The market has now largely changed to those aged 55+ who are looking to make a permanent move overseas. Why? As the baby boomers approach retirement age so they are discovering the income they believed they would enjoy from their pension has dramatically shrunk. Conventional savings generate a minuscule return and UK property prices have fallen - and are set to continue falling. Consequently people have to face up to the reality of having to lead a very austere lifestyle throughout old age - or continue working. Its small wonder that many people are extremely annoyed, having worked all their lives only now to be faced with an uncertain future. Government research shows over 40% of this age group are planning to move abroad, where they can afford a better quality of life.
So what can you expect to find in Crete? Don’t believe all the bad publicity the country has received over the last year?
Throughout 2010 the UK press has been unfairly banging on about how Greece is bankrupt and society has taken to the streets in protest. Now it would appear UK pigeons have come home to roost, what with demonstrations, riots, injuries, and a pending winter of discontent. While the British government has been slow off the mark to react to the problems the nation faces, the Greek government was far more courageous and acted far quicker to put in place draconian measures to reduce its fiscal deficit. Praised by the International Monetary Fund and the European Central Bank, Greece is now on target to reduce its fiscal deficit to below 3% of its GDP by 2014. To put that figure into context, steps the UK government is putting in place would only appear to bring the country’s GDP down to a figure of around 5%!
The economic pain in the UK has hardly yet been felt, with inflation and cost of living set to rise markedly in 2011. However, in Greece the austerity measures have already been applied and while VAT was increased the main focus of cuts have been on the public sector, reducing bureaucracy and reforming the tax system. Thus, in the main, any changes to the cost of living have already been factored in and UK couples coming over now, with a pension of 1,000€ per month, can look forward to enjoying a far more comfortable lifestyle than in the UK – and that’s not to mention the glorious 320 days of sunshine a year.
To live in Crete you don’t have to worry about council tax. There isn’t any - apart from 10€ or so included in each utility bill. Typically your metered water will cost around 100€ a year and electric for a detached two bedroom house, like one of our Snobbys, will set you back around 800€ per annum – or less if you have one of our renewable power systems. Because the winter is not as cold as in the UK, with temperatures never getting down to zero – even at night, generally you won’t need any heating during the day. Imagine the saving compared to the UK?
As you get older healthcare is always a concern. A private visit to a consultant in Crete costs around 50€ and the most up to date technology is available to you, with results invariably obtained there and then. A DVT scan for example costs just 60€ - and a full body scan around 600€. That’s a fraction of what it costs in the UK. Healthcare in Greece is free to all those of pensionable age and in Crete the hospitals do not have MRSA. The only downside to the excellent treatment is that culturally personal nursing is undertaken by a family member which invariably means hospitals tend to be a little noisy. You can of course opt to have a private nurse.
Living in the UK, as you get older crime becomes a real worry. Crete is as safe as houses and has the lowest crime rate in the EU.
There is no doubt, apart from the wonderful weather, healthy food, glorious scenery and the friendly people; Crete allows you a tremendous opportunity to enjoy a lifestyle which the UK just cannot even get close to. Come on over. You’ll be quids in!
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With much smaller pensions than they originally thought, with years of austerity ahead as government tackles the national debt, a crumbling health service - and not to mention miserable weather half the time - what is there to look forward to? It seems the great silent majority is taking life by the scruff of its neck and doing something about it. Research by the Foreign Office show that nearly half of Boomers plan to move abroad where they can enjoy a better quality of life, in the sun.
Moving to the sun is exciting and will give you a new lease of life, but it’s important you buy the right property and don’t get carried away letting your heart rule your head. This five point plan may be obvious, but it’s all too easy to throw caution to the wind. For your future happiness you need to get it right and, as Snobby owners already know, they got it right!
POINT ONE - Choosing the right location
Property in tourist locations tend to be expensive and in the winter everywhere shuts down. Far better to consider a working village which is open all year round, where there’s at least a mini-market and a place or two where you can eat out. Also, being near a bus stop makes sense, especially if in the future you find you cannot drive. Come to that a house on an elevated position could mean, as you get older, the steep slope may inhibit any walking.
POINT TWO - Build your own, resale, old, or new?
The gamut of buying land and building your own home may be a dream, but it’s fraught with bureaucratic danger, delays, will give you high blood pressure and will always cost you more than you thought. Resales can be risky unless your lawyer digs deep to check all building licenses are in place and properties may not necessarily comply with current anti-seismic construction standards. A stone derelict may have soul and be cheap too, but always requires a blank cheque to restore the property. Can you afford it? New build is the safest option - and invariably there is a guarantee too, which will ensure there are no unexpected maintenance costs to cover.
POINT THREE - Size matters!
While owning a huge plot of land may be your dream. In reality as you get older it will be impossible to maintain. Even if you are a passionate gardener will you be able to stand the heat having to work 24/7 to keep abreast with everything? Even a garden of 100 square metres is plenty big enough to grow all the vegetables you need for two and still have space left over for a garden of plants, pots, raised beds and the odd lemon tree.
POINT FOUR - Busting your budget
People arriving in Crete often seem to be sprinkled with fairy dust, with preconceived ideas flying out the window. PLEASE make a must have list, and in large letters, enter the budget you can comfortably afford. No matter what, never let your heart rule your head. Your budget should also include the figure needed to pay for all the purchase costs and taxes. Work on 18% on top of the house price as a maximum guideline. Far better to buy something beneath your budget than bite into your savings and prejudice your future lifestyle.
POINT FIVE - Financial security
Never, ever, send money directly to your lawyer, agent, architect or builder. Only ever transfer money from the UK into your own Greek bank account. The ‘pink slips’ confirming the monies you transferred from the UK need to be declared on your Greek tax return, or it will be presumed you earn a taxable income in Greece! On a new build, and especially buying off plan, you should always take steps to protect your deposit, or stage payments, should the builder happen to default. Only proceed with buying a property if you are sure any monies you pay over prior to completion is made legally safe.
At Snobby we work hard to provide exactly what the UK market is seeking. With Snobby you get amazing value and quality. In fact we proudly claim Snobbys are the lowest new build prices for detached homes you’ll find in Crete. Don’t take our word for it come on over and see!
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Don’t take the self-righteous attitude of “I pay UK tax so the Greek system has nothing to do with me.” That will not hold water. Exactly as you are obliged to do in the UK, anyone with a Greek tax number is legally charged to file a declaration each year. As you need a Greek tax number in order to own a property in Crete that means you. Relax, don’t worry, there’s nothing to it, providing you follow simple instruction – but don’t do the ostrich thing, or it’ll come back later to bite you in the bum and cost you money.
You can’t get away from filing a tax return. On selling a home in Greece, the lawyer will check there are no outstanding loans or unsettled tax owed on the property. If you’ve not filed annual tax returns against the period of ownership, you will be fined for every year missed. Even worse, if you haven’t filed tax returns AND haven’t been clear where funds originally came from to purchase your house, the revenue will presume the money was derived from earnings in Greece and you will be taxed accordingly. This will invariably mean having to shell out thousands in fines and outstanding tax.
Just follow the simple rules and you won’t get into a pickle.
The tax year runs from January 1st until 31st December and while all Greeks have to file their return within a couple of months into the New Year, foreigners invariably have a couple of months more. The tax return shows whether you own a property, land, a swimming pool, a car, or a boat, and documents authenticating these purchases are all forwarded to the revenue to support your tax declaration.
It sounds daunting, but just relax and with the right advice it’s easy-peasey.
If you generate an income in Greece there must be sufficient earnings shown to meet these purchases. If money was sent over to Crete from the UK, then this has to be proved, or it will be presumed you generated the money in Greece and you will be taxed accordingly.
THE RIGHT WAY TO GO
Greeks expect to pay an accountant around 50€ for their annual tax return. As you don’t understand the system I believe it’s much safer to find an accountant who speaks good English and has at least a working knowledge of UK tax law, to best advise you. It may cost you more, but you’re also paying for peace of mind, someone who will do all the running around on your behalf and you can be secure in the knowledge that you will not be hit by any hidden tax bill, now, or in the future.
When buying a house or a car, you should NEVER pay money to a third party in Crete, direct from the UK. Money should ALWAYS be transferred from the UK directly into your own Greek bank account. If you cannot be there to withdraw it, then authorize your lawyer to withdraw specific funds on your behalf.
When in Crete you should go to your bank and ask for copies of the ‘Pink Slips’. This is a legal record confirming you brought funds into Greece from the UK and therefore these sums are not taxable. Never bring spending money over. Always transfer money from the UK into Crete to maximize your ‘Pink Slips’.
Your accountant will need these to enter on your Greek tax return and the total amount should exceed the purchase costs of your house, land, car or boat. If you have taken out a Greek mortgage to fund any of these, then you will need sufficient ‘Pink Slips’ to cover the loan repayments each year.
The Greek revenue are now saying if your house is only used for holidays, or part of a year, then there are various costs associated with that, such as utility bills etc. Consequently, dependant upon the square meterage of your house, the size of pool and type of car, the revenue will estimate how much money you need to bring into Greece each year to cover these running costs.
For example, if you have a two bedroom Snobby, then you need to introduce funds from the UK amounting to approximately 2,000€ each year. If you have a Greek mortgage of, say 450€ per month, then you need ‘Pink Slips’ of around 7,500€ to cover everything.
Appreciate that Greece has a different system. Don’t take chances just because you know something about taxation in the UK. Find a good accountant used to dealing with property owners from the UK. We can recommend an excellent one in Chania who speaks good English and takes care of everything, without you having to run around Chania and queuing in all the various governmental departments. Everything will be taken care of and you won’t have to pay a penny in tax.
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Denise Gilbert, from Croydon is passionate about gardening. She and her family used to spend many holidays in Crete over the years and fell in love with the island. After her husband died she and her daughter Alison, who is a Park Ranger in Chelmsford, often discussed moving to Crete and starting a new life. They began to look for property and discovered a small development of five Snobbys being built in the village of Kamisiana in western Crete. Alison decided to buy a two bedroom Snobby while Denise bought the house next door - a three bedroom Snobby Posh Pad. Having sold her house in the UK, Denise moved over permanently in February 2010, while Alison plans to move into hers by the end of the year.
Denise says, “On my holidays I’d met people who had bought houses on large plots and now realised it was a mistake. As they got older what was difficult to maintain, became downright impossible to look after. I love gardening but the need to spend every waking minute of your time out in the heat just trying to keep on top of things was a pressure I could do without. I calculated what I wanted to grow - and the space needed - and discovered I could be self-sufficient and have a lovely garden without being chained to my fork and spade. I suppose people may want a large plot for privacy, but all Snobbys come with a walled garden - and therefore you get privacy, but pay less for the privilege.”
The Snobbys bought by Denise and Alison stand above the old village, surrounded by olive trees, with a panoramic sea view towards the picturesque fishing village of Kolimbari and the soaring Rotherpou Peninsular.
Says Denise, “While the cost of living in Crete is much lower than in the UK, I liked the fact I could make my money go even further by growing all my own vegetables. The whole of my garden is around 118 sq. m. yet you would not believe what can be grown.”
Denise buys plants and seeds from the local animal feed shop in nearby Tavronitis, and is often given cuttings by friendly neighbours. She has three tomato and two red pepper plants as well as a bed of huge red onions growing beside the garden path by the side of the house. A gravelled area in front of a sun terrace has now become a jungle of triffid-like leaves hiding melons, butter squash, cucumbers and courgettes. On the lower terrace she has a vegetable garden of just 20ft x 10ft and planted here are spinach, broccoli, aubergines and beans. “I’m still trying to get it right,” she says. “I planted three courgette plants and grew so many I had to give them away. As fast as I cut them so others grew in their place. It’s the same with the tomatoes too. Once I’ve planted a crop the only tending they need is watering, which I do in the evening, when it’s cooler and there’s less chance of evaporation. With plenty of water and the level of sun you get in Crete, it’s small wonder that everything does so well.”
But Denise’ garden is not just about vegetables. There’s an abundance of colour with geraniums, palms, bougainvilleas and a lemon tree and grape vine too - although these will take a couple of years before giving fruit.
Says Denise, “A garden like mine is perfect. It doesn’t rule my life, I can potter to my heart’s content and at the end of the day you cannot beat the taste of fresh organic produce you’ve grown yourself -without too much effort either. Alison is planning to see Yiannis, who owns the olive grove next door to see whether he will rent a small piece of land to keep chickens - and maybe even a goat!”
The good life isn’t about the size of plot you can afford. It’s all about the lifestyle you can afford by being Snobby.
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THE BAD NEWS
Leading accountants Pricewaterhouse Coopers, have published a report on the UK housing market claiming that house prices could remain below their peak levels for the next ten years. In other words there is a 50% chance your home will be worth less in 2020 than it was in 2007. They forecast house prices could plunge by 25% over the next three years.
Ed Stansfield – Chief Property Economist, of Capital Economics - goes one step further. He forecasts property prices will drop by 5% by the end of this year, followed by a 10% drop in 2011 and a further drop of 10% in 2012. In real terms that means the average home today, worth £162,000, will drop to £125,000 by the end of 2012! Take your time and money will just run through your fingers and be wasted.
Ray Clinn, Head of Pensions for Liverpool Victoria Insurance
says, “Britain’s over 50’s have already seen their pension pots damaged by the economic crisis in the UK and we estimate 28% of people aged over 50 will be forced to delay their retirement.” Do you want to spend the rest of your life having to work and then having to count the pennies just to live?
THE GOOD NEWS
We know there is a growing pent-up market desperate to leave the UK, as over the last two years Snobby has seen a positive upward rise in enquiries and number of appointments to view our properties. However, in most cases buyers are unable to make the move until they sell their house and generate the necessary equity.
Naturally everyone wants to get the best price they can for the sale of their house – but the question is can you afford to wait? Prices in Crete have remained relatively stable and are even likely to rise slightly in 2011. If you have a house in the UK with a market value of £162,000, by the end of next year you could have lost nearly £20,000 – and the year after that ANOTHER £17,000 – and that’s not to mention on-going expenses of council tax and TV license, and increase cost of living. The longer you stay in the UK the more money it’s going to cost you. The sooner you do something about it, the more you’ll save. Where would you rather be? Lying out in the sun enjoying a wonderful life – or sitting indoors worried about whether you can afford to turn the heating up?
WHAT TO DO?
Let’s say you’re coming up to retirement and your mortgage is paid up. Bite the bullet and put your house on the market for a quick sale. If you have an average priced house of £162,000, market it for £149,000 – that’s a huge drop of £13,000 – and makes a really attractive price for a fast sale. After the sale costs and legal expenses that would leave you with around £142,000 – on today’s rate that’s equivalent to 170,000 euros.
Move to Crete and as an example, take one of our Snobbys – a two double bedroom detached villa, standing in a spacious walled garden. That would cost you around 120,000 euros and that price includes all purchase costs, fixtures and fittings, so there’s nothing else you need budget for. You’d arrive in Crete, everything paid for, with a nice little nest egg of over 50,000 euros!
Factor in a UK state pension for a married couple of around 750 euros per month, plus a private pension of perhaps 500 euros and you’ll be living the life of Riley. A couple in Crete can live comfortably on 1,000 euros a month – and on top of that you have money behind you too.
Is it really worth losing out on the rest of your life because you want to squeeze that last penny out of your house – when likely as not you’ll lose money while waiting?
If you would like to receive accurate information on a property and living package in Crete just let us know and we’ll do our best to help.
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