Guide to building property
Guide to Building Property in Crete & The Pitfalls to Avoid
Guide to Building Property
Follow our guide to building property and avoid pitfalls.
Most are reluctant to building a new home, especially in a foreign country. This is probably because they cannot really imagine a house on a plan, or they are worried about costs and legal issues.
Building in Greece these days is easy, risk-free and affordable. Provided, of course, you have the right advisor at your side!
3 steps to successful building
1. Find a suitable plot.
BEFORE making an offer on the plot, ask the vendor/agent for an up-to-date topographical plan, indicating the exact boundaries and size of the plot, the building law that confirms that the plot is buildable, with the engineer’s/topographer’s signature and stamp.
Ask a local architect or engineer’s advice about the ability to build on the plot, its limitations and potential risks or problems. They will be able to ensure that:
- the land is not classified as forestry land according to the Greek forest Registry. If it is, it is not buildable.
- the land is located in an area that permits the construction 2nd homes.
- confirm that there are no archaeological issues limiting or prohibiting construction.
- that the land does not include any public land within its boundaries.
- utilities such as water, electricity, and telephone lines, are nearby, and that the land is served by a public, private, or service road.
A Greece based lawyer will also need to confirm that there are no legal issues. Plots should be clear of debts and have clean titles.
Land in Greece is generally divided into three categories:
- In-plan plot – within city, town, village boundaries. Higher building quotient/coefficient
- Out-of-plan Plot – Outside city, town, village boundaries Lower building quotient/coefficient
- Forestry plots or plots located in areas where 2nd homes are not permitted
The first (easiest) category refers to land within the city or village plan where you can build on a small plot and don’t need clearance from the forestry service. In these areas there are very few structural restrictions and a higher building allowance.
The second category refers to land located outside the city plan. A plot under 4000m2 has a 186m2 building allowance. This increases relative to size.
The third category (forestral, agricultural etc) is a piece of land that, for several reasons, nothing can be built on it.
Some helpful information:
- There is a way to expand the allowance legally by e.g. building a house with a photovoltaic system and providing electricity, building in stone, or building an “encaved” house if the plot is on a slope.
- A new law that will probably come into enforcement at the end of 2022 will require that a plot is at least 4000m2 in order to build.
- Maximum building capacity for residential plots is about 370m2. Even a plot of 10.000m2 cannot build more unless it can be divided legally into smaller plots. Not all large plots can be divided as there are various restrictions e.g. bordering roads.
- Some other factors that may limit or reduce building capacity are forestry areas, archeological restrictions, distance from the seashore or “water line”, streams or rivers, roads, and high voltage electricity pylons.
2. Obtain a Building Permit
The estimated time of building permit issuance is from 4 to 6 months.
The architectural plans accompany the application of a building permit. Once the final plans have been agreed with the archiect, he or she will submit them, along with all the relevant studies, requirements, and documents needed, to the relevant authority for approval and issuance of the permit.
A building permit is required for new construction, or adding onto pre-existing structures, and renovations. The new construction will be inspected during construction and after completion to ensure compliance with national, regional, and local building codes. Failure to obtain a permit can result in significant fines and penalties, and even demolition of unauthorized construction.
The building permit is valid for 4 years, extendable for another 4 years.
Important:
The re-sale of a property that has been built illegally (fully or partially), or without a building permit, may be impossible.
3. Construction
Once the building permit has been issued the excavation works can start. It takes 8 to 12 months to complete a construction, the main factor here being the weather conditions.
Finding reliable contractors is important. Always use registered professionals who have a good reputation!
Find a company rather than several independent professionals or ”friends”. This will save you time and help avoid pitfalls. The construction companies only deal with trusted and reliable associates and vendors.
Always keep in touch on a regular basis and keep track of your budget and expenses. There will always be a few unexpected expenses but most can be budgeted for at the planning stage.
New technology such as video-calls, email, chats etc. are perfect for keeping in touch with your construction company and/or project manager. In this way you will be able to check that the building work is on schedule, and ensure that it is meeting your expectations
What is I.K.A.?
I.K.A (The Institute of Social Insurance) is the only compulsory insurance required under building contracts in Greece.
A building operative’s eligibility for unemployment benefits, health care and pension will depend on the number of years they have worked, and the number of IKA “stamps” they have collected.
Who is responsible for its payment?
Those who own the property that is being built (or will be built) are the indirect employers of the workers involved. So, they are responsible for all I.K.A payments, although in practice these are paid monthly by the contractor. As this is a complex topic, it is important to get your Architect or Engineer’s advice and ask them (with a Power of Attorney) to complete the I.K.A. paperwork on your behalf.
How is it calculated?
I.K.A liability is assessed by your local I.K.A office based on the drawings submitted for Building Permit. This is based on a number of minimum labour constants, e.g. ‘X’m3 of reinforced concrete will take ‘Y’ man hours/days to install, at a labour constant of ‘Z’ Euros.
IKA contributions add about 9-10% to the cost of construction work in Crete.
Non compliance with IKA Regulations
There are 3 main consequences of non-compliance with I.K.A Regulations:
- Punitive fines will be imposed for incorrect filing and payment of I.K.A.
- The Electricity Company (DEH) may refuse to make a permanent connection to your property.
- You will not be able to re-sell your property without the stamped Final I.K.A. Certificate
BE CAREFUL!!!!
Some essential advice for people buying, renovating or building a property in Greece
Tip 1. You want to buy a ruin or old property and want to refurbish it, adding on extra rooms or enclosing existing terraces:
BE CAREFUL: Ask an Architect if the size of the plot legally has the potential to accept extra building volume.
If you just proceed on your own without advice, YOU RISK:
a. Not being able to get a Building Permit for works.
b. High fines if you do proceed to build illegally without a Building Permit.
c. Not being able to re-sell your house if you do the works illegally.
Seek advice from a competent Architect. Lawyers are not always experts on the subject.
Tip 2. If you already are the owner of a house or ruin and want to refurbish it or do some repair works without building anything extra:
BE CAREFUL: Ask an Architect if you have to obtain a Building Permit or not.
Tip 3. If you have a house or ruin in Greece and want to refurbish or do some repair works yourself:
BE CAREFUL: You might have to declare these works to I.K.A and pay the necessary contributions. Ask an Architect for advice as you risk very high fines if a representative from the very powerful I.K.A. authority carries out a check on the completed or works in progress. (See I.K.A. Obligations link).
Tip 4. If you buy an old house with which the owner has carried out extended refurbishment works before selling it to you:
BE CAREFUL: If the vendor has not paid the corresponding I.K.A for the works done, YOU risk paying it after the purchase should there be an I.K.A control. Ask if the I.K.A payments have been made and take receipts. If in doubt, check with an Architect and a Lawyer.
YOU RISK paying that I.K.A plus fines and or have difficulties in re-selling the property. (See I.K.A. Obligations link)
Tip 5. Having inspected many plots and found THE ONE that fits you because the view is just right and the price reasonable, do not rush:
BE CAREFUL: Check with an Architect to verify it can legally accept a building. You will need to see a recent Topographic Survey to confirm the boundaries and size of the plot and to know the following:
– Is the final forestry clearance available?
– Is there the need for a final archeological authority clearance?
– Is the size of the plot large enough to legally build the size of house you want?
– Is the date of issue of the particular plot in combination with its size, correct according to what the law demands, in order for the plot to be able to accept a house?
– Is the size, shape, and orientation for views, privacy etc. of the plot suitable to build the kind of house you want?
If you are not sure about all these points, YOU RISK not being able to build the house you want.
Tip 6. You have discovered a nice small development, perhaps on a 4500 m2 plot outside the limits of any town or village plan. Four fully detached small houses (without any material connection between them) have been constructed upon this plot and they are put on sale independently:
BE CAFEFUL: Check on the title validity of each detached house. Ask a Lawyer, an Architect and a Public Notary. The Greek law is rather contradictory in these cases. Be sure that you are not going to exchange a contract, which is going to be invalidated in the future.
Tip 7. You bought a 4600 m2 plot outside any town or village plan with sea view. It is a long strip descending upon a hill, its road access is good, electricity is very close and the view is just fantastic with no chance another house being built in front to disturb it:
The width of the plot is 23 metres. You dream of a house as wide as possible towards the sea view. When your Architect starts designing your house, you will see in his sketches that your house is only 9 metres wide towards the sea view, which you point out is too small. If you ask your Architect why he does not make it a bit wider he will reply that he has to keep 7.5 metres minimum obligatory distance from the boundaries. For wider plots the normal distance from boundaries is 15 metres.
This is just an illustration of a difficult situation that could have been avoided if the correct advice was sought beforehand.
Tip 8. You want to insure your property but your policy does not include cover against earthquake. Why?
Only newly built properties and concrete shells built after 1976 with a Building Permit can have earthquake insurance. Older properties which have been renovated would have needed a Building Permit showing that the proper reinforced concrete columns were in place and that this work was done by a professional and approved by the relevant Authority.
Tip 9. Buying a house through an Estate Agent:
It is always recommended that you use a licensed and well established Estate Agent through which to buy your property, plot of business. The recent couple of years has seen an remarkable increase in new Estate Agents, some of which are web based, having neither an office in Crete but working from home, a license nor are affiliated to the relevant associations.
Unless time and distance prohibits it, always have your first appointment with the Estate Agent or their representative at their office.
Ask for the details of the Estate Agent to put onto the purchase contract as the Greek Law requests. This way, the Estate Agent is obliged to share responsibility, by law, in case something goes wrong.
BE CAREFUL: If the Agent refuses, is it because they want to proceed to a sale without taking on responsibility for the sale? Or to pay relevant taxes on their commission?
SO ALWAYS: BE CAREFUL ….. AVOID RISKS…..
SEEK PROFESSIONAL ADVICE
AND ENJOY YOUR NEW PROPERTY IN CRETE!
Building in Greece
Most are reluctant to building a new home, especially in a foreign country. This is probably because they cannot really imagine a house on a plan, or they are worried about costs and legal issues.
Building in Greece these days is easy, risk-free and affordable. Provided, of course, you have the right advisor at your side!
3 steps to successful building….
1. Find a suitable plot.
BEFORE making an offer on the plot, ask the vendor/agent for an up-to-date topographical plan, indicating the exact boundaries and size of the plot, the building law that confirms that the plot is buildable, with the engineer’s/topographers’s signature and stamp.
Ask a local architect or engineer’s advice about the ability to build on the plot, its limitations and potential risks or problems. They will be able to ensure that:
- the land is not classified as forestry land according to the Greek forest Registry. If it is, it is not buildable.
- the land is located in an area that permits the construction 2nd homes.
- confirm that there are no archaeological issues limiting or prohibiting construction.
- that the land does not include any public land within its boundaries.
- utilities such as water, electricity, and telephone lines, are nearby, and that the land is served by a public, private, or service road.
A Greece based lawyer will also need to confirm that there are no legal issues. Plots should be clear of debts and have clean titles.
Land in Greece is generally divided into three categories:
- In-plan plot – within city, town, village boundaries. Higher building quotient/coefficient
- Out-of-plan Plot – Outside city, town, village boundaries Lower building quotient/coefficient
- Forestral plots or plots located in areas where 2nd homes are not permitted
The first (easiest) category refers to land within the city or village plan where you can build on a small plot and don’t need clearance from the forestry service. In these areas there are very few structural restrictions and a higher building allowance.
The second category refers to land located outside the city plan. A plot under 4000m2 has a 186m2 building allowance. This increases relative to size.
The third category (forestral, agricultural etc) is a piece of land that, for several reasons, nothing can be built on it.
Some helpful information:
- There is a way to expand the allowance legally by e.g. building a house with a photovoltaic system and providing electricity, building in stone, or building an “encaved” house if the plot is on a slope.
- A new law that will probably come into enforcement at the end of 2022 will require that a plot is at least 4000m2 in order to build.
- Maximum building capacity for residential plots is about 370m2. Even a plot of 10.000m2 cannot build more unless it can be divided legally into smaller plots. Not all large plots can be divided as there are various restrictions e.g. bordering roads.
- Some other factors that may limit or reduce building capacity are forestry areas, archeological restrictions, distance from the seashore or “water line”, streams or rivers, roads, and high voltage electricity pylons.
2. Obtain a Building Permit
The estimated time of building permit issuance is from 4 to 6 months.
The architectural plans accompany the application of a building permit. Once the final plans have been agreed with the archiect, he or she will submit them, along with all the relevant studies, requirements, and documents needed, to the relevant authority for approval and issuance of the permit.
A building permit is required for new construction, or adding onto pre-existing structures, and renovations. The new construction will be inspected during construction and after completion to ensure compliance with national, regional, and local building codes. Failure to obtain a permit can result in significant fines and penalties, and even demolition of unauthorized construction.
The building permit is valid for 4 years, extendable for another 4 years.
Important:
The re-sale of a property that has been built illegally (fully or partially), or without a building permit, may be impossible.
3. Construction
Once the building permit has been issued the excavation works can start. It takes 8 to 12 months to complete a construction, the main factor here being the weather conditions.
Finding reliable contractors is important. Always use registered professionals who have a good reputation!
Find a company rather than several independent professionals or”friends”. This will save you time and help avoid pitfalls. The construction companies only deal with trusted and reliable associates and vendors.
Always keep in touch on a regular basis and keep track of your budget and expenses. There will always be a few unexpected expenses but most can be budgeted for at the planning stage.
New technology such as video-calls, email, chats etc. are perfect for keeping in touch with your construction company and/or project manager. In this way you will be able to check that the building work is on schedule, and ensure that it is meeting your expectations.
What is I.K.A.?
I.K.A (The Institute of Social Insurance) is the only compulsory insurance required under building contracts in Greece.
A building operative’s eligibility for unemployment benefits, health care and pension will depend on the number of years they have worked, and the number of IKA “stamps” they have collected.
Who is responsible for its payment?
Those who own the property that is being built (or will be built) are the indirect employers of the workers involved. So, they are responsible for all I.K.A payments, although in practice these are paid monthly by the contractor. As this is a complex topic, it is important to get your Architect or Engineer’s advice and ask them (with a Power of Attorney) to complete the I.K.A. paperwork on your behalf.
How is it calculated?
I.K.A liability is assessed by your local I.K.A office based on the drawings submitted for Building Permit. This is based on a number of minimum labour constants, e.g. ‘X’m3 of reinforced concrete will take ‘Y’ man hours/days to install, at a labour constant of ‘Z’ Euros.
IKA contributions add about 9-10% to the cost of construction work in Crete.
Non compliance with IKA Regulations
There are 3 main consequences of non-compliance with I.K.A Regulations:
- Punitive fines will be imposed for incorrect filing and payment of I.K.A.
- The Electricity Company (DEH) may refuse to make a permanent connection to your property.
- You will not be able to re-sell your property without the stamped Final I.K.A. Certificate
BE CAREFUL!!!!
Some essential advice for people buying, renovating or building a property in Greece
Tip 1. You want to buy a ruin or old property and want to refurbish it, adding on extra rooms or enclosing existing terraces:
BE CAREFUL: Ask an Architect if the size of the plot legally has the potential to accept extra building volume.
If you just proceed on your own without advice, YOU RISK:
a. Not being able to get a Building Permit for works.
b. High fines if you do proceed to build illegally without a Building Permit.
c. Not being able to re-sell your house if you do the works illegally.
Seek advice from a competent Architect. Lawyers are not always experts on the subject.
Tip 2. If you already are the owner of a house or ruin and want to refurbish it or do some repair works without building anything extra:
BE CAREFUL: Ask an Architect if you have to obtain a Building Permit or not.
Tip 3. If you have a house or ruin in Greece and want to refurbish or do some repair works yourself:
BE CAREFUL: You might have to declare these works to I.K.A and pay the necessary contributions. Ask an Architect for advice as you risk very high fines if a representative from the very powerful I.K.A. authority carries out a check on the completed or works in progress. (See I.K.A. Obligations link).
Tip 4. If you buy an old house with which the owner has carried out extended refurbishment works before selling it to you:
BE CAREFUL: If the vendor has not paid the corresponding I.K.A for the works done, YOU risk paying it after the purchase should there be an I.K.A control. Ask if the I.K.A payments have been made and take receipts. If in doubt, check with an Architect and a Lawyer.
YOU RISK paying that I.K.A plus fines and or have difficulties in re-selling the property. (See I.K.A. Obligations link)
Tip 5. Having inspected many plots and found THE ONE that fits you because the view is just right and the price reasonable, do not rush:
BE CAREFUL: Check with an Architect to verify it can legally accept a building. You will need to see a recent Topographic Survey to confirm the boundaries and size of the plot and to know the following:
– Is the final forestry clearance available?
– Is there the need for a final archeological authority clearance?
– Is the size of the plot large enough to legally build the size of house you want?
– Is the date of issue of the particular plot in combination with its size, correct according to what the law demands, in order for the plot to be able to accept a house?
– Is the size, shape, and orientation for views, privacy etc. of the plot suitable to build the kind of house you want?
If you are not sure about all these points, YOU RISK not being able to build the house you want.
Tip 6. You have discovered a nice small development, perhaps on a 4500 m2 plot outside the limits of any town or village plan. Four fully detached small houses (without any material connection between them) have been constructed upon this plot and they are put on sale independently:
BE CAFEFUL: Check on the title validity of each detached house. Ask a Lawyer, an Architect and a Public Notary. The Greek law is rather contradictory in these cases. Be sure that you are not going to exchange a contract, which is going to be invalidated in the future.
Tip 7. You bought a 4600 m2 plot outside any town or village plan with sea view. It is a long strip descending upon a hill, its road access is good, electricity is very close and the view is just fantastic with no chance another house being built in front to disturb it:
The width of the plot is 23 metres. You dream of a house as wide as possible towards the sea view. When your Architect starts designing your house, you will see in his sketches that your house is only 9 metres wide towards the sea view, which you point out is too small. If you ask your Architect why he does not make it a bit wider he will reply that he has to keep 7.5 metres minimum obligatory distance from the boundaries. For wider plots the normal distance from boundaries is 15 metres.
This is just an illustration of a difficult situation that could have been avoided if the correct advice was sought beforehand.
Tip 8. You want to insure your property but your policy does not include cover against earthquake. Why?
Only newly built properties and concrete shells built after 1976 with a Building Permit can have earthquake insurance. Older properties which have been renovated would have needed a Building Permit showing that the proper reinforced concrete columns were in place and that this work was done by a professional and approved by the relevant Authority.
Tip 9. Buying a house through an Estate Agent:
It is always recommended that you use a licensed and well established Estate Agent through which to buy your property, plot of business. The recent couple of years has seen an remarkable increase in new Estate Agents, some of which are web based, having neither an office in Crete but working from home, a license nor are affiliated to the relevant associations.
Unless time and distance prohibits it, always have your first appointment with the Estate Agent or their representative at their office.
Ask for the details of the Estate Agent to put onto the purchase contract as the Greek Law requests. This way, the Estate Agent is obliged to share responsibility, by law, in case something goes wrong.
BE CAREFUL: If the Agent refuses, is it because they want to proceed to a sale without taking on responsibility for the sale? Or to pay relevant taxes on their commission?
SO ALWAYS: BE CAREFUL ….. AVOID RISKS…..
SEEK PROFESSIONAL ADVICE
AND ENJOY YOUR NEW PROPERTY IN CRETE!
