IOBE Proposes Rent Cap and Reforms to Ease Greece's Housing Crisis

IOBE's Bold Proposal to Cap Rent Increases in Greece

In response to the severe affordable housing crisis in Greece, the Foundation for Economic and Industrial Research (IOBE) has put forward a comprehensive proposal aimed at stabilizing the market. The proposal includes capping excessive rent increases, bolstering 'Renovate-Rent' schemes with tax relief, and placing restrictions on short-term rentals and Golden Visas in high-pressure areas. This move comes as 35% of homes remain vacant, according to the 2021 census, and the number of loans issued by banks remains significantly lower than pre-crisis levels. The IOBE's recommendations are seen as a potential turning point in addressing the supply-demand imbalance that has plagued the Greek housing market.

Housing Supply Constraints: The Airbnb and NPL Effects

Greece's housing supply woes are largely attributed to properties being tied up as non-performing loans and the burgeoning short-term rental market, including platforms like Airbnb. According to a report by Greek Reporter, the Bank of Greece highlights these factors as primary contributors to the housing crunch. In the first half of 2025, construction activity dropped dramatically, with a 14% decline in permits and a 24% decrease in total surface area. These bottlenecks have pushed apartment prices up by 7.3% year-on-year as of the second quarter of 2025, surpassing the previous peak set in 2008.

IOBE's Renovate-Rent Scheme and Tax Relief Proposals

The IOBE has also outlined improvements to existing schemes, such as 'Renovate-Rent,' with proposed rental caps and minimum lease durations. According to ProtoThema, supplementary tax relief could be provided to landlords offering reduced rents. These tax incentives are seen as crucial in encouraging property owners to enter the long-term rental market, rather than opting for short-term leases that often offer more immediate profits.

Restrictions on Short-Term Rentals and Golden Visas

The IOBE study suggests stringent restrictions on short-term rentals and modifications to the Golden Visa program, particularly in areas facing housing shortages. As detailed in Crete Tip, these measures are designed to free up residential properties for local residents. By limiting short-term rental licenses and revising visa requirements, the Greek government aims to redirect housing stock towards the domestic market, alleviating the acute pressure on housing availability.

Public-Private Partnerships as a Path Forward

In another innovative approach, the Greek government is exploring public-private partnerships to develop affordable housing on publicly owned land. As reported by To Vima, this initiative plans to yield 5,000 new housing units focusing on young people and vulnerable groups. Developers will be offered public land in exchange for constructing residential buildings, a portion of which will be designated for affordable housing through income-adjusted rents and rent-to-own schemes.

Decentralization and Telecommuting: Enhancing Regional Balance

The IOBE's report also underscores the potential of decentralization to mitigate housing demand in urban centers like Attica. Encouraging telecommuting and enhancing infrastructure in less densely populated areas could distribute population and housing needs more evenly across the country. According to PEDMEDE, this strategy could significantly relieve the pressure on housing markets in Greece's largest cities.

Future Implications for Greece's Housing Market

As Greece grapples with its housing crisis, the IOBE's proposals present a multi-faceted strategy aimed at stabilizing the market and protecting tenants. If implemented, these reforms could lead to a more balanced and sustainable housing sector. For international investors, this represents both a challenge and an opportunity. As Greece moves towards these potential policy shifts, RealEstateAbroad.com analysis suggests that investors may find new opportunities in affordable housing projects and long-term rental properties.