Pilot scheme for adjusting objective values of properties

The committee tasked with adjusting the property prices used for tax purposes (known as objective values) to the going rates is to present its first draft calculation to the government’s coordinating committee, headed by Finance Minister Euclid Tsakalotos.

Sources say that after receiving the necessary data from the Bank of Greece, notaries and the Independent Authority for Public Revenue (IAPR), the task force members have created a model for the calculation of zone values based on today’s market rates.

For pilot purposes, they have used an area in Athens where there is rather significant transaction activity compared to other areas that have only seen very few property sales in recent years. They utilized property price information that the central bank has in its database, and transaction data from the Notaries Association. They also used rental statistics from the IAPR to establish the average lease rate per square meter in the same part of the capital and calculate the implied value of properties.

Using all of the above data the task force has managed to create an objective value calculation model – which for now has been applied to just one area.

The problem is that in most areas of Greece transactions have been few and far between, and in some areas there are no data whatsoever. That means the process to determine the zone prices across the country will be particularly difficult using the above system. The ministry envisions the creation of a platform for the new objective values to be kept up to date with live information, but this would also be difficult given the aforementioned problem.

Sector experts insist that at this stage, with the lack of liquidity and the very small number of transactions in the property market, it would be wiser to cut objective values by 20 percent across the board to bring them closer to market rates. However, this would be out of line with the government’s agreement with its creditors. Also market rates are more or less 40 percent below the objective values, a gap some sales have seen rise to 70 percent.