20.12.2023
The start of implementation of the two pillars of the new Unified Housing Policy, announced last October by the Home Office, marks the Council of Ministers’ approval today of detailed guidance on the Built to Rent scheme for private land, as well as on revised town planning incentives.
At the same time, the Council of Ministers approved the proposal of the Ministry of Interior to extend the Cyprus Enterprise Recovery Planning Incentive Plan until 31 December 2024.
In fact, the publication of the first two analytical guides marks the beginning of the implementation of the main principles of the new unified housing policy announced in October. These are medium-term measures aimed at increasing the production of housing units and their availability in terms of affordable housing (sales and rentals).
These two measures are currently aimed at land developers rather than the general public, offering them an attractive package to increase housing stock while ensuring a minimum number of affordable housing units.
The Built to Rent scheme on private land involves the construction of a range of residential units, with an additional construction factor of up to 45% of the applicable one being provided.
It is the responsibility of land developers who take advantage of the Plan to provide all additional units that are produced at affordable rents for a minimum of six years.
It is combined with tax incentives and is used for the first time in Cyprus, unlike abroad where it is very widespread. The goal is to strengthen the market with an additional 800 residential units over the next three years.
The revision of urban planning incentives aims to increase the production and supply of new housing units by providing an additional construction ratio of up to 45% of the current one.
In addition, as mentioned above, the Home Office has begun to review urban planning incentives to increase the production and affordability of new housing by providing an additional building factor of up to 45% of the current one. Land developers will be required to sell 25% of the units created at an additional rate to ensure affordable housing.
As for the Business Recovery Stimulus Plan, it first came into force in 2013 to restore the economy after the crisis. Since then, it has been extended several times and today its extension has been approved for another year (until December 31, 2024).
The scheme mainly deals with the development of tourism or other types of business development in all provinces and contributes to efforts to attract the interest of foreign investors in large-scale development.
From 2013, when it was implemented, until the end of November 2023, 1,044 urban planning applications were submitted, of which 845 were approved.
The plan is considered a success given its performance to date and is being expanded with amendments that strengthen it and bring it in line with the government’s new approach to the housing sector, simplifying the building licensing process and more.
The most important changes
- Increase in compensation depending on the type/category of development (addition to tourism development, new tourism development, other new construction) from 10%-20% value of excess development coefficient to 50% for all cases without exception and up to 70% in cases where development carried out outside the defined areas of application of the criteria.
- Payment of the amount to a Special Fund that will be created to support the housing policy of the state, instead of a special fund of the National Housing Authority, as has been the case so far.
- Two amendments link the Plan to a new housing policy that emphasizes affordable housing and allows money through the Special Fund to be used to invest in housing stock measures and increase the number of affordable affordable housing options. In particular, the decision to extend the Plan for another year was taken after assessing the positive results of incentives to encourage business activity in Cyprus.
It was also considered appropriate to strengthen the Plan by incorporating amendments in line with the new objectives and policies promoted by the Government relating to the housing sector, simplification of the building licensing process, etc.
