Tax cuts for those who choose to own homes for long-term rentals, and tax increases for those who more intensively exploit their property with Airbnb-type leases, are bringing pressure to bear on the government for measures to bring down rents. That solution appears to be finally gaining traction, as newmoney.gr revealed two weeks ago. Final decisions will be made in September and, most likely, announced by the prime minister at the TIF.

In practice, the economic staff faces two issues:

– To increase the supply of rental housing to balance rental prices. The problem is also a pan-European one and will be of concern to the new European Commission. In Greece, however, there is already a huge problem of housing shortage in the center of Athens, and in areas around it, and on islands, and in all the tourist destinations of the country, which results in young couples, doctors, police officers or teachers who are transferred, etc.

– Give incentives for long-term rentals, without imposing major bans on short-term ones that can be struck down in court and don’t seem to solve the problem anywhere, nor in other countries that have a similar problem due to over-tourism (e.g. Spain, etc.).

In this context “balanced” or alternative solutions are being considered, along the lines of “one thing is a house on rent for 3 years, another is rent by the week or day”. The draft recommendations and measures to be put out for consultation include:

– Reduction in tax on “normal” long leases. For years it has been considered a problem that the tax rate of 15% (and from the 1st euro) jumps sharply to 35% after 12,000! This gives an incentive for almost everyone to declare below 12,000 euros, since on every euro above 1,000 euros per month, the state automatically gets 1/3 instead of the 1/6 that applies to below 12,000 per year. A more rational scaling for rents from 10,000 or 12,000 and up to 15,000 or even 20,000 euros a year could generate revenue by reducing tax avoidance.

– The tax on short-term leases should remain the same or increase, so that long-term leases gain a comparative advantage and a substantial incentive. Amounts and percentages have been variously heard to have been on the table, but it has not yet been decided what the final direction will be, i.e. whether there will be charges or, simply, no reductions at all for short-term leases. However, an increase in the minimum rate from 15% to 22% for short-term leases, which could “finance” the reduction for long-term leases, is not ruled out.

But there are also suggestions for other measures, such as the reintroduction of tax credits for first home rentals or even interest on mortgages. Although these are considered to be very popular measures, the number of potential beneficiaries is so large that, for budgetary reasons, the practical benefit to each of them would ultimately be very limited or “token” even if they were implemented.