17.10.2022
In recent months, the problem of high rents has been all over the media. High rents cause social problems, especially for young couples and low-paid people, and discourage students from attending our colleges and universities.
Various proposals were submitted by politicians and others. There were the usual demands for rent subsidies (which could lead to further increases), the Limassol municipality offered apartments (it will regret it in two or three years) and there were offers for private residences to house students for €200/month. None of this is helping to solve the problem, and according to the Ministry of Education, enrollment will double in two to three years.
Student housing regulations are flawed and the problem of legal tenants is also a problem.
At the same time, educational institutions seem indifferent to this problem, despite the fact that these institutions use state land provided to them free of charge, soft loans, and so on.
Even with these advantages, the cost to universities to build units is about double or triple that of the private sector. Although some, like the University of Cyprus, refuse to use the private sector, the issue can only be resolved with the participation of the private sector, which is ready to offer the necessary units in various places, units with benefits that will not cost public money, except for the VAT deferment.
Our client considered building 160 student residences next to the University of Cyprus, which had permits and funding, but the addition of 19 percent VAT increased costs to the point where it was not financially viable. Therefore, we proposed to reduce VAT to 5 percent, with the owner obliged to rent out apartments for about eight to ten years, and if the owner sells the apartments in the meantime, he will have to pay the state 14 percent of the difference.
Another problem is the absurdity of the existence of minimum areas for residential units that increase the cost. As the Prime Minister of Ireland stated, “the market should create objects for which buyers can pay.” This is clearly not for us full-blooded Cypriots, because the position of the planning authorities is that Cypriots should live in decent apartments. What is this nonsense? In addition, Cypriots should not drive cheaper cars, whether or not they have the money for more expensive ones.
Then the issue of unpaid utility and general expenses and the complicated process of evicting unscrupulous tenants do not inspire investors.
The case is very urgent and should have been resolved at least two years ago. Our government should have some vision in its approach, while it would be reasonable to assume that the state should put pressure on state institutions at least to begin with. Perhaps we should also involve student unions in this work in order to give impetus to at least some progress on this issue.
Antonis Loizou & Associates EPE – real estate appraisers, real estate agents and real estate consultants
