On Monday, February 15, the House of Representatives finance committee discussed measures to support tenants affected by the coronavirus pandemic.
In particular, the deputies considered two bills to stimulate owners who rent out premises to companies or individuals who have suspended their activities due to the imposed quarantine, to voluntarily reduce the amount of rental rates during the first six months of 2021.
One bill dealt with a tax credit for property owners who reduce their rent for at least three months, in the amount of 50% of the difference in price, provided that this amount is not less than 30% and does not exceed 50% of the rent price. The second law dealt with the exemption of landlords from the special defense contribution (from 3% to 75% of the rent price) for the months during which they reduced their rent.
It is worth noting that the Small Business Association has expressed great doubts about the effectiveness of such incentives due to their voluntary nature.
The association stressed that a number of homeowners are not registered with the tax department or do not declare rental income. Moreover, many tenants do not even have contracts with their landlords. The previous quarantine showed that most owners are not sufficiently motivated and are afraid that such measures may negatively affect their income. But even if an agreement is reached, it is unlikely that a discount on rent for several months significantly helps tenants, especially since in the end they still have to pay off rental debts.
This view was supported by many MPs, who called on the authorities to provide direct subsidies of one third of the rent to support tenants affected by the effects of the coronavirus pandemic.
The representative of the Ministry of Finance noted that if all landlords make concessions, the damage to the state treasury will not exceed 40 million euros. At the same time, subsidizing one third of the rent has a huge impact on the amount of rental income reported to the tax department, which reaches about 650 million euros per year.
In turn, MP Christiana Erotokritou from the DIKO party disagreed with the opinion of the Ministry of Finance, arguing that this amount applies to the 12-month period of operation of all enterprises, and not just those affected by the crisis.
Erotokritou stated that the Ministry had not studied the matter at all. At the same time, she added that they were only interested in PR, and not in the final result.
She asked the Ministry and the authorities to think again and return to the bill, which provide direct support to tenants by subsidizing rent and forcing landlords to participate in financing.
As you may know, earlier the Ministry of Finance stated that such aid is contrary to EU rules, and forcing homeowners to reduce rents is unconstitutional by law, since it can be regarded as interference with a private contract.