Selling a House

Having sold a house recently, this is a " must read "

Buying and Selling a House on Crete.

Date: 18/03/2019

Contributor: Terry Bridge.

Generally speaking, buying a house on Crete is easy. If you have all the right people in place, know the property you wish to purchase and have sufficient funds it can be quite painless. May seem a bit glib, that statement, but it is true.
Having bought and sold several houses in the UK and wrestled with mortgages, planning permissions and building regulations and the bureacrats that administer to them, I preferred buying in Greece.
Now, selling is a whole different story, especially if your property is on a shared plot, which many are, and if your house has not been legalised, you should think very seriously about when you wish to sell or the property is to be passed on to your heirs before buying that dream home.

A little time spent talking to people who KNOW and reading articles, written by people who KNOW, can smooth the process. The following information is correct at time of writing. I will only write about cash buyers as the mortgage situation in Greece is something I know very little about. The information also refers to Crete, as I am aware that the islands do differ slightly in their regulations.

Your time on Crete has run its course and you want to sell for whatever reason ..

There are a few things that are different to the UK that are part of the selling process and its worth just listing them here with an explanation.

  1. E9 certificate. This is an important document that is supplied by your accountant to the Tax Office. The certificate is drawn up from the drawings by the original builder and updated through time due to building extensions, land extensions etc. This certificate dictates how much Property Tax is paid by the property owner. See below why this is important.
  2. Vertical Separation. When building was going along at a pace on Crete, the Authorities had to lay down certain principles of law governing building permissions. The most outstanding of these principles was to avoid urban sprawl throughout the countryside. There are few laws within the boundary of a city, town or village but there is one strict law outside the boundary or withing planning zones. The plot size is limited as is the building size. Plot size is a minimum of 4000m2 unless the property borders an urban road or is within a planning zone when it can be a minimum of 2000m2. The building size is restricted to 220m2. When house selling was booming, builders would build two properties of 100m2 and link them somehow and sell them as a shared plot. Most houses on Crete outside the village boundaries are constructed this way.

Now, times change and you can now have a house separated ( which every buyer will want ) from your neighbour by the vertical separation license. This requires an engineer to redraw the properties as separate which will then require a new E9 certificate. The property then has to be re registered as separated at the Land Registry.

I have not forgotten the fact that your neighbour, or neighbours, must approve your sale if you are on a shared plot and they have to pay a part of the vertical separation cost. You need good neighbours ! If you have one neighbour, they pay half. If you have three neighbours you all pay 25% each.

The vertical separation can be costly, usually in excess of €5000. These costs are the taxes to the Government and the fees to a Notary, the Land Registry and the Lawyer, who will need power of Attorney to act on your behalf.

Another important consideration is the legality of your property. If you haven't taken the opportunity to pay the fines for any illegal building on your property, then now is the time you will have to pay them. You cannot sell a house in Greece nor can you pass on to a relative, nor change ownership without the house being fully legalised under the Greek Law 2014.

Also you must ensure that your house meets the Greek standard of energy consumption, which entails instructing an engineer to assess your house and grant you an energy certicate. This should only cost about €150.

Your buyer may need to be investigated for military clearance if your property overlooks Souda Bay or any military property and the buyer is not Greek.
You may need a Forestry Clearance certificate, depending on the area you are selling from.

It is worth noting at this time that the Greek Government have put an amnesty on Capital Gains Tax from selling property. At present this amnesty runs out at the end of this year. The tax will be 15% of the difference between your purchase price and your selling price. You can see from this why it is important to have the correct purchase price recorded at The Tax Office and not a reduced price by your accountant who would recoup some profit from your initial purchase price taxation.

Another strange thing on Crete is that the estate agent is usually acting for both parties, which of course would be very rare in the UK. So don't expect any preferential treatment from the estate agent for his 2.5% easy money.

When we bought our house on Crete, I asked how easy it would be to sell. I was told that the process was simple and only costs were 2.5% to the estate agent and 1% to the Lawyer. Our house has been on the market for four years, we have a buyer now but the process has taken six months already and is still not resolved, due to problems with the engineer, the accountant, the estate agent and the buyer. We have been given more excuses from the estate agent than fleas on a dog for why our buyer won't pay the deposit.

We have eventually sold our property but the process of separation from the neighbour was extremely trying on myself and my wife.

So, the selling process is:

  1. Inform an estate agent you want to sell
  2. Make it clear, in writing, what items you are leaving with the house
  3. Instruct a lawyer for power of attorney, pay notary and lawyer fees.
  4. Pay any outstanding taxes via the accountant
  5. Ensure all utilities bills are paid and service providers informed to stop services or carry over to new occupier.
  6. Instruct engineer if vertical separation is required and/or obtain an energy certificate. This certificate lasts 5 years.
  7. Instruct engineer to produce a current E9 certificate. This may incur another tax increase.
  8. Pay any taxes through your accountant resulting from vertical separation.
  9. Pay any fees resulting from vertical separation.
  10. Precontract. get 10% deposit. You will have to fight for this but make sure your lawyer knows you want this prior to contract. Vendor will lose deposit if he pulls out.
  11. Completion. lawyer takes 1% and estate agent's fee is usually 2.5%.

Correct at time of writing May 2019.

AND THIS IS WHAT HAPPENED TO US !

 

One day in Crete in December 2018 an estate agent rang us to say that they had a buyer for our house. As we had seen our house on the market for four years and this particular agent had a few viewers over the years without any positive outcome we didn't get too excited.

We then had a meeting with the Agent where he told us that the buyer was Chinese and he wanted to acquire a Golden Visa. We were also told that the price would be €255,000 and that the deposit given to us would be €25,000. This was to make it look as if it wasn't a contrived golden visa sale, especially as I had agreed a lower price. I was to return the overpayment on the deposit and the purchase price.

I instructed the Agent and our lawyer that the price was £242,000 but there would be no sale without:

1. A 10% deposit
2. A six month rent free period in the house after completion.

If no six months rent free then the price was to be €245,000. 

Our estate agent informed us that the buyer was buying the property through a Chinese agent.

The first thing we needed to do was to get an energy certificate from our friendly Engineer. I rang him and he agreed to come and carry out the work and the fee would be €150.

The next thing of course was to inform our lawyer. In the second week of December 2018 we signed a power of attorney to our lawyer and had it witnessed by a notary supplied by the lawyer. This cost us €130 to the Notary and €50 to the Lawyer. Our lawyer had told us that you were not allowed to sell a house on a shared plot and this law had been in force since 2011. I have been unable to confirm the validity of this. The lawyer stated that you had to have the plot vertically separated from the other half and that both owners would have to share the costs. I thought at the time it was a good job I got on well with the neighbour, who just so happens to be my wife's younger brother. The Lawyer gave us a verbal consideration of €3000 in total for the costs.

As new drawings had to be done and issued to the Tax Office for consideration before going to the Land Registry we instructed our friendly Engineer to carry out the work.
He arrived with an assistant and spent most of the day surveying our two properties. The fee for the drawing would be €450, which I still think is a fair price.

At this point we decided to chase up the deposit, which apparently, according to our lawyer, is not done by them. Our Estate Agent responded to our Lawyer and not us by stating that the buyer would not pay the deposit until the vertical separation was done as he was worried that we would pull out and keep his deposit. We now know that to be a fabrication by our Estate Agent. As a vertical separation is required by law, according to these so called professionals, to sell our house, it could not be an excuse to hold back the deposit, as the buyer would surely get his deposit back. We also found out that the Agent had not even mentioned the six months rent free period.

I will say at this time, that our intentions were to use the capital to buy a house in the UK and rent it out whilst we rented a property in Crete where we wanted to stay for the time being.

The next body blow was the taxation fee, the notary fee, the lawyer fee and the land registry fee. This all came to just over €8,400, not quite the €3000 we had been advised. This was just for the vertical split contract. These people hadn't done anything yet !
Then another body blow, the E9 certificate which relates to how much Property Tax you pay. On checking, The Tax Office decided that neither us nor our neighbour had settled all our taxes. We now faced a tax bill going into thousands of euros. Now, as both myself and brother in law had paid EVERY tax bill presented by our Accountant, we used the same one, we were mystified and promptly sought a meeting with the Accountant.
I made a very angry entrance into the Accountant's office where he backed off and apologised for his assistants error and the bill was much lower and he presented the new bills which amounted to some €411 for us and €600+ for our neighbour. These bills were totally fabricated and I and the neighbour had bank receipts to show we had paid the taxes. Who fabricated them, I do not know. But half of the neighbours fees were the Accountant claiming that the neighbour had not phoned him to instruct him to do his tax return ! What a bloody joke !
The Accountant said that we needed to pay them or we would be tied up for months trying to prove we had and this would probably stop the house sale.

One day in the Accountant's office I asked him why my wife paid more tax than I did.            " Surely you know " he said " It's simple " Then gave this off the cuff lengthy explanation. When I looked at the tax demand again, I noticed I had made a mistake and it was me that paid the higher tax. Sums everything up really.

I decided to pay my €411 tax.

Following a discussion on the telephone with our neighbour, the Accountant agreed to pay half of his fees. He asked the neighbour to pay the remaining amount into the Accountant's bank account. The money was paid into the Accountants bank account on 28th March and has been confirmed by Barclays who carried out the transaction. To this day the Accountant is insisting he hasn't received the money.

Because of this last statement we were unable to complete the vertical separation, so I made the decision to go to the Tax Office and pay the neighbours contribution which had now risen to €347 due to debit daily increments.

I have since tried on several occasions to retrieve the money from the Accountant, all to no avail. This of course is a very difficult situation.

Whilst all this is going on we are still chasing the deposit, which we need to be able to pay the fees and taxes for the vertical separation. Oh yes, you pay taxes on everything. With the electricity, you pay taxes on taxes !
Because, we feel it is the Estate Agent that is holding up the deposit and not acting on our behalf at all and we tell him so, he agrees, out of his own money, to pay all the vertical separation taxes before some contrived deadline by our lawyer that didn't even exist. I subsequently, the following day, paid him half the taxes back from the money that the neighbour had sent. I told him I would pay him the rest when he got our deposit.

I need to state at this time, although the Agent vehemently denied receiving any money from the buyer, we know he was given €2000 and the Chinese Agent received €1000. We were also told by the Agent that the buyer had not signed a power of attorney and had not opened a bank account with the withering statement " it's very hard to get money out of China ". The Chinese Agent told myself and my wife this during a visit to the house by the buyer and later confirmed it during a telephone conversation with me 5th April 2019. During the telephone conversation he confirmed that the buyer HAD opened a bank account in Athens and must have signed a power of attorney. Who's lying here ?

According to these professionals, the buyer had to return to China without signing any documents nor paying the deposit because his visa ran out. Our Estate Agent told us it was our fault because we hadn't settled all the taxes quickly enough.
Trying to keep as calm as possible, we asked what Plan B was. We were told that the buyer would return on 3rd April and we would have a completion contract, which supposedly was set up for April 4th, signed by all parties.

On April 3rd we were informed by the Estate Agent that the buyer's visa had been refused and he would need to apply again. The Agent stated a further 10 days. The Chinese agent stated a further 21 days. Apparently a letter of introduction to the Agent on Crete was required. Wouldn't he know that from his previous visa ?
I was getting very angry at this stage and even more so when the Agent's mother let slip he had received the €2000 and he was receiving half the fee, ie 1.25% from the buyer, a fact he had denied to me. All this whilst he was in the office. 

I then text the Chinese agent  to tell the buyer to get the deposit to me or at least show faith by getting me €10000 so I can pay all the fees.
My wife has followed up with requests to him. Our lawyer has requested his lawyer to intervene but still no deposit.

The Estate Agent won't answer any emails, telephone calls or texts. The Accountant never answers anyway. All our lawyer seems to do is chase me for money. She's MY lawyer for goodness sake. Is everybody just in this for themselves ? Or are they all acting together with no thought for the client. There is definitely something going on or am I being paranoid.

During all these happenings, we, of course were looking for a rental property and there was very little about. We eventually found one through Crete Island Estates. We fixed a date of 7th April for the rental to begin. During the week before, we were allowed to move some of our belongings across to the rental property. We had to pay 2 months deposit, precarious, but we didn't want to lose the property as there was little else. However, the landlord has been brilliant as has Crete Island Estate, who I mention here so as not to be confused with the Agent above. We have even had the start date put back to 1st May 2019.

We soldier on as there is little we can do except wait for the visa deadline. If it doesn't happen then we will have to stop the sale. The vertical separation fees and taxes will have to be paid by a loan, if we can get one, as we have no money for this. This is all leaving a very bitter taste in my mouth.

The latest update today 23rd April is the Agent has sent me a text stating buyer is either coming next week or getting his visa. I have asked him to clarify and enquired if he was arranging a contract meeting.
The Agent then sends me a text stating the buyer has his visa and will be arriving 12th May and he is arranging exchange of contracts for that week. He also asked for my bank details. I sent our bank details in the UK and told him that we would require €1500 for the extra 2 months rent we will have to pay.
This was met with a text that said he would ring me in 20 mins - still waiting five days later !

It is Monday 6th May, one week before the buyer arrives from China. I have been chasing the accountant and his assistant to pay me the money that arrived in their bank account 28th April but nobody has answered email nor text. Our neighbour is still very tardy with the paperwork I need to prove my case.

I can't believe it ! Our neighbour HAS paid the money into the wrong bank. Well, he now owes me €347.

Everything happening this week - finally. A small deposit of €7000 arrived in our bank yesterday 9th May from the buyer. We paid the Notary and Land Registry fees this morning.
Looks like it may be all go at last.

The buyer duly arrived from China on Monday 13th May as promised. The vertical separation was all signed on Monday and we picked up the documents from the lawyer on Tuesday whilst we handed over a cash payment for the sale duties.

The balance arrived in our bank on Wednesday 15th and the completion took place shortly after. Our agent phoned and for the first time through this whole debacle, I lost my temper with him. I was annoyed after I found out that getting the money out of Greece was not as straightforward as our agent had made out. We had to visit our bank and go through an inquisition to allow the money to be moved. We had the same thing, but online with our transfer agents. 

On Thursday the buyer arrived with his agent and OUR agent and were all full of themselves about the fantastic job they had done. The buyer was looking for the €10K over payment refund. I told them that as the buyer hadn't actually sent €255K and we had been involved in additional expense due to them messing us about, the refund was reduced. As this was the money that was to be used to pay the agents and buy furniture for the house, I was well pleased, when I saw the disappointment in their faces. I did point out that I had told our agent some weeks ago about this but true to form he had not passed this on.

post note 30/08/2019 - The water bill still hasn't been resolved, 4 months now and there is no furniture in the house but someone is squatting there according to the neighbours.

This is all a sorry tale but could have been a lot smoother if the agent had informed us exactly what was required for the sale and cut out all the bullshit that unfortunately he is well known for.

Now, one may be forgiven for thinking this is the end of this sorry tale, but no, there is still the question of the utilities. The Agent, who by now is full of himself, because the sale has gone through and he has pocketed 4.0% for doing very little, tells us that he has to do the utilities, because that is how it is done here.
The telephone / internet being the most difficult as both parties have to be present in a Cosmote shop.

Of course this is more bullshit from I don't know who because I was in the shop and the Agent spoke to the Cosmote representative on the phone. All done. Unfortunately the Agent hasn't done a thing about the water or electricity as he has been too interested in the Cricket World Cup.
I can't shut down the utilities as the property would deteriorate and all the plants would die.
It's now the 11th June, nearly a month since contract completion and nothing has happened yet.

We got fed up with the Agent, so we went to DEH and shut down the electric ourselves.
When the Agent went to have the supply reconnected he found that he needed the last meter reading. He rang us panicking as he had gone to DEH and couldn't reconnect without our help.
Of course we played our part correctly and had taken all the meter readings.

I have sent several texts to the Agent asking him when the water is transferred. It is now 8th July, one week short of two months since completion and not a word from our Agent.

16 weeks later - no reolution to water bill, no furniture installed and someone squatting !

Now, you may be wondering what happened with our neighbour and the €347 he owed us. This is another story that can only unfold in Greece.
Our neighbour had spent a considerable time emailing and texting the Tax Office, who eventually admitted they had received the money. He asked us if we could retrieve it as he was resident in the UK. We thought, no problem.
We bowled off to the Tax Office next Monday morning, armed with copies of all the emails, passports, etc. Get ticket, wait, go to counter. The lady went through all the documents and then said " We need a letter from the neighbours bank confirming his account. We cannot give you the money, we can only refund his account. "
Bl**** *ell !
We trotted off to get said document, this delayed a few more days.
When we triumphantly returned to the Tax Office, ticket, wait, go to counter, instead of just transferring the money, the lady consulted a colleague and we were asked to return to our seats whilst they conferred and huddled over a computer screen.
When we eventually got asked to return to the counter we were amazed to hear that the neighbour had an outstanding tax bill of €1500 and they would not be able to refund the money. The bill was oustanding tro IKA and involved building at his house.
Just to explain, whenever building works are carried out, a social security employment tax has to be paid for every individual that worked on your property. This is paid to IKA who have recently changed their name to EOKA.
After a lot of haggling and emails, I understand the amount came down to €700+ and was duly paid with the original error being paid back. We then got our money.
Beware builders who say they have paid all the EOKA. They never have. You have to check.

We are now renting a property, but that is another story. BTW the water supply has still not been changed over and we are at 30th November. Would we use these Agents again, NO!

We received a final water bill for 2018 which we promptly paid and informed the Water Services to send the next bill to the Estate Agent. 

We have been researching properties for investment in the UK and were very nearly duped by another unscrupulous estate agent who informed us that all service and maintenance charges were less than half of the actual costs. We also found out that the owners of the main lease were due to carry out extensive repairs and redecoration to the whole property which we would have been expected to contribute to. 

This shows that Greece is no different to the UK, especially where Estate Agents are concerned.

It hasn't stopped us loving Crete and its people and we may even buy another property here. Watch this space.
22/01/2020.