Among the housing measures unveiled by Prime Minister Kyriakos Mitsotakis in Parliament on Tuesday, Dec. 16, one stands out—not so much for its immediate social impact as for its ambition to reshape the market itself. It is a new framework of incentives aimed at developers and private investors, designed to boost the construction of homes reserved exclusively for long-term rental.

The government now concedes that the housing crisis is driven primarily by a lack of supply. For years, construction focused on luxury homes and short-term rentals, sidelining affordable housing—a trend the new measure aims to reverse.

A shift in philosophy
Under the new framework, developers and investors will be allowed to build or convert properties exclusively for long-term rental, with a ten-year commitment. In exchange, rental income will be tax-deductible and rents capped, signaling a shift from subsidizing demand to actively incentivizing housing supply.

The rest of the housing package
Beyond incentives for developers, the package includes measures to unlock idle housing and support targeted groups.

First, a large-scale home renovation program is being launched, offering subsidies of up to 90% of renovation costs. Financial support can reach 36,000 euros per property, with the goal of bringing old and vacant homes back onto the market. The income threshold for participation is set at 35,000 euros for couples, with an additional 5,000 euros for each child.

Second, the government plans to refund the equivalent of two months’ rent per year to around 50,000 teachers, nurses and doctors working outside the major urban centers of Attica and Thessaloniki. The measure is income-blind and is intended to encourage professionals to remain and find housing in areas facing acute accessibility and staffing challenges.

Third, municipal and state-owned buildings in mountainous and island regions will be upgraded and converted into housing for public-sector employees.

Tighter rules on short-term rentals
Restrictions on short-term rentals are also being tightened, with existing rules extended to central Thessaloniki. In Athens and Thessaloniki, properties in restricted zones will be automatically removed from the short-term rental registry upon transfer, blocking their return to the Airbnb market.

At the same time, urban-planning reforms will fast-track the conversion of existing, abandoned or unfinished buildings into housing through tax-incentivized private investments.