Will it all be Greek to you?
With the lowest cost of living in Europe and cheap housing, Brits are now turning to Greece to buy a property. But as Judith Larner warns there can be a few shocks in store as you try to negotiate local customs and bureaucracy
Saturday September 27, 2003
Spain and France remain the most popular destinations for British buyers looking for a home in the sun, but with prices in many locations rising fast, bargain hunters are now turning to Greece and Cyprus.
Greece has long been popular with the British. Now the lowest cost of living in Europe and cheap housing have combined to boost interest for second-home buyers. But for those used to the more developed property markets in northern Europe, local customs and bureaucracy can come as a shock.
At the age of 57, John Beech was starting to think about retiring to the sun. He'd spent holidays on the island of Crete and decided an old house in one of the villages would be the perfect retirement spot. On a trip last autumn he discovered what he was looking for and asked UK mortgage broker Conti Financial Services to find him a Greek bank who would lend the money to buy the property.
Legally, the house seemed in order, so Mr Beech was surprised when he was turned down for a loan by the Bank of Cyprus. "It had been owned by an English family who had sold it on to a Greek bank manager.
"There was no problem proving who owned it, which can sometimes be a problem," he explains. "But the house was not registered with the town planners."
Further investigation revealed the town plan only dated back 10 years, while the property Mr Beech was interested in was much older.
A local lawyer is now sorting it out and Mr Beech is confident a bank in Crete will come up with a mortgage. He describes the experience as "challenging". He says: "The whole process has taken about a year to complete. The estate agent has been very helpful." He is remarkably unperturbed by the bureaucratic nightmare. "It was suggested to me afterwards that the situation could have been easily resolved by simply filling in a form," he says, "but I don't think anyone was deliberately trying to be awkward. They were just a little tardy in their administration. It's just their way."
Zoe Lama, a Greek lawyer based in Crete, is familiar with the issues British buyers can come up against.
She says problems like the one Mr Beech had are easily resolved. More commonly, foreign buyers find there is some dispute over who actually owns a particular property. "Most British people have their heart set on an old house in a small village," she explains. "For Greek people who owns a property is not an issue because everyone in the village knows who lives there. Of course, foreign buyers need proof of ownership to raise money."
She says some banks are prepared to grant loans without the deeds. "There is a law which states anyone in possession of a property for 20 years is considered to be the owner. Vendors need to provide proof of this. This could be tax bills, social security, etc." The vendor must then get a certificate from the municipality stating ownership. Ms Lama emphasises the certificate is important.
"There is always a danger, especially in a country where making a will is not common, that someone will come along later and claim the property," she warns, "but with the vendor's certificate there is nothing that can be done legally."
Cassie Karanjia of UK-based estate agents Crete Property Consultants, says potential homeowners should be aware the Greek property market is relatively new. "EU nationals have only been able to buy since 1991," she says. "Be careful, because different regions have different laws, so it's essential to employ a local lawyer.
"This is especially important if, like most buyers here, you are paying cash. In this case you would not have a bank carrying out the necessary searches."
Buying a foreign property in any country can be fraught. Even in well-established markets like France and Spain, buyers should be aware of the pitfalls. Barclays, which has branches in both France and Spain, says buyers should always seek advice on legal matters.
Second-home owners should look at buying abroad as a long-term investment. The process can be slow and it can take years to recoup initial expenses.
Greece has more than 2,500 islands, so prices vary widely. Expect to pay more for properties on the coast and around Athens. As a guide, rural properties in need of restoration cost £20,000, coastal building plots around £25,000, apartments and studios near the sea from £30,000, while townhouses and small villas start from £100,000. In Cyprus expect to pay around £60,000 for an apartment in a tourist area and £50,000 in a less well-known area.
Useful contacts: Crete Property Consultants: 0207 328 1829. Federation of Overseas Developers, Agents & Consultants: http://www.fopdac.com./ Greek government: http://www.greekembassy.org.uk/