The justification for the imposition of this measure was to deal with large automatic adjustments to professional rents resulting from agreed annual indexation rent increases, due to the huge and unexpected increase of the Consumer Price Index announced by ELSTAT. However, the general wording of the provision seems at first sight to also include agreements to increase the rent in percentage or even in an amount of increase expressed in euros, with the result that it creates huge injustices especially at the expense of bona fide landlords, who rightly complain because they had kept low their rents for a number of years, and now they are “punished” for their attitude.
This arrangement is an unacceptable intervention of an anti-social nature since it is directed against the little and medium-sized property, unilaterally and without any counterweight in its favor, such as the now necessary reduction in rent taxation, while at the same time leaving large property and the State undisturbed! But the even more dangerous thing is that in the time depth of such measures of forced commitment of the amount of the leases, the forced extension of the duration of these leases is fatally added. The combination of these two measures constitutes the eternal “Rental”, which was in effect for decades in our country due to the Asia Minor Disaster and the Second World War, which literally destroyed and ruined the oldest building potential of our country for decades…
The 3 most frequently asked questions about the above setting are as follows:
1. Which categories of leases does the law itself exclude from its application?
Leases with a lessor are excluded from this arrangement:
a) Real Estate Investment Company Societies,
b) companies belonging to Alternative Investment Organizations,
c) commercial center operating companies, with a surface area of at least 15,000 sq.m.
d) companies that are 100% owned by the State, and their subsidiaries.
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- In which cases could the lessor legally request the non-application of the regulation and the agreed adjustment of the rent?
good faith is in any case permissible. However, the case where a higher contractual increase in rent could be legally claimed in our view is only if in a business lease the rent had remained unchanged for a number of years, in which case the indiscriminate application of the provision to the detriment of the lessor of such a lease ends up being particularly burdensome and abusive, and therefore at least the agreed adjustment can be legally challenged.
Furthermore in our view, the landlord can request and receive increased rent in relation to the paid by a percentage greater than 3% without even a court order in the following cases:
- If a business lease was agreed at the beginning of it , what will be the normal rent, but for the convenience of the tenant during his initial installation in the tenancy and its proper configuration by him, by a special written agreement a low initial rent was fixed for a short period only, after which it was agreed that the normal (market), significantly higher, rent will apply.
- When the contractual or any longer legal term of a business lease expires, the 3% limitation cannot apply to the rent of the new lease that will be freely agreed between the contracting parties. If we consider the opposite to be the case, then the landlord of a property with an old and very low rent will have no choice but to evict his existing tenant in order to rent it to a third party at a completely free rent, so this provision will ultimately harm rather than protect the tenant!
- If the contracting parties jointly agree to pay an increase in a higher percentage, how does the landlord guarantee that the tenant will not change his mind and ask for a refund or offset of the overpaid amount?
The 3% “cap” provision has nothing to do with the 1978 residential lease “fair rent” meme , exceeding which was also a criminal offense (!). In order for such an agreement to be valid and binding for both parties, the following characteristics should be present in our opinion:
- This agreement to be in writing and later than the day of publication in the Official Gazette of the above provision concerning the relevant year. The certainty of the later date is now easily ensured through the AADE Lease Information Declaration application, in addition to the other known ways. This is because the subsequent waiver of any kind of rights in these leases is valid if done by a document of a certain date.
- This document should clearly state that the contracting parties are aware of the existence of this limitation and that the lessee expressly waives the right to claim a refund of any amount that exceeds 3%. It is noted that if the disputed provision is expressly mentioned in the lease, i.e. article 96 of Law 5007/2022 (Government Gazette 241A/23.12.2022), the lease automatically acquires a certain date if it refers to an event of a certain date so the relevant agreement should be considered as valid, without the lessee being able to claim that he was unaware of the relevant provision.
- In any case, our opinion is that after the income tax declaration of the above amount by the lessor, it is completely unnecessary to accept the tenant’s request for a refund of any amount that exceeds the ceiling of 3%, given the fact that the tax office assesses tax on the total rent, even if it exceeds that provided for by the above provision, without so that the taxpayer has a substantial and effective possibility to claim the difference of the corresponding tax attributed to him.
