The Council of State (A΄Department) ruled that the State is not obliged to compensate the property-owning companies, but also the private property owners, with the amounts they reduced (from 40% to 100%), the rents of their shops and residences, the period of the lockdowns for the coronavirus.
It is recalled that 10 companies, which lease their properties, had appealed to the Council of Ministers and asked to be recognized that the The state owes companies, as real estate owners, which lease business premises to third parties (shops, etc.), but also to individuals who lease apartments and other properties, to pay the amounts of rent they lost due to the application of the measure of the mandatory rent reduction in a percentage of 40%, from March to December 2020 and 100% from January to March 2021. Also, 96 homeowners had intervened in the CoE in favor of the positions of the 10 companies. At the same time, they asked for the amount of 1,000 euros to be paid to each of them for the moral damage they suffered from the rent reduction.
The claims of the appeal are groundless
The seven-member composition of the 1st Department of the Council of Ministers (pilot decision), chaired by vice-president Spyridoula Chrysikopoulou and rapporteur by State Councilor Christos Liakouras, rejected as unfounded all the claims of applicants.
In particular, the SC rejected the applicants’ annulment requests, judging that the property owners, through the Administrative Courts, do not establish a right to compensation according to article 105 of the Introduction Law of the Civil Code (EisNAK).
In more detail, the decision states that “the claim against the State for the restoration of the damage (property and non-property – moral damage) which the companies have suffered, according to their claims, from legislation, in violation provisions of higher formal force, cannot be founded on article 105 of the Income Tax Act”.
The amounts that had been returned
In 2021, after persistent POMIDA to the government, 60% of the rental losses incurred by property owners during the disputed period were reimbursed by the Ministry of Finance and 80% of the lost rents were reimbursed to private property owners. POMIDA had requested that these refunds be tax-free and non-seizure, which was accepted by the Ministry of Finance.
The companies asked the SC to recognize that the State must pay the amounts corresponding to the rents that they lost, as owners of real estate which they had leased out under business lease agreements, for the 11 months in question, due to the mandatory rent reduction for the leasing businesses affected by the covid-19 pandemic.
They claimed that these reductions as a measure to support tenants are contrary to a number of constitutional provisions and the European Convention on Human Rights.
At the same time, the companies argued that the principle of equality was violated, due to the unfavorable, unjustified discriminatory treatment reserved the legislator to the lessors – legal entities in relation to the lessors – natural persons for whom he provided more support measures.
They requested an additional 20% in their lawsuit
Also, the companies requested, in addition, to be paid the difference of 20% which arises between the reduction of the rent of the legal entities (companies) and the natural persons who rented real estate.
According to the decision, “these legislative regulations do constitute an intervention in commercial real estate lease contracts drawn up between private individuals, introducing a harmful change for the lessor in order to deal with the adverse consequences of the COVID-19 coronavirus for the respective professional or business activities, but only the enactment of these provisions is not sufficient in itself to cause the damage (property and non-moral damage) invoked by the lessor companies in their legal action against the Greek State”.
And this, because “the damages consequences for the lessors of commercial real estate do not result directly and immediately from the provision by the laws of the disputed measure of (partial and/or full) exemption, but from the differentiated, in relation to the contractually provided, execution of the relevant contracts by the lessees as a consequence that the latter formed their contractual behavior based on the provisions of the legislative regulations and thus did not pay part or all of the rent due”.
