The New York Times — At law courts throughout Greece, people are lining up to file papers renouncing their inheritance. Not necessarily because some feckless uncle left them with a pile of debt at the end of his revels; they are turning their backs on what used to be a pillar of Greece’s economy and society: real estate. Growing personal debt, declining incomes and ever higher taxes as Greece’s depression grinds on have turned property and the dream of easy money into dread of a catastrophic burden.
The figures are clear. In 2013, two years after a property tax was introduced (previously, real estate tax revenue came mainly from transfers or conveyance taxes), 29,200 people declined to accept their inheritance, according to the Justice Ministry. In 2015, the number had climbed to 45,627, an increase of 56 percent in two years. Reports from across the country suggest that this year, too, large numbers of people are refusing to inherit.
“This can be very painful,” said Giorgos Voukelatos, a lawyer. “People may lose their family home. Because if the father or mother had debts, the child might be unemployed and unable to carry this weight as well.”
The growing aversion to property is evident in the drop in business at notaries public. The national statistics service, Elstat, reported in July that in 2014 there were 23,221 deeds in which living parents transferred property to their children, down from 90,718 in 2008. The number of wills drawn up or notarized has been steady through the crisis, at around 30,000 annually, suggesting that many inheritances being rejected were not part of formal wills. (More than 120,000 people die each year.)
With a history full of wars, bankruptcies and rampant inflation, Greeks had always seen land as a haven. Homeownership, at 74 percent of households in 2014, is well above the European Union average of 70 percent. Old-timers used to urge younger Greeks to buy property to avoid losing savings as they did in frequent currency devaluations — or in the monster inflation during the Axis occupation in World War II. Parents felt duty-bound to help their children acquire homes or leave them property as the only possible hedge against hardship.
“We have entered a new era,” said Poppy Kakaidi, a lawyer. “Whereas parents wanted to leave their children with a roof over their heads, now the children themselves say, ‘I don’t want this burden.’” She has several clients who have turned down inheritances, mostly to avoid the deceased’s debts.
After many years in which only very valuable properties were taxed, many Greeks went from paying almost no taxes on real estate to not having enough money to pay. In 2010, property taxes accounted for 0.26 percent of gross domestic product, while this year they are around 2 percent, according to state budget figures.
“Suddenly, the state treated the Greeks as if they were rich, at the precise moment that they ceased to be rich,” the federation of Greek enterprises, S.E.V., said in a recent bulletin. It also lamented a World Bank report that ranked Greece 144th among 189 economies in terms of the ease — bureaucratic and otherwise — of registering property.
With the unified tax, ownership of every kind of property is now subject to taxation. During the crisis, the economy has shrunk by 25 percent and many people are unable to pay taxes. Arrears in tax payments at the end of September were at 92.8 billion euros and keep increasing by about 1 billion each month. It will be very difficult for the Greeks to get out from under this mountain of debt. Delinquent loans, which at the end of June made up 31.7 percent of all housing loans, were a mere 5.3 percent of the total in 2008. Tens of thousands of homeowners are afraid of repossessions, which may result in many more homes on the market and a further drop in values.
Property, which along with tourism could be a pillar of recovery, is not helping. The Bank of Greece noted in June that demand for real estate “is hampered by red tape, unclear urban planning regulations and their numerous violations, and the lack of a stable and clear framework for land-planning and use of land.” It also noted the lack of “a comprehensive and precise” land register.
It is inconceivable that after six years of crisis such problems would not have been solved. And yet, the leftist government recently proposed adding further documents and costs to selling or renting property — a compulsory “energy performance” certificate and a civil engineer’s assurance that there are no illegal constructions. The property owners’ federation, Pomida, declared that these new obstacles “threaten to turn the country into an endless ‘property graveyard’ where nothing will be sold, nothing will be bought and nothing will be rented.”
If he could see Greece today, Pierre-Joseph Proudhon, the 19th-century anarchist who declared “Property is theft,” might change his cry to “Property is debt.”
