CITYSCAPE Investment & Property Services S.A.

Corporate Leases

FAQs FOR CORPORATE LEASES IN GREECE

The documents below constitute a Q&A list for general information purposes only in respect to the standard corporate lease issues in Greece . They are not intended to be comprehensive or to provide any specific legal advice. Professional legal advice should therefore be sought before any action is undertaken based on the below document.

THE LEASE

How long are corporate leases generally?
The standard lease has recently been changed to a term of 12 years with an option to extend the lease by another 3 years (total of 15 years). After 2 years of the initial term, the tenant has the right to leave, but must give 6 months’ notice and pay the landlord compensation equivalent to 4 months’ rent.

What form of agreement would the tenant be asked to sign?
A formal case binding upon both parties. There is no standard lease document for office space, however, there are a number of clauses, which are always covered in a lease contract.

Is the lease legally binding?
The lease is legally binding. The landlord is obligated within one month to have it stamped and registered with the Inland Revenue Office. It is advisable that the company which is the lessee also register it with the Inland Revenue Office as a precautionary measure but also because it will be required by the company in order to obtain operating permits, apply for telephone lines, etc.

Are options to renew or extend the lease possible?
By law, the tenant is granted a 3-year extension of the original lease term.

What regulations cover sub- leasing or assigning of leases?
Sub- leasing usually requires the landlord’s consent, which is only rarely refused if detailed description of sub-lessee is provided and sub-lessee has direct financial interests with lessee or a part of the overall tenant company’s group. This should be detailed in a specific clause. Generally, landlord’s do not accept sub-lessors without prior consent and due diligence.

THE RENTAL

In what monetary units are rents quoted?
Rents are quoted in Euros per square meter per month.

When referring to rent, what does this specifically include?
In addition to basic rent, the tenant commonly pays a stamp duty every month, which is currently 3.6% of the monthly rent. This can be negotiated and shared equally between the tenant and landlord. In many instances, the subject of who pays the stamp duty can be a dealbreaker. There is also a monthly service charge that covers the cost of the building’s maintenance and operating expenses.

How is rent adjusted during the term of the lease?
Rent is adjusted through annual increases as agreed to at the beginning of the lease. The increases are generally based on the inflation rate plus 1 to 2% extra and is negotiable. It is also common that annual indexations can be a mutually-agreed upon flat percentage (currently between 4-5%). Service charges are adjusted each month, depending on the building’s operating costs.

How is rent paid – monthly, annually?
The first month’s rent is paid upon the signing of the contract. From there on, rent is paid monthly in advance.

What incentives are offered by the landlord?
Incentives are usually very limited, but short rent-free periods (from one to 2 months) to allow for fit-out may be granted or very few free parking stalls if available.

THE FACILITIES

How is floor space measured?
Generally, floor space is measured as the gross internal area including walls, but excluding common areas. Common areas are almost always included if the whole building is rented to one tenant. Certain ownerships in specific buildings include these common areas, but these are exceptions and not the norm.
However, there is no standard for measuring floor space in multi-tenant buildings. In Athens , tenants are responsible for a proportionate share of the service charges, but not based on the amount of space leased. For example, a ground floor tenant would pay less for lift maintenance and common electricity consumption than occupants on higher floors.

What is generally provided by the landlord prior to occupation of the space?
In most cases, new accommodations are offered in basic form. The tenant is responsible for completing finishes such as lighting, carpeting, partitioning, etc.

THE COSTS

What costs does the tenant incur at the time of occupation?
The tenant usually pays 2 months’ rent as a deposit and the first month’s rent plus the stamp duty that corresponds to the rent (but is not applicable to the 2-month deposits). Legal costs are borne equally by the parties.

Is key money charged or a security deposit required at the start of the lease?
As mentioned above, the usual deposit is equivalent to 2 months’ rent. Key money is always sought in the case of high-street retail locations, but rarely for office space.

How are tenant improvements specified, paid for and supervised?
The fit-out is usually organized by the tenant, subject to the landlord’s approval. The tenant also finances the improvements in most cases. In most Class A premises, landlord’s have their own teams or can sub-contract. It is advisable that all tenant specs are listed, prices, etc and it forms the Appendix of the lease agreement. The landlord remains owner of the improvements when the tenant leaves the premises.

What additional costs should the tenant budget for during the term of the lease?
The tenant should budget for annual increases in rent due to the escalation clause. However, value added tax (VAT) is not charged on rent. VAT may or may not be applied to service charges, depending on how property management accounting is conducted. Service VAT in Greece is 19%. Other duties that refer to the occupied space are small municipal taxes, municipal waste disposal, etc. that are usually incorporated and clearly stated within the Public Electrical Company’s bimonthly bill.

What costs are the tenants responsible for at the end of the lease?
At the end of the lease, the tenant must bear the costs of returning the property to the same condition it was in at the beginning of the lease but should be thoroughly discussed with landlord at the appropriate time. Most landlords are flexible and usually can accept the condition of the property upon expiration in “as is” condition, but always with their prior consent.

MISCELLANEOUS

Can furnished office space be leased on a short-term basis?
In Athens there are only a few small, serviced office suites, which would be suitable for relatively short terms, available.

Is leasing the only option for foreigners wishing to establish an office in your country?
In Greece , foreigners can buy as well as lease. For leasing, there must be a professional business address in order for a company to establish itself as a legal entity which can be supplied by one’s Greek lawyers or accountants until a suitable space if leased and all bureaucratic works completed for the incorporation of a company.

Are there restrictions on foreign ownership of commercial buildings in your country?
In order to purchase property in Greece , the purchaser must be “established”, i.e. operates as a branch or parent company and be registered for VAT.

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