On January 24, 2025, the Council of State, Greece’s highest administrative court, issued four landmark judgments. These are Decisions No 146, 147, 148, and 149/2025 of the Council of State in Plenary Session, published on January 24, 2025, and made available to the public on February 5, 2025. The decisions are expected to significantly impact the country’s real estate market.
The rulings pertain to provisions of the Greek Building Regulations (Law 4067/2012), which provide “incentives” for increasing building parameters, such as the building coefficient and the maximum height, in exchange for voluntary reductions in the coverage coefficient, the creation of communal green spaces and/or planted roofs, and the construction of energy-efficient buildings. The court ruled that provisions introducing these incentives contravene Article 24 of the Constitution, which mandates a “rational urban planning”, i.e., a planning process that adopts spatial and urban planning criteria and takes into account the specific traits and needs of each area.
Now, while the Council of State is not a Constitutional court, in the sense that its rulings do not nullify laws outright, the impact of its rulings is nonetheless extremely significant. When the court finds a law unconstitutional, any administrative acts issued on the basis of the unconstitutional provision are susceptible to annulment (provided that they may still be validly contested). Further, the administration is entitled (if not obligated) to revoke all similar acts that were based on the said provision. In short, judgments of such content are a big deal.
In this instance, the court opted to limit the effects of its rulings by specifying that they would take effect after December 11, 2024, when the Court’s Chairman announced the content of the decisions to be issued. Pursuant to a second announcement issued on January 24, 2025, the court weighed, on the one hand, the public interest and, on the other hand, the principles of legal certainty, predictability, and the trust of the citizens who have constructed buildings, relying on the legislative regime and the incentives established by Law 4067/2012, and have acquired property rights over these buildings, in good faith. As a result, the court ruled that the consequences of the unconstitutionality should not affect building permits for which implementation (construction work) has demonstrably begun by December 11, 2024.
To put this in perspective, it is estimated that approximately 14,000 building permits issued under the contested incentives, where construction has yet to begin, are directly affected by the court’s ruling. The impact would obviously be far greater if it included permits where construction had already begun – or had even been completed. The judgments reflect the court’s effort to strike a balance between conflicting interests, recognizing both the need to uphold sustainability principles and the importance of providing stability and legal certainty to the real estate market.
Nevertheless, following the above announcements, chaos ensued. Several municipalities, particularly in the Attica region, reacted by indefinitely postponing the approval and issuance of new building permits that utilize the incentives. The Greek government attempted to regulate the matter with temporary measures. For example, Article 41 of Law 5167/2024, dated December 20, 2024, was extended by a decision of the Minister for the Environment and Energy until February 24, 2025, enforcing a further postponement of permits making use of the incentives and, at the same time, “canceling” any administrative act revoking building permits issued after December 11, 2025.
The matter is far from resolved, and all stakeholders of the real estate market, along with citizens and environmental groups, are holding their breath to see what comes next. In a country whose economy heavily relies on tourism, the importance of real estate development is paramount. With significant investments already on the line, many developers are now uncertain about how to move forward. Whether these projects will be halted, revised, or reapproved is still up in the air, and the outcome will undoubtedly shape the future of urban development in Greece.
But from a macroscopic perspective, the judgments in question highlight the Council of State’s evolving role in shaping the future of urban development.
By Helen Alexiou, Managing Partner, AKL Law Firm
This article was originally published in Issue 12.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
