Buy-to-Let in Greece: Long-Term Rentals vs. Short-Term Holiday Lets

Reading time: 15 minutes

Table of Contents

• Introduction
• The Greek Property Market: An Overview
• Long-Term Rentals in Greece
• Short-Term Holiday Lets in Greece
• Comparing Long-Term and Short-Term Rentals
• Legal and Tax Considerations
• Investment Strategies and Market Trends
• The Impact of Tourism on the Greek Property Market
• Conclusion
• FAQs

Introduction

Greece, with its stunning landscapes, rich history, and vibrant culture, has long been a magnet for property investors seeking lucrative opportunities in the Mediterranean. As the country continues to recover from its economic challenges, the real estate market has shown remarkable resilience and growth potential. For investors considering buy-to-let properties in Greece, a crucial decision lies in choosing between long-term rentals and short-term holiday lets. This comprehensive analysis will delve into the intricacies of both options, providing data-driven insights and expert perspectives to guide your investment decisions.

The Greek Property Market: An Overview

Before diving into the specifics of rental strategies, it’s essential to understand the current state of the Greek property market. Recent data from the Bank of Greece indicates a steady increase in property values, with a 7.3% year-on-year rise in apartment prices across Greece in Q2 2023. This trend is particularly pronounced in major urban centers like Athens and Thessaloniki, where demand continues to outpace supply.

Key factors driving this growth include:

• Economic recovery and increased foreign investment
• Growing tourism sector
• Infrastructure improvements
• Attractive visa programs, such as the greece investor visa

These elements create a favorable environment for property investors, but the choice between long-term and short-term rentals requires careful consideration of market dynamics, legal frameworks, and potential returns.

Long-Term Rentals in Greece

Market Dynamics and Tenant Profiles

Long-term rentals in Greece primarily cater to local residents, expatriates, and international students. The demand for long-term rentals has remained stable, particularly in urban areas and university towns. According to recent studies, the average occupancy rate for long-term rentals in major Greek cities hovers around 95%, indicating a robust and consistent market.

Rental Yields and Stability

Long-term rentals typically offer more stable and predictable income streams. Data from property management firms suggests that gross rental yields for long-term lets in Greece range from 4% to 7%, depending on the location and property type. While these yields might seem modest compared to short-term lets, they come with reduced volatility and lower management overhead.

Advantages of Long-Term Rentals

• Steady income stream
• Lower turnover and management costs
• Reduced wear and tear on the property
• Potential for longer-term capital appreciation

Short-Term Holiday Lets in Greece

The Tourism Factor

Greece’s tourism sector is a powerhouse, contributing significantly to the country’s GDP. In 2022, Greece welcomed over 27 million international visitors, a number expected to grow in the coming years. This robust tourism market creates substantial opportunities for short-term holiday lets, particularly in popular destinations like the Greek Islands, Athens, and coastal regions.

Seasonal Demand and Pricing Dynamics

Short-term rentals in Greece experience high seasonal fluctuations. Peak season (June to September) can see daily rates soar by 200-300% compared to off-season prices. However, this comes with the challenge of potentially lower occupancy rates during quieter months. Data from vacation rental platforms shows that popular Greek destinations can achieve occupancy rates of 70-80% during peak season, dropping to 30-40% in the off-season.

Potential Returns and Considerations

While short-term rentals can offer higher gross yields, often ranging from 8% to 15% in prime locations, these figures must be weighed against increased operational costs and management requirements. Investors should also consider the impact of evolving regulations on short-term rentals in popular tourist areas.

Comparing Long-Term and Short-Term Rentals

Legal and Tax Considerations

Navigating the legal and tax landscape is crucial for successful property investment in Greece. Recent legislative changes have aimed to regulate the short-term rental market more stringently, while long-term rentals operate under well-established tenancy laws.

Short-Term Rental Regulations

• Mandatory registration with the Greek Tax Authority
• Compliance with safety and hygiene standards
• Potential restrictions in certain areas to protect long-term housing availability

Long-Term Rental Laws

• Minimum lease duration of three years for primary residences
• Rent control measures in some cases
• Clear guidelines on tenant and landlord rights

Tax Implications

Both rental types are subject to income tax, but the rates and deductions can vary. Short-term rentals may face additional taxes, such as the “stayover tax” introduced in 2018. Investors should consult with local tax experts to optimize their tax strategy based on their chosen rental model.

Investment Strategies and Market Trends

Successful property investment in Greece requires a nuanced understanding of market trends and the ability to adapt strategies accordingly. Recent data points to several emerging trends that investors should consider:

Urban Regeneration Projects

Major Greek cities, particularly Athens, are undergoing significant urban renewal. Areas like Metaxourgeio and Kypseli in Athens are seeing increased demand for both long-term rentals and stylish short-term lets. These regeneration zones offer potentially higher capital appreciation alongside strong rental prospects.

Sustainability and Energy Efficiency

With Greece pushing towards greener infrastructure, properties with high energy efficiency ratings are becoming more attractive to both long-term tenants and eco-conscious tourists. Investing in sustainable features can lead to premium rental rates and lower operating costs.

Tech-Enabled Property Management

The rise of property management platforms and smart home technologies is making it easier for investors to manage short-term rentals remotely. This trend is particularly relevant for international investors looking to minimize hands-on management while maximizing returns.

Niche Markets and Experiential Rentals

There’s a growing demand for unique, experience-driven accommodations, especially in the short-term market. Properties that offer authentic Greek experiences, such as renovated traditional houses or eco-friendly island retreats, can command premium rates and higher occupancy.

The Impact of Tourism on the Greek Property Market

Tourism remains a cornerstone of the Greek economy, with direct and indirect effects on the property market. The latest data from the Greek Tourism Confederation (SETE) projects continued growth in tourist arrivals, which has several implications for property investors:

Expanding Tourist Destinations

While traditional hotspots like Santorini and Mykonos continue to thrive, there’s increasing interest in lesser-known destinations. Areas like Nafplio in the Peloponnese or the islands of the North Aegean are seeing growing tourist numbers, presenting opportunities for early investors in these emerging markets.

Extended Tourist Seasons

Efforts to promote year-round tourism are showing results, with shoulder season (April-May and October-November) bookings on the rise. This trend can potentially increase the viability of short-term rentals by extending the peak earning period.

Infrastructure Developments

Ongoing improvements in transportation infrastructure, including airport expansions and new marina developments, are opening up new areas for tourism and, consequently, property investment. Keeping abreast of these developments can help investors identify emerging hotspots before prices peak.

Conclusion

The choice between long-term rentals and short-term holiday lets in Greece ultimately depends on an investor’s goals, risk tolerance, and management capacity. Long-term rentals offer stability and lower management overhead, making them suitable for passive investors or those seeking steady income streams. Short-term holiday lets, while potentially more lucrative, require more active management and adaptation to seasonal fluctuations.

As Greece continues its economic recovery and solidifies its position as a top tourist destination, both rental strategies present compelling opportunities. The key to success lies in thorough market research, understanding local regulations, and aligning investment choices with broader economic and tourism trends.

Investors should also consider the potential for a hybrid approach, where properties are rented long-term during off-peak seasons and switched to short-term lets during high tourism periods. This strategy can maximize occupancy and yield while mitigating some of the risks associated with purely seasonal rentals.

Ultimately, the Greek property market offers diverse opportunities for savvy investors. By carefully weighing the pros and cons of each rental strategy and staying informed about market dynamics, investors can position themselves for success in this vibrant and evolving market.

FAQs

1. What are the minimum investment requirements for obtaining a Greece investor visa?

The Greece Golden Visa program requires a minimum real estate investment of €250,000. This can be a single property or multiple properties, as long as the total investment meets or exceeds this threshold. It’s important to note that this amount is subject to change, so potential investors should always check the most current requirements.

2. How do property taxes differ for long-term rentals versus short-term holiday lets in Greece?

Property taxes in Greece are generally the same regardless of how the property is used. However, income from short-term rentals may be subject to additional taxes, such as the “stayover tax” which is calculated based on the rental price. Long-term rentals typically face standard income tax rates on rental income. It’s advisable to consult with a local tax expert for the most up-to-date and specific information.

3. Are there any restrictions on foreigners buying property in Greece?

Generally, there are no significant restrictions on foreigners buying property in Greece. However, properties in certain border areas or on some islands may require additional permissions. EU citizens face no restrictions, while non-EU citizens may need to obtain a special permit from the Ministry of Defense for properties in border regions.

4. What are the typical property management costs for short-term rentals in Greece?

Property management costs for short-term rentals in Greece typically range from 20% to 30% of the rental income. This usually covers marketing, guest communication, check-in/out services, cleaning, and maintenance. However, costs can vary depending on the location, property type, and level of service required.

5. How has the COVID-19 pandemic affected the Greek property market and rental sector?

The COVID-19 pandemic initially caused a slowdown in the Greek property market, particularly affecting short-term rentals due to travel restrictions. However, the market has shown resilience and recovery. Long-term rentals remained relatively stable throughout the period. As international travel resumes, the short-term rental market is rebounding, with some shifts in preferences towards properties offering more space and privacy. The pandemic has also accelerated trends towards digital property management and contactless check-ins for short-term rentals.

Article reviewed by Enzo Almeida, Business Scaling Expert | Growth Strategist | Driving Expansion in Emerging Markets, on March 14, 2025