Greece
Land value capture in Greece
Several land value capture instruments are used systematically in Greece (Table 2.23) and some are anchored in the Constitution. Developer obligations are a key instrument for local governments to obtain the land for public infrastructure and services private development requires. The main obstacles that limit the use of more land value capture are the legislation’s complexity, public entities’ lack of administrative capacity, and landowners and developers’ resistance. Many actors in the planning system think that intervention in property rights should be minimum.
Enabling framework
Greece is a unitary state with two subnational levels of government: 13 regions and 332 municipalities (OECD, 2022[3]). Land-use planning is highly centralised with strong oversight at the national level (OECD, 2017, p. 111[2]). Regions and municipalities have few responsibilities for land use. Regions and municipalities mainly play advisory roles in the preparation of some spatial plans and approval of some local land-use plans, respectively.
According to Article 17 of the Constitution, property is under the protection of the state. Therefore, private property rights should not be used against the public interest. The national government level creates the legal framework for land value capture.
Developer obligations (Εισφορά σε γη και χρήμα – Eisfora se gi kai xrima)
Landowners are subject to obligations (Εισφορά σε γη και χρήμα – Eisfora se gi kai xrima) when the government decides to draw up statutory urban plans for new development or urban expansion. This is because urban plans are considered to increase land’s value. Landowners participate in consultations. The obligations consist of cash payments or land provisions for public roads, utilities, schools, parks and public space in general. They are designed to compensate the cost of stronger public infrastructure and services use that private development generates. The legal basis dates back to the 1975 Constitution and the obligations were introduced in national planning legislation in 1979. The national government, regional and local governments implement the obligations. They always use them. Statutory plans enabling land or cash obligations require approval from the national government. Usually, only local governments receive the revenues. However, if the national government funds the public works private development requires, it recovers the land value increase.
The cash or land obligations are calculated using a fixed formula, based on the size and use of properties included in statutory urban plans. No landowner is exempt. Cash obligations are paid through instalments.
In new development, compulsory land provisions cover on average 80% of the public space that statutory urban plans require for public infrastructure and services. Local governments provide the rest through expropriation.
The main challenges are the legislation’s complexity; the government’s lack of administrative capacity, for example to prepare the implementing acts for land obligations, which can lead to important delays; and landowners’ resistance. Landowners often challenge paying the obligations in court. Moreover, the lack of systematic monitoring and evaluation makes it difficult to assess developer obligations’ impact in practice.
Strategic land management
Land the modern Greek state obtained in 1830 after the war of independence against the Ottoman empire was considered largely national land. Most land in cities then gradually became private.
Strategic land management (Διαχείριση και αξιοποίηση δημόσιας ακίνητης περιουσίας) that recovers increasing land values is occasional, but becoming more frequent. The Hellenic Republic Asset Development Fund S.A. (HRADF), a public development fund, implements the privatisation programme launched in 2011. It has sold undeveloped public land through public auctions, or has rezoned and developed it before sale, which raises land values. The Hellenic Public Properties Company S.A. (HPPC), a public company, leases public land to generate revenues and boost economic development. Nevertheless, a large part of public land remains undeveloped or used below its potential value.
Strategic land management is hampered by the lack of strategic priorities, institutional fragmentation between multiple public entities and their lack of coordination.
Land readjustment
The national government, regional and local governments use land readjustment (Αστικός αναδασμός) for urban development or redevelopment and the conversion of rural to urban land. Subnational governments require approval from the national government. The legal basis dates back to the 1975 Constitution, and land readjustment was introduced in ordinary legislation in 1979. However, it is only rarely used.
The main obstacles are the following:
Local governments and landowners have not shown interest in land readjustment. Many actors in the planning system argue that intervention in property rights should be kept at a minimum.
The legislation is complex. Landowner consent and compensation rules are unclear.
There is a lack of temporary resettlement options for resident landowners during readjustment projects.
The government is planning a reform of the legislation to improve land readjustment’s efficacy.
The national government, regional and local governments can initiate a readjustment project, through a statutory urban plan. Landowners participate in consultations. However, no specific share of consenting landowners is required. Landowners who do not consent can be expropriated but expropriation is rare.
Landowners must provide a share of their plots for public improvements and services, such as roads, utilities, schools, administrative buildings, parks and green space. The share of plots the government can demand is based on the size of landowners’ properties. After readjustment, landowners receive a plot with a value that is equal to their original holdings and located on or as close as possible to their original land. However, landowners may receive newly created plots within the readjustment area or jointly owned plots. They cannot exchange reallocated plots for cash.
Charges for development rights
In dense areas, developers can build at a higher density (floor area ratio) if they reduce their plots coverage by buildings and provide land for common utilities areas. Landowners and developers are offered similar incentives to demolish and reconstruct buildings at a lower height or to demolish one or more upper floors of existing buildings. These planning incentives aim to reduce urban heat-island effects and clear the view of important monuments. The Ministry of Environment and Energy decides the incentives and associated charges for development rights (Κίνητρα για την περιβαλλοντική αναβάθμιση και βελτίωση της ποιότητας ζωής) after the opinion of the Central Council of Architecture, a consultative body responsible for the built environment’s quality. Local governments are in charge of implementation through the issuance of building permits. However, landowners and developers have shown little interest in using the incentives so far.
Moreover, the government introduced a special charge for development rights in 2012 for the development of the former Athens Hellinikon airport area. The developer of the area can pay a cash charge to build at a density (floor area ratio) above the established baseline but within the maximum density permitted by the special law regulating the area’s development (Law 4062/2012). The estimated value of development rights determines the charge. The municipalities of Athens, Piraeus as well as other neighbouring local governments receive the revenues. They may only use the revenues for the creation of green areas, public facilities and renovation of their historical centres. However, the developer has decided not to use this special instrument.
The main obstacles to charges for development rights are the limited scope for them as they apply to few specific cases; unclear development norms and regulations; and local governments’ lack of administrative capacity, for example to estimate the increase in land values development rights generate.
References
[3] OECD (2022), “Subnational government structure and finance”, OECD Regional Statistics (database), https://doi.org/10.1787/05fb4b56-en (accessed on 13 January 2022).
[8] OECD (2021), “Subnational government structure and finance”, OECD Regional Statistics (database), https://doi.org/10.1787/05fb4b56-en (accessed on 25 November 2021).
[2] OECD (2017), Land-use Planning Systems in the OECD: Country Fact Sheets, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/9789264268579-en.
[1] OECD/UCLG (2019), 2019 Report of the World Observatory on Subnational Government Finance and Investment - Country Profiles, OECD/UCLG.