This will happen because with the maximalist and absolutely prohibitive provision that from 1.1.2021 the public sector will be able to lease (or extend existing leases) only category B and Near buildings Zero Energy. Not only are such buildings not available today for immediate lease, but no landlord will go to the process and enormous expense of upgrading existing suitable buildings while the provisions allowing the State to unilaterally terminate any building lease remain in force, without compensation to the owner!
In its letter, POMIDA also cites the current unacceptable and dishonest legislation that allows the State the possibility of unilateral termination of real estate leases by the State for 8 reasons without any compensation of the lessor or a completely unjustified solution with compensation 1 rent (1), breaching the lease agreement and financially ruining the private person who entrusted it, which must be amended immediately in order for any owner who intends to lease his building to the public sector to he is sure that the public will also honor its obligations to him, so that he will be convinced to make the required huge investment in energy upgrading of his building, and the amortization of his expenditure will indeed be achieved. It also cites its proposal for the wording of this provision.
The text of the letter is as follows:
To the Minister of Internal Affairs Mr. Kostis Hatzidakis The Minister of Finance Mr. Christos Staikouras The Deputy Minister of Finance Mr. Theodoros Skylakakis The Deputy Minister of Internal Affairs Mr. Dimitrios Economou The Deputy Minister of Internal Affairs Mr. Nikos Tagaras The Deputy Minister of Finance Mr. Apostolos Vesyropoulos
Here Athens, 13.11.2020
SUBJECT: PROPERTY LEASES IN THE PUBLIC: Prohibition of category B energy specifications + Near Zero Energy from 1.1.2021 and with a unilateral lease solution from the State!
Dear Ministers
With article 5 par. 6 of s.n. of the Ministry of the Interior for the integration of the EU Directive 2018/2002 on the Energy Performance of Buildings, which you have posted for consultation, from 1.1.2021 the State will not only be unable to find buildings to rent to house its services, but will be forced to gradually abandon the already leased ones, at the end of their leases!
This is because with the maximalist and absolutely prohibitive provision that from 1.1.2021 the public sector will may lease (or extend existing leases) only Class B and Near Zero Energy buildings. Not only are such buildings not available today for immediate lease, but no landlord will go to the process and enormous expense of upgrading existing suitable buildings while the provisions allowing the State to unilaterally terminate any building lease remain in force, without compensation to the owner! The proposed provision is as follows:
« 6. When entering into a new contract of lease or purchase of a building from public bodies, which is intended to house the services of the body, it is required that the building belongs to at least energy category B’, as defined in the Regulation on the Energy Performance of Buildings (B’ 2367/2017) and to be of almost zero energy consumption from 1.1.2021 onwards.”
In order to achieve an energy upgrade that must reach Energy Category B and with almost zero energy consumption mainly in buildings built before 1980 (which make up the majority of buildings in city centers and which as a rule, they belong to Energy Category G and H) a series of interventions are required that are not only time-consuming but also, above all, costly, beyond any economic and possibly also technical possibility of their implementation. As an example, it is mentioned that a building from the 70s will have to completely change the heating and cooling-air-conditioning system beyond the obvious interventions of changing frames and thermal insulation/thermal facade of the entire building.
Even for the buildings built with the Thermal Insulation Regulation (after 1980 usually category E or D the buildings of the 90s) a substantially expensive and extensive set of interventions is required. In essence, the draft law ultimately obliges the State to focus only on completely/radically renovated old buildings or buildings constructed after 2000 at least, which constitute a very small minority of the country’s housing stock, which in order to reach category B require expenditures so serious that their demolition may be inevitable! It should be taken into account that Greece is coming out of 10-year memoranda and in those years there was zero reconstruction, especially of buildings that can meet the housing needs of the Public sector, without the slightest subsidy or support to the owners for the energy upgrade of the buildings as happened in many other EU states, but on the contrary with a double confiscation ENFIA.
Thus, if the provisions of the draft law apply, the State will find itself completely unable to cover housing needs of in leased buildings. In fact, due to the scarcity of buildings for public use, with the specifications of the draft law, especially schools and other special buildings, especially those rented by Universities, etc., the State will be forced to pay exorbitant rents when very few such buildings appear on the market later!
In today’s economic and social reality and with the unfavorable conditions prevailing in the taxation of capital (GIT+supplementary tax) and real estate income but from the ongoing reductions in rents, it is virtually impossible for an owner to be able to fully cover all the costs of the above energy upgrade (it is noted that commercial buildings are still excluded from the Save-Autonomous program). In essence, all properties built up to 2,000 are devalued!!! It is understandable that energy Category B is a condition for the purchase of a property by the Greek State so that it does not spend extra on its energy upgrade. But given that according to the current legislation on public leases, it can leave unnecessarily and without notice and at any time, unilaterally terminating any lease without any compensation to the owner, it is completely unreasonable to demand from the owner to incur particularly disproportionate expenses without the minimum guarantee for the duration of the lease and their amortization during the agreed duration of the lease. In order to understand why this is necessary, we list below the unacceptable and dishonest current legislation that allows the State the possibility of unilateral termination of real estate leases by the State for 8 reasons without any compensation to the lessor or completely unjustified termination with compensation of 1 rent (1) , breaching the lease agreement and financially ruining the private person who entrusted it, which must be amended immediately so that any owner who intends to lease his building to the public sector can be sure that the public will also honor its obligations to him, so that to be convinced to make the required huge investment in the energy upgrade of his building, and the amortization of his expenditure will indeed be achieved.
POMIDA’S PROPOSAL:
Therefore we propose with this provision to differentiate the requirements between purchase and lease of real estate from the Public sector and to give enough time to upgrade the existing ones or construct such new buildings, which cover the needs of the State as follows:
A) When purchasing a building from public entities, which is intended to house the entity’s services, it is required that the building belongs to at least energy category B’, as specified in the Energy Performance of Buildings Regulation (B’ 2367/2017) and to be of almost zero energy consumption from 1.1.2026 onwards.”
B) Regarding building leases: a) During the new building lease, the energy class B) of the property to be claimed as a condition after five years, i.e. from 1.1.2026, and
b) When extending or subleasing a building that concerns the stay of the service in same property in which it is installed at the entry into force of this, to be required from 1.1.2026 to upgrade them by one energy class.
C) In both cases the 12-year lease term of Law 2130/2003 should henceforth bind not only the owner but also the lessee – Public or Public Sector Organization.
At your disposal for any clarification and cooperation!
special appreciation
The President The Secretary General Stratos I. Paradias Tasos G. Vappas APPENDIX “>We quote the current legislation that provides for the possibility of unilateral termination of real estate leases by the State for 8 reasons without any compensation of the lessor or completely unjustified termination with compensation of 1 rent (1), in violation of the lease contract:
Article 19 of Law 3130/2003. Premature termination of the lease 1. The State may terminate the lease prior to the contractual expiration of the lease without any obligation to compensate the lessor, if:
a) The housed property is relocated service in a property owned by him.
b) The covered service is granted the free use of another suitable property for a period of time at least equal to the remainder of the lease.
c) The sheltered service is abolished or subordinated to another service.
d) The organizational composition of the service is changed during the lease in such a way that the leased property does not cover its housing needs.
e) Change the headquarters of the housed service.
f) The lease has been carried out to cover the housing needs of the general secretary of the Region and before the end of the four-year period it has been replaced by a decision of the competent Minister.
“g) if the sheltered service is relocated for the reasons mentioned in paragraph 3 of article 3 of this law”.
– Case g΄ was added by par. 6b of article 41 Law 4024/2011, Official Gazette A 226/27.10.2011.
“3. If it is considered fiscally appropriate to consolidate the housing of public services in order to save operational costs and to achieve a rent of at least 50% less than the total of the rents already paid separately, the procedure of this paragraph is followed, after a recommendation by law (Article 3B of Law 2362/ 1995, as applicable) of the Head of Financial Services of the relevant institution and approval of the Minister of Finance and the competent Minister as the case may be. ………………………………………… – Paragraph 3 was added with paragraph 6a of Article 41 of Law 4024/2011, Official Gazette A 226/27.10.2011.
“1A. (Unjustified lease termination). The State may, after one year from the start of the contract, terminate the lease, without the conditions of paragraph 1 being met. The termination is made in writing, and its results come after three (3) months from its notification. In this case, the State owes the lessor an amount equal to one (1) month’s rent, as it was formed at the time of termination of the lease. For existing lease contracts, at the time of publication, the above right is granted if they have lasted for at least six years. The decision to terminate the lease is issued by the Secretary General of Public Property, in accordance with the procedure of the first paragraph of paragraph 2 of this article.”
-Para. 1A was added with para. 1 of article 43 of Law 4071/2012 (Government Gazette A΄ 85/11.04. 2012) 2. In all the above cases, the Minister of Economy and Finance issues a decision of early termination of the lease, following an opinion of the Housing Committee, which is drawn up based on a relevant document request of the housed service and the agreement of the authority in charge of it. The decision to terminate the lease early is notified by the competent Real Estate Service to the lessor of the property and takes effect at least thirty days after its notification. From this date, any obligation of the State to pay rent ceases. See relative to POL HYPOIK/1033511/989/00TY/E΄/POL.1065/9.4.2003/on the application of new provisions for leasing real estate for the housing of Public Services [REL.: Law 3130/28.3.2003 (Government Gazette 76/t. A΄)].
