Tax incentives to boost the construction of new rental housing

The government’s new Build-to-Rent initiative forms part of a broader package of measures included in a draft bill currently under public consultation by the Ministry of National Economy and Finance. While the legislation also addresses disposable income support, tax provisions, the out-of-court debt settlement mechanism, and public asset management, the real estate sector’s attention is focused primarily on Articles 6 and 7, which introduce, for the first time in Greece, a structured framework of incentives for Build-to-Rent investments.

The programme is aimed exclusively at legal entities operating in the construction and real estate management sectors. Its objective is to increase housing supply either through the development of new residential complexes or through the conversion of existing non-residential properties—such as obsolete office buildings, commercial premises, or abandoned structures—into housing units intended for the long-term rental market.

A key eligibility requirement is that participating properties must be leased exclusively for a minimum period of ten years. In addition, rental rates will not be determined solely by market forces but will be set through a joint ministerial decision issued by the competent ministries. Through this approach, the government seeks to combine investment incentives with the creation of a new stock of housing that remains affordable over an extended period.

The legislative framework provides that a joint ministerial decision will establish the programme’s participation criteria, eligible business activity codes, contractual arrangements between landlords and tenants, lease provisions, property maintenance obligations, and the methodology for calculating rent levels. In practice, the success of the initiative is expected to depend largely on the details of this secondary legislation.

The most significant incentive, however, is contained in Article 7 of the draft bill. Specifically, it provides for a full exemption from corporate income tax on revenues generated from the leasing of properties that qualify under the Build-to-Rent programme. The tax exemption will apply only if the requirements regarding the ten-year lease period and the predetermined rent levels are fully met.

The provision is regarded as particularly important by real estate professionals, as it represents the first attempt to establish a dedicated Build-to-Rent investment framework in Greece, modelled on more mature European markets such as the United Kingdom, Spain, and the Netherlands, where large residential portfolios are developed specifically for rental purposes rather than for sale.

Market participants believe the measure could act as a catalyst for the redevelopment of underutilised properties, particularly in urban centres where substantial amounts of outdated office space remain vacant. At the same time, the creation of additional housing units could help ease the upward pressure on rents that has characterised the market in recent years.

Nevertheless, industry sentiment remains cautiously optimistic. Investors and developers stress that the level at which rents are set will be a decisive factor in determining the programme’s success. If rent ceilings are established at levels that do not provide adequate investment returns, interest in new developments may remain limited despite the generous tax incentives on offer.

Industry representatives also argue that faster permitting procedures and greater planning flexibility for building conversions will be essential if the programme is to achieve meaningful results. In their view, the tax exemption is an important step forward, but it will not, by itself, be sufficient to stimulate large-scale investment unless accompanied by a substantial reduction in administrative and regulatory barriers.