Greek Economy
The Greek economy has undergone a major transformation over the last 10 years. The strict fiscal framework required for Greece's entry in to the Eurozone (2001) led a rapid decrease in interest rates and historically low levels of inflation.
Gross domestic product (GDP) growth has outperformed the E.U. average every year since 1996. Lower interest rates and the availability of credit have led to rapid increases in consumer loans, credit cards and mortgages.
Greece is politically, socially and economically stable and is experiencing solid economic growth. It has high levels of home ownership and strong consumer spending.
The strong performance of the Greek shipping industry (approx 25% of global shipping) and investment in the developing markets of South-Eastern Europe has given Greek companies and institutions a larger presence in international markets.
The current centre-right government is trying to deal with the large current account deficit and looming pension crisis which both hinder future economic development. Although there is strong local opposition to privatisation programmes and pension reforms, progress is being made.
Commercial Leases
The current law relating to commercial leases is presidential decree 34/1995, which altered law 813/1978. The law covers all commercial tenancies for land and property. This law does not cover residential, agricultural and public sector leases. Leases on listed buildings are also exempted from the tenant protections clauses under this law but are covered by civil law acts.
Lease Length
For a commercial lease, the law guarantees the tenant a minimum term of 12 years with an option for a further 4 years. The tenant may, however, agree to a shorter term. If the landlord wants the tenant to vacate at the end of the 12-year term he must pay the tenant compensation equivalent to 2 years rent. At the end of 16 years the landlord may remove the tenant without any compensation. Lease renewals are new leases and rents are renegotiated.
Tenants break options
Tenant has a right to vacate the premises at any time after the first 2 year's of the contract, upon giving the landlord 6 month's notice and paying a fine of 4 month's rent. Therefore, the earliest a tenant can break a contract is at 2 and-ahalf years into the contract. There are examples where tenants have resigned from this right and agreed to a fixed term lease. Any waiver agreement must be signed after to main lease to ensure that the tenant was not made to sign such an agreement under duress.
There is no legal president for the legality of such waivers but it is generally considered that a court would uphold such agreements especially where the tenant is a large company or organization.
Landlord and Tenant Framework
Greek landlord and tenant legislation is generally 'tenant protective' giving tenants considerable flexibility. This includes the right to remain in occupation for long periods (without a rent revision to open market value) and the right to vacate the property with a rolling break option. The law provides the basic framework but many terms and conditions are contractually agreed between the landlord and the tenant explicitly stated in the lease.
Subletting and Assignment
Sub-letting and assignment are not permitted unless explicitly agreed in the lease.
Landlord's right to terminate
Apart from major breaches of contract the landlord has the right to terminate the lease under the following circumstances:
a) For Own Occupation
- Only after the first 3 years of the lease term
- Must give 6 months notice
- Must pay compensation: 16-30 months rent
- The landlord must then use the property for a period of at least 2 years for business purposes.
b) For Redevelopment
- Only after the first 3 years of the lease term
- Must give 6 months notice.
- Must pay compensation: 12-18 months rent
- Must commence the redevelopment within 6 months and must have a valid building permit.
Sometimes these rights are specifically excluded from the lease at the request of the tenant.
Annual Rent Adjustments
The parties are free to negotiate any rent adjustment they wish. Market practice is an annual increase linked to the rate of inflation. If the lease does not have any provisions for rental adjustment, then the rent is adjusted to 75% of the Consumer Price Index (CPI) for the previous 12 months. Rent payments are normally made monthly in advance. The landlord will normally require a guarantee equivalent to two months rent.
Repairs and Improvements
It is standard practice that the tenant is responsible for internal and external decorations. Repairs and maintenance to the building such as central heating boilers etc. are the responsibility of the landlord but the cost or a proportion of the cost is recoverable from the occupiers of the building. Structural repairs are the sole responsibility of the landlord.
The tenant may make improvements or changes to the property with the prior consent of the landlord. Tenants have no right to compensation for improvements at the end of the lease but are entitled to take removable fixtures they have added and leave the property in the same condition as they received it in.
Source: Lambert Smith Hampton