How to cash in on Airbnb boom in Greece
With more than 100,000 homes in Greece offered on Airbnb, many are looking to get a part of the action from the country's tourism boom.
Providing a place for tourists to stay may help bump up depressed household income levels but there are many issues - and potential pitfalls - owners should be aware of.
Growing supply levels, rising maintenance costs and a tightening regulatory framework are complicating what is seen by many as an easy way of earning cash.
The fast pace at which homes are being offered for short term rent in Greece is making the market more competitive, forcing owners to think twice about the quality of service offered.
"There is a growing inflow of new hosts in Greece, which is pushing prices lower, while property owners try to improve their guests’ experience," said Anna-Maria Tzirali, founder of BnB Angel, a company that evaluates, lists and optimizes properties for short term rentals.
"There is a learning curve for many hosts, plus a lot of space to improve Greece’s Airbnb offering, which in terms of pricing, is currently at the lower end of what a guest can find across Europe," said Tzirali.
In a bid to beat the competition and up revenues, property owners are becoming more creative. Massages, cooking classes, bike tours and private taxi services are among the extra services offered to lure tenants.
To be sure though, the sharp rise in short term rentals is in line with the fast expansion of Greece's tourism market. In 2017, more than 30 million foreigners are expected to visit the country, up from 26.5 million in 2015. This growth has also drawn the attention of investors - in Greece and abroad - who are ploughing money into hotels, adding some spark to a real estate market that is reeling from the country's ongoing economic woes.
Renting out a property on a short term basis requires a hands on approach that may not be for everyone. Apart from being there to hand over the keys and provide necessary instructions to visitors, property owners may have to field calls from their guests on just about anything regarding their stay, ranging from where to get the best souvlaki to bus routes.
A high turnover of tenants also creates wear and tear on a home, bumping up maintenance costs.
"When the number of tenants increase, there is always the risk that more repairs and maintenance may be required which inevitably leads to less peace of mind," said Katerina Sirouni, architect and property manager.
When listing a home for the first time, there are some basic things that must be kept in mind,
Before listing a property, the owner needs to complete a home inspection and address all safety hazards. Rules need to be clearly set out with guests such as informing them of when they need to respect quiet times. Keeping neighbors in mind is especially important in a country like Greece, where being quite for two hours in the middle of the day has been passed into law.
"An angry neighbor could kill your Airbnb hosting dreams," said Learningairbnb.com on its website.
The latest changes to Greek legislation on short term rentals were voted in by parliament earlier this year.
Among the new laws introduced is that owners can only lease out their property for up to 90 days per year. This drops to 60 days for islands with a population of less than 10,000 people. These limits can be exceeded if rental income declared by the owners does not exceed 12,000 euros.
Rental income (euros) Tax rate
more than 35,001 45%
Other changes include limiting the number of homes that can be rented to two per person. Not all parts of the law have been fully implemented, creating some grey areas, which hosts need to carefully check. Experts recommend that hosts consult with legal and tax advisers before making any decisions.
Income from Airbnb is treated by the taxman as regular property rental income and taxed by up to 45%. Experts point out that this income is unlike revenue from any other business activity since expenses are not deductible and this means less for the owner at the end of the day.
"Commissions paid to these platforms are not deductible, neither are the costs of furniture, power or phone bills connected to the property," Nikos Siakantaris, managing partner at accounting and tax consultants UnityFour.
"Therefore, the 15% tax rate applicable on income up to 12,000 euros is in reality much higher because you can't take into account the money spent to prepare the property for rent," said Siakantaris.