Additional measures for the major problem of mortgages, with the main aim of increasing the supply of real estate on the market, are being worked on by the government staff in order to be announced by Kyriakos Mitsotakis during the budget debate.

The prime minister, who will be present on Friday at the start of the debate, will speak on December 16, as usual, about the Budget and is expected to unveil the additional measures, while he has already announced in the recent past a major programme for refurbishment of closed properties with European funds and relatively relaxed income criteria, to bring more apartments into the property market pool.

Weeks ago, Mitsotakis had asked Finance Minister Kyriakos Pierrakakis and State Minister Akis Skerchos to start paper exercises with the Budget as the horizon and the direction of boosting supply.

In fact, a relevant meeting on this issue was held a few days ago at the Maximou Mansion with the participation of the two aforementioned ministers, the Vice President Kostis Hatzidakis, the Minister of Social Cohesion and Family, Domna Michailido,u and others. The government officials are evaluating the framework in place in many other European countries to come up with an intervention that is more function-based on the Greek real estate market.

European practices

One idea that has been floated is providing tax incentives to property owners and basically developers to lease a portion of new apartments at more affordable prices for tenants. The rent calculation could be done by taking into account data such as property values. For example, Spain has introduced high tax exemptions for landlords who rent at affordable prices – a practice that could be applied in Greece as well.

Another idea is reducing or exempting municipal property taxes. This could of course, be done at the level of municipalities, which in the case of Greece do not exercise tax policy, although in the past Mitsotakis has announced that the collection of ENFIA will be transferred to them in due course.

In other countries, however, municipalities are reducing ENFIA or equivalent local taxes for properties that are part of a social or affordable housing scheme, as well as for properties in Community Land Trusts. Also, special tax regimes are being created internationally for real estate investment trusts (REIT or SOCIMI type) in exchange for a commitment to long-term affordable housing.

Finally, in some cases, a so-called “inertia tax” is imposed on long-term vacant properties, or increased taxation is imposed on purchases by non-residents and foreign investors. In Greece, the idle tax debate was opened before the TIF, rejected, but it always remains active as a thought. At the same time, however, the government has already adjusted upwards the monetary limits for the Golden Visa, which is the main investment tool for non-Europeans to buy property in the country.

There are also a number of regulatory and planning tools that have been evaluated by the government staff, e.g., the British model, whereby developers are required to either cede a percentage of affordable housing from the building or pay an equivalent cash contribution, which of course, risks increasing construction costs.

What other countries are doing

The housing issue is not just a Greek problem, but a European problem and is a concern for all governments trying to find solutions and boost the housing supply side. Apart from the United Kingdom which imposes a compulsory levy on developers, there are also local social housing schemes. France operates so-called Community Land Trusts (foncier solidaire), with concessions of public land, and gives tax and subsidy tools for social housing.

Spain has increased taxes for foreign buyers and gives tax incentives for affordable rentals, and seeks to activate vacant and idle housing. Portugal is running a large state programme to build tens of thousands of new homes, with PASOK having referred to the so-called “Portuguese model” in its programme, but it also comes at a high financial cost. Finally, Germany and the Netherlands subsidise rents, give incentives to landlords for social housing and attempt to limit speculative investment.

Analyzing international practices, government officials believe that a combination of measures works best, with the utilization of public land, subsidies, zoning and providing tax incentives. On the public land development side, the social counterpart program is underway, with public land to be built over the next few years by private developers and several apartments will be returned to the state, to be subsequently allocated to citizens with social criteria.

In this context, the utilization of abandoned camps “run” by the Armed Forces is also included, to create free housing for their cadres. However, it is obvious that the number of about 1,500 apartments, for which buildings will have been “raised” by 2027, is quite small, and only the measure of utilization of land owned by the State is not enough.

The example of Malaga

One of the models considered by the government is that of Malaga. In 2024, the city of Andalusia in Spain recorded a record 8,902 new homes, the highest number since 2008 and a 27.5% increase on 2023. The city of Malaga led the way with 2,246 approvals, while Estepona, Marbella, and Fuengirola followed with hundreds of new permits.

A central element of housing policy is the utilization of municipal land through tenders to private parties for the construction of so-called VPOs (affordable housing). Already 476 homes have been awarded to Lagoom Living, while another 530 are being promoted in the same sector. Meanwhile, the Municipal Housing Plan 2023-2027 provides for over 4,100 sheltered housing units, both for rent and purchase.

The city, which needs around 12,000 new homes a year but produces just 3,000-4,000, is implementing a mixed strategy: private development, PPPs for affordable housing, and social rentals financed, such as the first 476 properties supported by a European Investment Bank loan. Objective: simultaneously increase supply and strengthen affordable housing.

The renovation programme

Beyond the surprise measure that Mitsotakis will outline, however, is the government’s already made decision to launch a bold renovation program, much larger in scope than the existing Renovate-Renovate-Renovate.

The new programme will start to “run” in the first few months of 2026, and the aim is to renovate and put on the market around 30,000-35,000 apartments that until recently remained unused and closed. The budget of the programme will rely on the reallocation of EU funds from programmes of other ministries and is expected to approach 500 million euros.

The Hellenic Development Bank will play a central role in implementation, as well as the mechanisms of financial institutions, in an effort to get the programme up to speed. According to information from government officials, the subsidy for renovation can be as high as 90% of the cost, resulting in minimal participation by the beneficiary.

As for the income criteria, the goal is to involve so-called “middle-class” citizens who still hold idle real estate, so these are similar to the improved criteria for inclusion in My House II – unless something even better is done.