Buying a property is a big financial decision. If you prepare early, calculating all the costs and expenses of buying a property, then you will avoid unwanted surprises. You will be able to set your budget accordingly and you can easily search for properties that meet your criteria.
It is good to calculate the costs of buying a property early on. This way, you will have a clear picture of what you will need to pay from the start.
Some of these costs are defined, by the state, as mandatory and cannot be avoided.
However, there are other costs that, while optional, can reduce the financial and legal risks a buyer faces. These costs will ensure the smooth completion of the purchase and sale.
Let’s say you want to buy a property with the money you have saved, without having to take out a mortgage for your purchase. The property purchase costs in this case are as follows:
Mandatory Expenses
1) Tax Office
For a property to be transferred in your name, you will need to pay the Property Transfer Tax (PTT) to the tax office. Based on the most recent amendment, the tax amounts to 3% of the property’s objective value (or its commercial value if the latter is greater).
From September 2019 the transfer tax is paid electronically. All you will need to do as a buyer is to submit an application to the competent DOU together with the seller. Then the payment ID will be issued for the payment of the tax.
2) Notary
What does a notary do? The notary is essential when buying and selling a property as he will draw up the transfer contract. He will explain to the contracting parties the terms of the contract and will be present when it is signed. Finally, he will file the contract with the competent authorities and will remain responsible for any subsequent legal proceedings.
A notary’s fee, as defined by law, is set as a percentage of the objective value of the property (or the commercial value if the latter is greater). Specifically:
Notary fee for property sale
In addition to the proportional fee, the notary is entitled to €5 for each additional sheet of the contract and €4 for each sheet of copy of the contract. Also, for completing each tax return as well as for each sheet of objective value, the notary is entitled to €10.
3) Land Registry – Mortgage Registry
Transfer costs to the mortgage registry amount to 0.475% of the declared value (or the objective value if the latter is greater), plus a VAT of 24%. In addition, the mortgagor issues a Certificate of Provision of Services which is charged to the buyer.
Optional Expenses
The following are real estate purchase expenses that, although optional, can be decisive in ensuring a smooth and legal deal.
1) Lawyer
Buyers are strongly advised to hire an attorney to review title deeds.
From 1/1/2014 none of the buyers or sellers are obliged to be accompanied by a lawyer when drawing up a contract of sale.
However, buyers are strongly advised to hire an attorney to review the title deeds. This check is very important as it will inform the buyer if there are encumbrances or claims on the property and reveal any legal obstacles.
In addition, the lawyer can create a pre-agreement. This will outline the terms of the agreement before the notary draws up the relevant contract. The presence of a lawyer will help speed up the procedures and ensure your rights.
A lawyer’s fee is determined by the free market. Some charge a percentage of the property price (eg 1%) while others are paid by the hour.
2) Engineer
For a sale to take place, the engineer’s certificate is necessary. This will certify that there are no encroachments on the property (or, if there are, what arrangements need to be made).
Although this is a responsibility of the owner, it is advisable for the buyer to hire their own engineer, to ensure that there is no arbitrariness on the property. The buyer’s engineer will be able to provide their own professional opinion and certify that the property certificate is valid and accurate.
3) Brokerage Services
Brokerage services, although optional, guide the buyer during the first phase of the property search. Their character is mainly advisory.
A good real estate agency can recommend suitable properties and direct you to one.
Broker Fee: It is common in our country for brokers to be paid 2% of the sales price from sellers, and an additional 2% from buyers (excluding VAT 24%).
Achilleas Karapatakis – External Associate