16.03.2023
The Mortgage for Rent scheme, the latest lifeline for insolvent borrowers, will soon be launched as KEDIPES, the state-owned asset management company, announced its plan on Tuesday.
Representing former Coop Bank , Lambros Papadopoulos and Marios Papadopoulos , Chairman and CEO of KEDIPES, respectively, unveiled the scheme. KEDIPES will oversee the scheme after Brussels urged the Cypriot authorities to set up a company to manage the scheme.
The scheme will be launched after Cyprus receives final approval from Brussels, which is considered a formality and is expected to be granted in the coming days.
The rental mortgage will benefit approximately 4,000 distressed borrowers and the cost is estimated at 400 million euros.
KEDIPES plans to purchase mortgage-linked properties for 65% of their current value. In this case, the cost of the house should not exceed 250,000 euros. The beneficiaries are those who receive social benefits or are considered ineligible for the two previous government schemes for insolvent borrowers – Estia and Oikia .
The rent will be adjusted annually based on a formula to be determined, while borrowers have the option of receiving government assistance in the event of any rent increase. The beneficiaries will pay rent in accordance with the price at which KEDIPES purchased the property and the duration of the agreement.
The mortgage lease agreement will have a minimum repayment period of 14 years, while borrowers can submit a property purchase offer after five years. Beneficiaries over the age of 65 will not be given a specific time frame to pay off their mortgage.
KEDIPES employees stated that the buyout price of the property will take into account various parameters, such as changes in property prices, expenses and rental payments, while remaining attractive to the beneficiary.
Banking institutions are critical to the success of the scheme and have made it clear that they are participating.
Last week, the House of Representatives voted against yet another extension of the moratorium on the disposal of property. Most MPs rejected AKEL’s three-month extension, opting to give the new government time to work out its proposals to help distressed debtors.
