Study: Why Greek Property Owners Prefer the Short-Term Rental Market

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Greek property owners continue to favor short-term rentals over long-term leasing due to taxation concerns and high maintenance and renovation costs, according to a study by Kapa Research.

Commissioned by the Panhellenic Federation of Property Owners (POMIDA), the study explores the key factors influencing property owners’ decisions in Greece.

Taxation on rental income deters long-term leasing

The study found that 82 percent of property owners in Greece believe the Unified Property Tax (ENFIA) is unfair, with 71 percent calling for its abolition and another 20 percent advocating for a reduction. Introduced in 2014, ENFIA applies to all properties in Greece — including buildings, plots, and land parcels — based on their size and specific features.

Additionally, 46 percent of survey participants said the most effective incentive for increasing the supply of long-term rental properties would be lowering rental income tax rates. High taxation, combined with the rising costs of property renovations, has made long-term leasing less appealing.

Among property owners who keep their properties vacant, 54 percent cited the need for renovations as the primary reason. Of these, 61 percent estimated that renovation costs range between 5,000 euros and 20,000 euros.

Furthermore, 12 percent of owners stated that high taxes discourage them from renting out their properties, while another 10 percent expressed concerns about tenant reliability.

Rent increases remain limited

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Contrary to the common belief that property owners are driving up rents, the study revealed that 62 percent of landlords have not raised rents at all in the past three years.

This trend is consistent across different property types, with 58 percent of commercial property owners and 68 percent of single-family homeowners reporting no rent increases. Even when rent adjustments did occur, 86 percent of cases saw an increase of no more than 20 percent.

Challenges in the long-term rental market

Despite government incentives aimed at encouraging long-term rentals, many property owners remain hesitant. A key incentive recently introduced by the Greek government offers a three-year tax exemption on rental income for properties previously used as short-term rentals or left vacant.

However, 33 percent of property owners surveyed said they worry about losing the tax exemption if tenants leave before the three-year period ends, while 30 percent consider the incentive insufficient to make long-term rentals financially attractive.

Why property owners prefer short-term rentals

Despite ongoing challenges, the short-term rental market remains a compelling option for many Greek property owners. The study identified three main reasons for this preference:

– Higher returns – Despite fluctuations in tourist demand, short-term rentals remain more flexible and often generate higher profits compared to long-term leases.
– Tenant control – In contrast to long-term rentals, where reclaiming a property due to unpaid rent can be time-consuming and difficult, short-term rentals give owners greater control over who stays in their homes.
– Reliable payments – Between 21 and 31 percent of long-term tenants are reported to delay rent payments, whereas short-term rental payments are typically made in advance.

Shifting market trends

Despite persistent challenges, 59 percent of property owners now view renting out their properties as financially beneficial, compared to just 12 percent in 2014.

Additionally, the percentage of property owners considering selling their assets has declined significantly, from 34 percent in 2007 to just 14 percent today. This shift suggests growing confidence in the Greek real estate market.

Outlook: The need for more incentives

While the short-term rental market continues to thrive, taxation and renovation costs remain major barriers to long-term leasing.

The Kapa Research study concludes that unless additional incentives — such as lower taxes — are introduced, Greek property owners will likely continue prioritizing short-term rentals for their financial advantages.