In a legislative intervention, which will attempt to put order in the market of short-term leases, which has grown largely unchecked to dimensions approaching 15% of the total economic activity of the tourism, is expected to proceed directly to the government. The immediate regulation and delimitation of this market, also known as the «sharing economy», whose turnover is now estimated at €3.371 billion, is necessary because, as in other countries abroad, its rapid growth has begun to have a number of consequences.
Among these, it alters the character of the destinations, deprives the functioning of local communities and neighbourhoods, threatens social organisation, depriving critical functions such as education, housing for students and public officials, and workers of necessary accommodation, causes unfair competition in the coordinated market of Hotel and generates revenue that evades taxation.
The role of municipalities
According to with information from «K», the Presidency of the Government, in cooperation with the Ministries of Finance, Environment and Tourism, as well as with the Association of Greek Tourism Enterprises and other representative bodies of tourism, is moving in two directions:
First, the Ministry of Environment is preparing legislation which will give it the power to determine the regulatory aspects of its operation purchase of short-term leases to the municipalities. The municipalities, on the basis of data documented by studies, which will assess parameters such as the carrying capacity of their areas of responsibility, the housing needs of public officials - such as teachers and doctors -, tourism workers and other activities in the areas concerned, the adequacy of infrastructure, but also the preservation of the specific character of their individual neighbourhoods, will be able to set limits on the number of properties that can be made available at any given time for short-term rental through online platforms.
Secondly, as revealed on Monday by the Minister of Tourism Vasilis Kikilias, the government will proceed in parallel with a legislative intervention of the Ministry of Finance to differentiate the tax treatment of individuals and legal entities operating in this market, depending on whether they are small owners with one or two properties or professionals who have a significant number of properties available for short-term leases.
«Short-term rentals are part of our tourism product. For the proper functioning of healthy competition, and for the proper functioning of our urban centres, the government is working on a framework for the short-term rentals market. This framework will separate those who lease out properties in bulk from the majority who lease out one or two properties,» the Tourism Minister said.
Meanwhile, yesterday, on Monday, the Hellenic Chamber of Hotels presented a study by Grant Thornton entitled «Short-term rentals: impact on cities and citizens», which records both the size of the short-term rentals market and its negative footprint due to the uncontrolled expansion of the activity.
The data also shows that tourism expenditure in the sharing economy is growing at an average rate of 15% per year. This is to be expected, as the average price of short-term rentals is 5 times higher than the average price of long-term rentals, creating strong incentives for landlords to place their properties on the short-term market.
Impact on the Greek tourism product
«The tourism product offered by the sharing economy is causing issues at the socio-economic level,» says Grant Thornton study for the industry, which was conducted on behalf of the XEE. These include the deterioration of quality of life, health risks and the general strain on cities and infrastructure security. In particular, it is found that the inadequate expertise of short-term rental property owners causes soundproofing and nuisance problems for other tenants, raises issues of proper maintenance and renovation of facilities and inconsistencies between the level of service claimed and the level of service actually provided. These in turn lead, according to Grant Thornton, to «a risk of deterioration in the quality of the Greek tourism product and a negative impact on its international visibility».
Speaking at the presentation of the study, the Mayor of Athens, Costas Bakoyannis, he said that «we need to agree on three things. First, a regulatory framework is needed, there should be rules. Secondly, this regulatory framework should be the competence and responsibility of local government. It would be very easy politically to “push” the issue to the government of the day. However, it is no coincidence that in most of the world's major cities the responsibility and competence lies with the municipality. Thirdly, we must move away from the logic of horizontal solutions and policies. Instead of working from the top down, let us work from the bottom up, i.e. neighbourhood by neighbourhood.
Other issues identified by Grant Thornton relate to the level of property cleanliness and the operation of property facilities, public safety and personal safety and integrity issues, waste management burdens in urban centres and energy consumption. Above all, the study confirms the threat of «deterioration of the urban characteristics, local character and cultural identity of the destinations» and the further strain on the «balance between the tourist and residential environment».
According to the president of the Greek Tourist Board, Alexandros Vasilikos, «the phenomenon has grown in a grey zone, with no rules, no controls, no certifications, with “black” work and underground economy practices. Rents for families have skyrocketed, doctors are leaving the islands because they can't find a home, teachers and lecturers are sleeping in cars. Entire regions are losing their character and character. We are too late in dealing with this phenomenon. The presentation of the study was also addressed by the heads of the destination management bodies of Porto and Paris, who, among other things, noted that limits have been set on the number of accommodation that can be made available through short-term rentals and that strict controls are carried out on undeclared properties, while subsidies are even granted to owners in order to transfer their properties from short-term to long-term rentals.
Strict conditions and fines
According to European real estate market circles, measures currently being evaluated internationally include heavy fines on undeclared properties rented out on a short-term basis, linking the activity to compulsory payment of insurance contributions, consent of the tenants' meeting for the use of a property on a short-term lease, separate inputs and the imposition of income presumptions twice as high as the normal ones. The XEE through its president Alexandros Vasilikos recommends a series of measures to regulate the activity of short-term rentals, such as the establishment of a maximum limit of short-term rental of each accommodation up to 90 days per year, for the whole country, reduced to 60 days in cases such as islands under 10,000 inhabitants or in areas with low average occupancy of hotels. It is also proposed by resolution of the municipality that new properties located in designated portions of urban centers not be allowed to be registered in the Short-Term Rental Property Registry when it is determined that the dwellings for short-term rental exceed the 50% of dwellings that are owner-occupied or leased for long-term rental.
The Chamber also recommends that a maximum of two properties per lessor should be set when a natural person, while any legal person should be considered a professional when entering into a short-term lease. A proposal was also submitted for minimum technical and functional specifications such as a minimum floor area of at least 10 square metres for a room and 18 square metres for an apartment, which must necessarily have natural lighting, ventilation and heating, hygiene and fire safety certification, liability insurance and compliance with specific health protocols. It is also proposed to impose a visitor's accommodation tax for the benefit of the local authorities, cleaning charges and a residence tax, but also to provide for a higher income tax for short-term rentals than for long-term rentals and the imposition of VAT on properties which have been used for tourist accommodation for more than 3 consecutive years. Finally, the Chamber recommends the introduction of an obligation to inform the co-owners of the availability of the property for short-term rental and an increase in common charges by 25% and the implementation of a system of control of complaints against the owner by co-owners and customers, with stricter penalties and fines.
What Airbnb companies say
By Nikos H. Roussanoglou
The Association of Short-Term Leasing Companies (STAMA) is open to dialogue with the relevant bodies in order to seek solutions for improving the institutional framework for short-term leases. However, according to Mr Nassos Gavalas, President of STAMA, «what should be made clear is that the property management companies, which are members of the Association, are not both investors and owners of these properties».
5.000 accommodations
Today, the Association of Short-Term Rental Companies has 58 member companies, managing 5,000 properties nationwide. «We estimate that on average 92% of these properties are for small landlords with 1-2 properties each. Therefore, to talk about further regulations and tax burdens, it should essentially be made clear that as a rule they will concern small property owners,» Gavalas said.
Also, according to STAMA, the fact that short-term leases do not yield VAT is not a Greek «novelty». Property management companies do not collect VAT and do not deduct VAT from their expenses.
According to AirDNA data, in Athens the share of individual owners is estimated at 31% from 42% in 2019. At the national level, the corresponding share is 40%, up from 46% in 2019.
However, it should be noted that the percentage of companies managing more than 21 properties makes up 12% nationwide, a figure that has not changed since 2019. In Athens, however, there is an increase in the share of companies to 21% from 16% before the pandemic.
Mr. N. Gavalas is also the head of Mint, a property management company. «As Mint we manage around 400 properties nationwide, most of which belong to individual owners. So we understand that there is a misunderstanding on this issue, as our companies are essentially providing services to individual owners who for various reasons (e.g. distance, age, time) cannot themselves dedicate the time required to manage their properties through digital short term rental platforms.».
