When the dream turns into a nightmare, with a little help from bureaucracy

by Giannis Xamonakis – ApokoronasNews.gr

If you drive along the country roads of Apokoronas you can’t have failed to notice the concrete mixer lorries that are making a reappearance, indicating renewed activity in the area of the house building industry. This is a sign of the holiday home industry tentatively re-emerging from the ashes of the financial crisis to the accompanying sounds of the distant rumble of jackhammers pounding the hillsides. And you would be right in thinking that the new buildings are paid for by foreigners who want a home in Crete.

But not all existing residents, it seems, are happy with what they’ve got. Only a couple of months ago, I received an email from Rose, one of the British residents in Apokoronas, telling me that she had a tale to tell about her experiences of owning a home in Crete. And it was not a happy one.

So, on a glorious day in January, one of the few good days we had this winter, in between spells of torrential rain and freezing temperatures, I met with Rose and some of her Apokoronas resident friends at a café frequented by the British community, and listened to some of the problems that turned their dream into a nightmare.

Many British arrived here in Apokoronas  in the 1990s, buying and renovating old village houses in almost deserted villages; by the boom years of the mid 2000s there had been a flurry of newly built homes ‘for the foreign buyer who wants to live their dream in the sun’. Over three and a half thousand British citizens seized the opportunity and moved to Apokoronas, spending their life’s savings on a property, their pension and/or savings supporting the local economy.

Property developers and estate agents mushroomed, and they were all making very good money. But by the time the economic crisis hit Greece, some of the developers, driven by greed and on the back of some of the most irrational and unfair legal framework, designed deliberately or by accident to favour dishonesty and corruption, decided to take the easy way out of the crisis, at the expense of the foreign buyers.

Naturally, out of the three thousand or so people who have built houses in Apokoronas, there are bound to be some who had bad experiences with builders, as is the case the world over. However, here in Apokoronas – as in the rest of Greece – the problem goes beyond the few cases of buyers falling into the hands of a rogue developer through bad luck or carelessness. As I discovered, the bizarre legislation of this country seems to encourage corrupt practices and deception, to the detriment of property buyers.

One of the people at the meeting was Raymond (not his real name) who retired to Crete after a lifetime’s work in the UK and other European countries. He related to me the long and tangled story of incompetence and dishonesty on the part of the developer and a number of other ‘professionals’ who were supposed to protect his interests, engaged by him on the project of building his retirement home.  “I don’t know what else could have gone wrong,” he said by way of introduction. “Maybe I’ll find out something else when I’m trying to sell,” he added.

Because the timing of his house building coincided with the beginning of the crisis, Raymond has probably suffered more than most at the hands of a property developer who eventually went bankrupt. Raymond had to buy an additional piece of land, as the one he originally bought was ‘not large enough’ (a miscalculation?). He had to pay off the mortgages on both plots in order to proceed with the building, as the developer had ‘not had any cash’ (a detail passed over?). For the same reason, he paid the legal fees of the vendor’s solicitor – otherwise the sale of the second plot could not go through. He had to pay separately to complete his house himself after the builder went ‘missing’ before the final stages of the building were completed. He paid the plumber and the electrician’s fees and the unpaid IKA to get domestic electricity – all of which was included in the price already paid to the developer.

Even though he thought he had been careful enough to notarise all his agreements, Raymond found that they had no more legal substance than if he hadn’t, and decided not to go through a very lengthy – measured in years – and very expensive series of court cases and appeals to extract compensation from a builder who was careful enough not to have any assets in his name – and whose whereabouts at the time were unknown.

The reader who contacted me, Rose, had a different problem with her property. She has no complaints about the builder, who is still in business and is trying to help with her problem.
To cut a long and ongoing story short, Rose found that when the time came to sell, with a buyer waiting, a change in regulations about her plot, which is designated as part grazing land and part residential development, makes it impossible to transfer her property. Her property has a legal planning permit issued by the Greek planning authority and clearance from the forestry commission, which in 2002, when Rose’s house was legally built, had no issues with including grazing land as part of a plot’s building allowance.  And in case you thought this is a one-off case, there are more than 40 other home owners in the same situation in Apokoronas.

A bizarre maze of laws and regulations stack the odds against the buyer

After listening to several of these cases, one could start thinking that buyers should have been more careful and not have parted so freely with their hard-earned money.
But who would really expect that solicitors do not need to perform thorough checks on a property before exchange of contracts and cash? That solicitors could engage in questionable practices when handling client’s accounts? That significant errors in contracts would go unnoticed, until the time the diggers come to start on the foundations of the buyer’s house?
And that in the event of any of the above happening – and they all have – the buyer is left without any legal consumer protection?


Most buyers are not aware that their power supply in their newly built house is ‘builders electricity’ which has to be changed over to ‘household electricity’ within three years of the original application for the ‘builders’ supply. The electricity bills arrive as normal, until the warning arrives that the supply will be discontinued if the necessary documents are not supplied. These include certificates from the civil engineer, the electrician and the plumber who did the work in the newly built property. This works well for the engineers, many of whom are owed money from the developer – money that the buyer has usually already handed over to the developer – but bad news for the buyer. The civil engineer can refuse to sign until their bill for work carried out in the property is settled. As one local civil engineer (who did not want to be named) put it, “We are 50K out of pocket – for getting plans and permits for just one developer. We have already paid the planning department and paid tax. Our only hope of getting our money back is if the people who bought the house want domestic electricity in the future.”

Similarly, IKA chases the owner, who finds out for the first time that there is a debt ten years after the house has been completed and after they thought they had paid the money to the developer when the house was being built. IKA adheres to its own rules, disregarding private legal contracts and receipts as proof of payment, and pursues the owner of the property, the victim of fraud committed by the developer, for the outstanding debts. “The reason for this,” a specialist lawyer tried to explain, “is that IKA can always trace the property owner, while developers often disappear.” So, chasing the victim is the easy alternative to a complete lack of checks by building inspectors and the inability of government departments to communicate with the property owner at the time of the completion of the building. But that is not all; when and if the payments are eventually made, the workers who are entitled to the insurance contributions do not get them as they, too, are impossible to trace. “I cannot see why they have to do that,” the lawyer continued. “Builders are liable for paying their own unpaid tax; and they can be traced – very often the same people who do not pay IKA contributions on behalf of their customers also have debts to the tax authorities.” And furthermore, IKA contributions paid by the customer to the developer as part of the agreed house price and pocketed by the developer, is a source of undeclared tax-free income for the developer. Any wonder this country’s finances are in a mess?


Trying to get a better understanding of Rose’s situation, I talked to a Chania-based civil engineer who has already complained to the previous government about the Forestry department’s regulations – too strange, even for Greece. She got quite animated as soon as I approached the subject. “It is completely crazy,” she said. “We have a government department that does not accept its own decisions – they issued building permits a few years ago and now they do not recognise them. And nobody is prepared to make a ruling to resolve an issue that affects thousands of people.”

The worry according to the forestry department is, she explained, that the state might have a claim on land that could be forestry. “But in this case,” the civil engineer continued, “they should have made a legal claim and registered it in the local land deeds repository.”

And again, not deciding how to interpret a new regulation is the lazy answer to the complete lack of ability by the state to complete the national land registry project like every other country in Europe (with the possible exception of Albania) has done. And that would have solved the ambiguity in land use designation.

What is to be done? Time for a review of property legislation

The reform agenda of the new government should include a serious and well thought out review of legislation concerning property ownership, complete land use designation, and new professional standards for legal, technical and advisory services offered in relation to property development.

The pending social security contributions review should include a good look into the system of paying IKA contributions for buildings, to include inspections and communication with property owners, separate from the general employment contribution regulations and concessions.

The holiday home industry shows signs of revival. The last thing this country needs is a new generation of unhappy customers to spread the bad news about living their dream in the sun.