Last week’s government amendment reinstates construction activities—both with and without NBC bonuses—on the urban map. This decision supports those who began building and allows a second chance for constructions previously considered illegal by courts, contingent on the payment of an environmental fee.
Conversely, over 2,500 building permits that did not start construction by December 11, 2024—the date the Council of State issued a ruling on unconstitutional NBC provisions—are under review. For these permits, the State offers expedited, complimentary revision processes (to reduce additional square meters) and refunds for taxes and fees, although these compensations are minimal compared to the benefits of the bonuses in terms of increased construction and property value.
As property owners have pointed out, receiving a few hundred euros back for revised permits pales in comparison to losing a top floor in Alimos or Glyfada due to the removal of bonuses—potentially a loss of 1 to 2 million euros.
Economic Compensation
The new economic compensation established by the latest NBC regulations, addressing the “build vs. court ruling” debate, will be based on the additional square meters (bonuses) of a building. This will be stipulated in a provision by the Ministry of Environment and Energy through a forthcoming Presidential Decree, which is expected to be submitted to the Council of State for review shortly (possibly within the month).
The same Presidential Decree will clarify what constitutes the commencement of works (by December 11, 2024), a point not explicitly defined in the amended legislation, which only vaguely refers to necessary interventions as excavation.
Sources indicate that the Ministry has included expanded provisions in the Presidential Decree to recognize as many activities as possible as proof of commencement. For example, test trenches for archaeological assessments do not qualify as excavation for construction but do for the archaeological service and are recommended to be included in the same framework, along with demolitions of structures even if no new construction has begun.
The objective, as communicated to the Supreme Court, is for the prompt approval of the Presidential Decree, ideally by summer—a highly ambitious expectation considering the usual timing of such reviews. The government claims it is not proceeding without consideration, emphasizing thorough evaluation of provisions will dictate the ultimate outcome.
Conclusion
Thus, it may take several months before the Council of State can definitively confirm whether certain provisions—like the revival of building permits challenged in court—can receive favorable treatment and be considered lawful upon payment of the environmental equivalent (a fee for environmentally impactful projects).
Presidential Decree
The Ministry of Environment exempts major strategic investments in both private and public properties institutionalized through Special Plans for Spatial Development of Public or Private Properties (ESCHASE and ESCHADA) and Integrated Development Plans (SOA), such as the Hellinikon project, from economic compensation obligations. These investments had predefined urban planning—prior to the 2020–2021 enactment of NBC’s combined incentives—thus not accounting for additional building volume later added as a bonus by the state.
This amendment charts a new path for these projects, as it does not exempt them from NBC provisions through a simple legislative act (which would risk being challenged), but requires a Presidential Decree subject to Council of State review—expected to receive favorable consideration since it does not constitute a horizontal regulation (which the court excluded in its recent plenary decision on the NBC), provided that it is scientifically supported by needs and the area’s carrying capacity.
Environmental “Exchange”
Through the amendment, the political leadership aims to expand the number of salvaged building permits, based on the difficulties faced by citizens and investors who legitimately obtained permits later ruled unlawful, emphasizing legal certainty and continuity of the state.
The NBC regulation emerges at a critical juncture for the construction industry, which has experienced a decline amidst substantial uncertainty in recent months. It even allows for the completion of buildings at various stages of construction. The proposed model permits citizens or developers, whose permits were canceled or entangled in legal disputes, to continue building upon the payment of the “environmental equivalent” into a special account of the Deposits and Loans Fund on behalf of the relevant municipality or local community.
The funds raised will support environmental interventions in public spaces (including renovations, illegal building demolitions, sidewalks, green spaces, etc.) under a new plan (Special Urban Upgrade Plan – ESPIAP), enabling the continuation of building permits—regardless of whether the structural framework of a property has been completed—provided approval from the Central Urban Planning Issues and Disputes Council (KESYPOTHA) and the Central Architectural Council (KESA) of the Ministry is obtained through a submitted request examined within one month.
In addition to the permits under litigation (canceled or under appeal at the Council of State), an environmental equivalent would also legitimize properties included in funding tools such as the Recovery Fund, NSRF, etc.
Though the environmental equivalent has been a conceptually attractive way to offset the consequences of planning breaches on the environment, it has yet to be implemented. Under the new NBC framework, history appears set to repeat itself, with a two-year timeline to apply the environmental offset and embark on studies that will determine appropriate measures per area (ESPIAP).
Incentives
This new NBC regulation follows just four months after a significant ruling from the Council of State declaring the widespread application of NBC incentives unconstitutional. The new regulation now limits incentives solely to areas specified in local urban plans, based on the unique characteristics of each community.
The amendment stipulates that until the Presidential Decree is enacted, penalties for canceled permits or those invalidated regarding NBC benefits are suspended, and transactions are not prohibited.
Buildings started before 12/11/2024
Permits for construction commenced before December 11, 2024, and can show evidence of work will proceed normally without revision or financial burden. They may also revise the permit, if desired, with no financial charges (taxes, fees, contributions, or deductions).
Permits before 12/11/2024 without construction work initiated
These permits maintain the right to build but forfeit the bonuses. The State offers expedited, free revision processes (to eliminate extra square meters) and refunds for taxes and fees.
Permits that were canceled
Citizens or developers whose building permits were canceled or are under litigation may continue construction upon the payment of the “environmental equivalent.”
Funding tools
Properties situated in funding mechanisms such as the Recovery Fund, NSRF, etc., will also be “legalized” through the environmental equivalent.
Hellinikon
The Ministry of Environment exempts significant strategic investments in both private and public properties institutionalized by Special Plans for Spatial Development of Public or Private Properties (ESCHASE and ESCHADA) and Integrated Development Plans (SOA), such as the Hellinikon project, from the obligation to pay economic compensation.
The situation is dire for the construction of 10,000 settlements with populations under 2,000
Ten questions and answers regarding upcoming changes and types of interventions planned by the State
At least 10,000 small settlements across the nation are anticipated to be affected by the introduction of the new Presidential Decree, which delineates settlements with populations under 2,000. Despite political promises of forthcoming legislative measures, the repercussions will only become visible at the conclusion of the urban planning process—expected in 2 to 3 years—leading to ongoing concerns among property owners and engineers.
The regulation, designed to align with Council of State decisions (StE), remains contentious and continues to draw criticism from local communities, municipalities, and even ruling party MPs, who describe the restrictions as suffocating, with severe implications for small property ownership. The political leadership of the Ministry of Environment and Energy (YPEN) had to work diligently in Parliament last week to address these objections.
The primary concern is the reduction of settlement boundaries, which has led to many plots now being classified as out-of-plan, significantly constraining building potential.
These changes are thought to halt urban planning initiatives, suspend investments, and decrease property values, though the government has pledged a new regulation to rectify the situation.
The Prime Minister has made a clear statement to alleviate concerns by announcing that the government will initiate legislative measures for the outer areas of these settlements, which the Council of State ruled to be scientifically unjustifiable. “The regulation will offer more favorable treatment than out-of-plan construction, without fully integrating them into in-plan zones.” He emphasized that property owners’ rights in peri-settlement zones closely connected to small settlements will be preserved.
The Ministry of Environment defends this new framework as compliance with legal rulings, not a political agenda. However, in many areas, including Crete, the public remains skeptical about the administration’s intentions, doubting that the YPEN’s regulation will leave 80% of compliant, buildable plots outside settlement boundaries.
A recent letter from the Eastern Crete Regional Department of the Technical Chamber of Greece (TEE) to Prime Minister Kyriakos Mitsotakis and Environment and Energy Minister Stavros Papastavrou (perhaps somewhat overstating) estimates that property owners nationwide could face valuation losses exceeding €100 billion. Last year, approximately 8,500 building permits were issued in these settlements, comprising 18% of total construction activity.
Let’s review ten key questions and answers that citizens and engineers need to comprehend regarding the small settlements throughout the country, the impending changes, and the planned interventions by the State.
1/ What is the issue with the settlements?
The Ministry of Environment and Energy is tasked with redelineating settlements with populations below 2,000 to comply with Council of State decisions that invalidated boundaries set by prefectural decisions in the 1980s, which were often overly generous. The supreme administrative court ruled that prefects lack the authority to set these boundaries, leading to the annulment of boundaries established from 2017 to 2022 in Rethymno, Pelion, and Paros, and casting doubt over all post-1983 boundaries throughout the country.
2/ What did the StE ruling entail?
The Council of State has established that settlement delineation must follow comprehensive urban planning, which should be subject to court review through a Presidential Decree. This context resulted in the annulment of settlement expansions made through arbitrary decisions by prefects or other authorities—not banning them outright, but mandating justifiable reasoning for any urban development.
3/ Why didn’t the Ministry offer solutions for small property owners?
Each small settlement typically consists of three sectors: the core area (pre- or post-1923), which serves as the main hub; the scattered regions; and the sparse areas. New rules established by the Council of State stipulate that these sparsely built sections will be classified as out-of-plan areas—i.e., outside settlement boundaries. YPEN attempted to shield citizens by delineating a “Zone C” within these settlements to include areas built through various prefectural decisions. Ultimately, this plan was rejected by the Council of State, which mandated the removal of the contentious article from the draft Presidential Decree.
4/ What current risks do these decisions pose?
By conforming to the Council of State’s directives, YPEN produced a fresh delineation of settlements, putting small plots (300 or 400 sq.m.) that were previously within buildable boundaries at risk of reclassification as agricultural land.
5/ Are these decisions final for property owners?
No, they are not. The State is preparing new legislation aimed at protecting citizens’ property from the adverse effects of boundary changes.
6/ What will the contentious regulation provide, and when will it be enacted?
YPEN’s new delineation regulations will assist planners currently working on Local and Special Urban Plans across 80% of Greece. These plans are expected to be completed in two to three years, pending the timely processing of 227 Presidential Decrees for local urban plans and 18 Special Urban Plans by the Council of State. The new legislative initiative will enable Local Urban Plans to define Special Land Use Control Zones (ΠΕΧ) based on special planning, scientific methodology, and municipal consultations.
7/ Which areas will be designated as ΠΕΧ?
Available information suggests that ΠΕΧ will encompass non-urbanized and future-to-be-urbanized zones beyond current plans and settlement boundaries, lying in proximity to settlements. These will face specific restrictions on land use and construction terms. Within the ΠΕΧ, Local Urban Plans will establish new Peri-Settlement Zones (ΠΟΖ), contingent upon approval from the Council of State as part of the urban planning process.
8/ What will be permissible in the Peri-Settlement Zones?
Peri-Settlement Zones will extend settlement boundaries by approximately 500 meters. These areas will be treated as distinct units based on their physical and urban characteristics, serving as transitional zones between in-boundary settlement areas and out-of-plan regions.
9/ What plot requirements will apply?
In these zones, plot requirements and building conditions may be more favorable than those outlined for out-of-plan areas but less so than those within settlements. For example, construction may be permitted on plots of up to 2,000 sq.m., while current regulations demand a minimum of 4,000 sq.m. for out-of-plan areas.
10/ Does the existing legal framework remain in place until the new regulation is implemented?
The Ministry of Environment and Energy has indicated that the new framework will take effect upon the conclusion of the urban planning process. Until that is achieved, the current legal framework applies, meaning permits can be issued based on existing boundaries established by prefects—even if the recent Presidential Decree (now published in the Government Gazette) excludes them from the settlement.
However, citizens should be aware that there is no legal certainty in such cases, as it is highly probable that the Council of State would not overturn its previous decisions should a legal challenge arise.
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