Adjusting objective values is proving a tough nut to crack

The Finance Ministry is setting up local committees around Greece with the ultimate aim of harmonizing so-called "objective values" (the property rates used for tax purposes) with market prices.

The ministry is taking this step because the committee it had originally tasked with finding a new formula to calculate the rate in each zone failed to come up with a working model. According to ministry officials, although the plan that task force presented was technically competent, it could not be implemented as in most areas in the country property transactions range between zero and very few, and for that system to work it was vital to have data from actual transactions.

One hundred committees will be set up around the country with the objective to adjust 10,000 zone prices to market rates. Besides tax officers and estate agents, committees will also consist of property surveyors and officials from the Bank of Greece and the Hellenic Statistical Authority (ELSTAT). They will have to deliver their final proposals to minister Euclid Tsakalotos within December.

They will come up against the same problem as the task force: the lack of data due to the low number of transactions. It is therefore quite possible that the committees will be forced to give up and tell the ministry they cannot determine the new zone prices - in which case the ministry will likely again ask for the postponement of the adjustment of the objective values to 2019.

Sources say the ministry has ruled out the option of a horizontal reduction in objective values over fears of lawsuits by citizens; that was the case last year, resulting in the cancellation of the values the ministry had set in six areas of the country.

According to a senior ministry official, "the big problem is that in most areas of Greece transactions are very few, so setting zone prices will be difficult, while it will be even more difficult to monitor the market so that the new online platform the ministry wishes to create with the values of properties can be fed with new data."

He also points out that the transactions currently taking place are mostly by people who urgently need the money, so sale prices may well not reflect actual market values.