of this requires that no money changes hands, but this would be exceptionally difficult on the part of the authorities, to firstly discover, and secondly prove.
You will no doubt want to insure your home, and if you are going to rent it then you should really have third party liability cover against any legal actions that may be brought about by guests. Most of the local insurance companies now offer policies tailored to second home owners that have third party liability clauses in them, but it as well to check this as litigation seems to be the new growth industry of the western world.
There are a number of web sites where individual properties can be advertised. The best way of finding them and assessing them is to do an internet search for a property similar to the one you want to rent, and see what comes up. This will give you a good idea of the competition and prices. Bear in mind that when most people do web searches they rarely go beyond the first three pages. So however attractive the web site on page 27 looks, it's unlikely it will look very attractive to many potential customers.
Property maintenance companies can be found in the same way, though there is more of a case for personal recommendations here. Having decided upon a property maintenance company, (many of which seem to be run by British ex pats), they will doubtless be a valuable source of information in your new venture, if for no other reason than they have a vested interest in your success.