Greater incentive for thousands of homes that have remained closed for years or only available through short-term rentals until now to be opened and made available for rent is being given to property owners under new regulations the government is putting in place from November.

Based on the new terms which are provided for by a provision in the tax bill, which is being introduced for voting in Parliament by the Ministry of National Economy and Finance, the following changes are expected to take effect from next month:

– incentives for those property owners who open and rent out under a long-term contract, residential properties that were vacant or had been converted to “Airbnb”
are strengthened, prolonged and extended

– provide landlords with a full exemption from rental tax for 3 years

– it expands the number of owners and the type of homes that benefit from the tax exemption, whereas they were previously excluded

– the protection of the landlord is strengthened, so that he does not lose the benefit when the tenant “breaks” the contract

Changes effective immediately

As an idea, the incentive is already in place as of December 2024: landlords pay no income tax for three full years if they open “vacant” homes and make them available for long-term rentals. This means that for an annual rent of e.g. 8,000 euros per year, the owner saves 1,200 euros in tax (15% per year) or a total of 3,600 euros over the three years.

However, while the measure was due to expire next December, in practice many beneficiaries of the tax exemption did not use the incentive, because they “stumbled” on the exceptions and the “fine print” of the law (article 72, paragraph 91 of Law 4172), which made the landlord potentially “hostage” to the will and actions of his tenant (e.g. early departure).

As a result, today across the country it is estimated that 700,000 to 900,000 apartments remain vacant, as pointed out by the General Secretary of Demographic and Housing Policy Konstantinos Glumis-Atsalakis, speaking at the Prodexpo 2025 conference.

The new regulation, however, which the Finance Ministry is bringing to the vote, improves and extends the measure for an additional year, to 31.12.2026.

Specifically, the new provisions introduce three key amendments that are scheduled to take effect immediately in November – as soon as they are published in the Official Gazette – radically changing the data in the rental market, in order for the measure to work more effectively across the country.

The new facts are that:

– in order to qualify for a 36-month tax exemption, the landlord is allowed to enter into a new long-term lease agreement until December 31, 2026. The property must have been declared as “vacant” in the tax office’s E2 for at least 3 years before, or as “Airbnb-type” on the short-term rental platform for at least 1 year before.

– the lease must be for a property that qualifies for tax exemption and has a minimum lease term of three years.

– flexibility of lease, even shorter than three years, is introduced for special categories of tenants – civil servants who move frequently with transfers. Instead of a “strict” three years, a minimum rental period of six months is allowed if the tenant is a doctor or nurse in the public sector, a teacher of all levels or a uniformed person.

So, instead of a single three-year lease, the exemption would be granted for successive leases within the three-year period (e.g., per school year for teachers) without the landlord losing the incentive. This solves a long-standing problem, especially on islands where owners have so far been forced to turn exclusively to short-term Airbnb-type rentals.

– The tax exemption is extended to dwellings over 120 sqm (which were previously excluded outright) if they are rented to families with three or more children. An additional 20 m2 is added for each additional child after the second. So, for example, a 140 m2 apartment may qualify for a three-year exemption if rented to a family with three children, while a 160 m2 apartment is eligible for large families with four children, or 200 m2 for a family with six children, etc. This frees the hands of landlords with larger houses which were previously outside the measure and remained closed.

– Any early departure of the tenant no longer nullifies the benefit to the rents already collected by the landlord. In addition, the landlord is given three months to find a new tenant so that the tax exemption benefit can continue for the remainder of the three-year period.

Until now, if the tenant left early (by choice or for reasons of force majeure) then automatically the landlord would lose or return to the government the tax benefit they had. This risk deterred many from entering the system.

Now the landlord is not at risk of returning money to the government and, with the increased demand for housing that is currently being recorded, it is likely that they will have no difficulty in finding the next person within 3 months to extend the benefit.

However, it is clarified that this opportunity to find a next tenant in the event of a tenant leaving early is granted once in the three year period. If another tenant then leaves early, the landlord does not lose the tax exemption for any rent received, but cannot extend it again to subsequent rentals until the three-year period is completed.

Which landlords earn more

Landlords who rent out a home that has been vacant for at least the previous three years will be exempt from income tax on rents for 36 consecutive months.

This “gift” from the IRS translates into thousands of euros of net profit. For a landlord who receives 1,000 euros per month from one or more properties that he has kept closed up to now, the total tax benefit over three years could reach 5,400 euros if he were taxed on them at 15%.

However, if one receives other rents from more properties, the benefits are multiple, because all these incomes are added up and taxed at 35% or 45%, not just 15%. So zero tax makes long-term renting attractive for the first time, especially for landlords with many properties.

To qualify, the property must have been declared as “vacant” on the E2 for three consecutive years prior to the lease: i.e. for a lease starting in November or December 2025, it needs to be declared vacant in the years 2022, 2023 and 2024).

Alternatively, for properties that were on a short-term lease, it is sufficient that they were on the relevant register for at least one year before changing use to a long-term lease.

In practice, the tax on the rents of these properties is zero. For rents from these properties, the landlord will not pay tax again until 2029 (for rents from 2025-2027 if they can find a tenant from this year), or 2030 if they give a house for rent from 2026 to 2028.

At the same time, however, and for any other properties that owners may have for rent but do not fall under this non-taxation regime, from 2026 the tax they pay will be reduced by 10 points, from 35% to 25%, for rental income of between 12,000 and 24,000 euros.

How tenants benefit

Tenants gain access to more apartments on the market, as it is estimated that thousands of foreclosed homes will be made available for long-term rentals. The tax exemption now makes it more advantageous to rent long-term for landlords, who will also be able to offer more competitive rents due to their relief from the tax burden. Especially third and large families, who until now had difficulty finding large houses, will have more choices with more affordable prices, since houses over 120 sqm are not excluded and are now dynamically entering the “game” of incentives.

At the same time, special categories of professionals who move frequently are benefiting. Doctors, teachers, military, police officers and nurses serving in remote areas or islands will find it easier to find housing, as landlords are incentivized to accommodate them for even six months, whereas before these changes, they completely lost the tax exemption since they could not ensure a three-year stay of their tenant in the leased house.

In addition, subject to conditions covering 80% of cases, these tenants will also be paid “a rent gift” on 30 November each year, permanently, as a rent rebate.

The fine print and the risks

But the provisions also raise important limitations that landlords should be aware of. If the tenant leaves and a new tenant is not found within three months, the exemption will cease to apply to rents received from then onwards. The landlord will not be refunded the tax saved for the time the house was rented, but will lose the right to the exemption for the remaining months of the three years. Thus, as POMIDA points out, indirectly, the landlord becomes a “hostage” to the second tenant instead of the first.

The eligibility of the property also requires close attention. To “lock in” the exemption, the property must have been reported as vacant on the E2 for three consecutive tax years prior to the contract. An apartment that was only vacant in 2023, 2024 and 2025 (not 2022) is not eligible for the exemption if it was leased in November 2025. It will qualify if the lease is entered into on or after January 1, 2026. In addition, all contracts must be entered into by December 31, 2026, so the “window” for application is not unlimited.

On the other hand, as the public consultation of the relevant provisions has shown, a “grey area” for landlords is also considered to be what will happen:

(a) if the owner of the property changes (e.g. in the case of inheritance, or transfer of a share from one co-owner to another, etc.) within the three-year period.

b) if a person had a “closed” house in 2022, 2023 and 2024 (based on the E2 he/she has submitted) but rented it this year before the law was passed – e.g. since the summer already.

Answers to such questions are expected to be provided in the interpretative circular to be issued after the law is passed.

The most dangerous restriction, however, concerns the ban on short-term renting of the house. If the property is even temporarily made available for Airbnb within the three-year period, the benefit is completely lost and there may be retroactive taxation and penalties.

For example, it is illegal for an island landlord to rent to a teacher for the school year but, when the summer vacancy occurs, to make it available through Airbnb-type rentals. This move will cost him the entire exemption – and possibly retroactively based on what the interpretive circular will say.

How the “deal”

In any event, landlords and tenants should be aware to weigh the new facts.

A landlord who opens an 85-square-foot closed house for a long-term lease in 2026 (if it was declared vacant in 2023, 2024 and 2025) will collect the full rent for 36 months without paying tax. This means that he can offer a lower rent as he does not lose 15%-45% of his income to tax as is currently the case.

In another scenario, a landlord with a 150 sq. m. apartment who kept it closed because she considered long-term renting to be risky and unprofitable, can now rent it out to a large family with four children, but now knowing that even if, for example, after two years the tenants leave, she is not in danger of losing the benefit for the money she already received, and she will still have three months to find new tenants to keep the tax exemption until 36 months after the initial rental. This security creates the conditions for easier negotiation between landlord and tenant.

At the same time, third and large families will now be an attractive option for owners of larger properties that until yesterday remained closed. A 140-square-meter house that was sitting unused because the owner didn’t want to pay high taxes, can now be rented to a family of three and enjoy full tax relief. The logic is mutually beneficial: the family finds it easier to find a great house, while the landlord receives tax-free income.

For special categories of civil servants (doctors, teachers, military, police, nurses), the six-month contract flexibility also changes the game.

On islands remote areas and, and where transfers are frequent, landlords have had a preference for Airbnb because they could not “tie up” tenants for three years. But now they will be able to rent to, say, a teacher for one school year (eight months), replace him or her with a doctor or uniformed coast guard, etc., for the summer and subsequent months, so they can continue to enjoy the exemption for the entire three years. This unties the hands of workers who need temporary housing, as well as owners who want to develop their property.