Starting in 2025, strict restrictions on new short-term rental properties will take effect in central Athens
From 2025, strict restrictions on short-term rentals for new properties in central Athens will come into force. Tested strategies of generating income via Airbnb and similar platforms need to be reconsidered as a matter of urgency.
So, what does this mean for those who have invested in property or are considering doing it? Well, let's break it down.
The 88th TIF-HELEXPO International Fair opened in Thessaloniki on 7 September. Greek Prime Minister Kyriakos Mitsotakis attended the event, presenting a plan to support Greek citizens until 2027. The 45-point document aims to ensure the prosperity of Greece's residents. But it's also crucial for those looking to invest in the country.
The Prime Minister has announced restrictions on short-term rentals across the country, while at the same time introducing incentive measures to encourage a shift towards long-term rentals. The government hopes this will curb Airbnb's uncontrolled growth in different regions.
New licences for short-term rentals in the centre of Athens will be 'frozen'. This will come into effect on 1 January 2025 and will apply to the 1st, 2nd and 3rd districts of the city. These measures will remain in place for at least one year.
The decision comes as part of efforts to tackle the housing crisis in historical and city centres, where short-term rentals are booming. As a result, it has become almost impossible to find properties available for long-term rent in the central area. The government has indicated that the ban may be extended to other areas if these show signs of "saturation".
Homeowners already doing renovations to prepare for Airbnb have time until the end of 2024 to complete their work and register their properties. There is still time to launch a rental property before the New Year, but owners should be prepared for a new tax: the government is introducing a higher 'climate tax' that will apply to all bookings made between April and October. The money raised from this tax will be used to improve the infrastructure in tourist areas.
However, if owners choose to shift their focus from short-term to long-term rentals, they will benefit from up to three years of tax relief on the rental income received.
Between 2019 and 2023, the number of short-term rentals doubled, contrasting with hotel growth of 3.5%. This year alone, over 12,500 central Athens apartments were short-term rentals.
Over the last few years, the rental market in Athens has been showing a positive growth, especially in the short-term rental sector. Between 2019 and 2023, the number of properties listed on platforms like Airbnb doubled, in sharp contrast to the hotel sector, which grew only by 3.5% over the same period.
In 2024, the number of properties available for short-term rental on platforms such as Airbnb increased by 10-12% per month, and by May 2024, the total number of beds in these properties had almost reached one million.
Meanwhile, Athens' long-term rental market remains attractive, particularly as property prices continue to rise. From 2021 to 2023, house prices increased steadily: by 11.61% in 2021, 16.90% in 2022 and 10.93% in 2023. This growth is reflected in GDP growth of 8.4% in 2021 and 5.6% in 2022, as a result of Greece's overall economic stabilisation after the pandemic. In 2024, economic growth is expected to be above the eurozone average again.
Low property prices, steady growth and one of the most accessible Golden Visa programs in the EU make Athens a highly attractive destination for real estate investment.
Certain areas in Athens offer especially good returns. In the first quarter of 2024, areas such as Korydallos in the Piraeus region and Attiki Square delivered yields of up to 6.3% for property holders.
Meanwhile, the long-term rental market remains strong with an average occupancy rate of 90%. This provides a reliable and predictable source of income.
With prices continuing to rise and economic activity remaining strong, the Greek property market - and Athens in particular - remains one of the most attractive in Europe. Long-term rentals not only provide a stable income but also help to increase the value of the property, making this segment particularly attractive given the new restrictions on short-term rentals.
In fact, the freeze on short-term rentals in central Athens could open up new opportunities in the long-term rental market for investors seeking to obtain a golden visa through property investment.
Rising demand and tax incentives make Athens an attractive long-term investment destination.
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