05.09.2022
A good attempt has been made by the Cyprus Land Development Organization (ΚΟΑG) to offer properties for rent (residential) at affordable prices. The announcement of this organization and the Limassol Municipality to help low-income groups pay rent is noteworthy, although the proposed proposal is not enough to solve the problem.
In addition to the above efforts, we have previously offered our own thoughts on this matter, and we are expanding our offerings today.
No matter how hard KOAG tries to help by offering new units for this purpose in two or three years, it is impossible to satisfy the demand both numerically and in terms of placement immediately.
KOAG’s overall cost management is a good proposition, as non-payment and tenant misconduct is a major curse in disadvantaged tenants and is one of the main deterrents for interested buyers looking to generate income.
The development of the public sector requires large-scale development in various areas, otherwise it may lead to ghettoization.
However, the private sector could help with the above efforts, and this should also include individual units, wherever located. Why wouldn’t existing owners offer their apartments for rent if they know that rent collection will be guaranteed?
Affordable rent can be determined using a percentage rate of 2-3 percent of market value and/or determining rent by area/quality based on a pre-existing list of rents for the area.
When purchasing a rental unit subject to VAT, the VAT rate must be reduced from 19 percent to 5 percent.
Immediate eviction for non-payment of rent/compliance with the terms of the lease, for example, within three months of the tenant’s non-compliance. Right now there is some progress just for legitimate tenants, but what about the rest?
Minimum lease term of at least three years with an annual inspection by the owner/ΚΟΑG of the condition of the property.
The terms of the lease stipulate that the owner must cover insurance and maintenance other than normal wear and tear.
In the case of a purchase with VAT reduced to 5 percent, the buyer/owner will be able to sell the apartment after an eight to ten year period, and if earlier, return part of the savings to the state.
Apartments that are offered for rent at an affordable level, either as a project or as a stand-alone unit, will automatically be eligible for a 10-15 percent renewal with immediate issuance of a title deed.
KOAG plays a very important role in this whole approach, whether it be their own project or a third party project.
Of course, the problem will not be completely solved, but this is only the beginning, and with the involvement of the private sector and the increase in supply, it will be immediate. The timing is very opportune for this type of investment, especially given the negative interest rates, the many problems that exist with rent (problems that ΚΟΑG will take on), and the various subsidies received by (single) parents are likely to take advantage of the system .
We concluded that a solution exists (on the above and other issues) in the form of the creation of a Deputy Ministry of the Interior, modeled on the Deputy Ministry of Tourism and the Ministry of Shipping, bringing in new people, non-politically attached and with an appetite for work, who can boldly offer solutions to chronic problems. that remain unresolved for years.
In recent years, we have expressed our dissatisfaction with the problems in the construction industry, which the respective governments and especially the Ministry of the Interior hardly understand and even less act accordingly to deal with the poor or improve the functioning of the real estate market.
In our latest publications on the issue of student residences, on the issue of ordinary users (comments on the new bill), the mafia of some local authorities to cover up illegal activities, issues of issuing certificates and intimidation of applicants, ETEK’s inaction, improvement of green spaces, etc. etc. These are just some of the questions that a deputy minister should be able to handle.
Antonis Loizou & Associates EPE – real estate appraisers, real estate sellers and development project managers
