Cabinet approves mortgage to rent scheme
The cabinet approved on Wednesday a mortgage to rent (MtR) scheme, following approval from the European Commission last week, government spokesman Konstantinos Letymbiotis said.
The commission on July 6 approved a mortgage to rent scheme.
Letymbiotis said that with the new plan, vulnerable households will be able to live in their main residence as tenants and be exempt from the mortgage. The state will fully cover the required rent on behalf of residents who will then have the chance to buy back the property after a period of five years at a favourable price, below the level of purchase.
He added that recipients of welfare with non-performing loans on 31/12/2021 and which remained non-performing on 31/12/2022, with a main residence, with a market value of up to €250,000, will have the right to join the scheme.
He added that the second category of beneficiaries consists of all existing applicants in the Estia and Oikia schemes, who were assessed as eligible but high risk with a market value of a residence up to €350,000. The third category consists of all the applicants in the Estia and Oikia schemes, who were originally approved for inclusion in the plans but subsequently their membership was terminated.
“The plan is consistent both with the government’s policy to reduce non-performing loans, and with the policy of strengthening affordable housing,” Letymbiotis said, adding that with this innovative plan for Cyprus, a definitive and fair solution for repayment of non-performing housing loans and protection of vulnerable households is being offered.
Under a mortgage-to-rent scheme, intended to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily surrenders ownership of their home for five years to their lender. An entity buys the home from the lender and becomes the landlord. During that time, the borrower no longer owns their home but will continue living in it as a tenant.
MtR stipulates that applicants meeting the basic criteria – provided they have a title deed – will transfer title to asset management entity Kedipes, which at the same time will sign a 14-year rental contract with the individual concerned.
Kedipes will pay the creditors a fee for the primary residence, and the loan where the primary residence served as collateral will be written off from the creditor and will cease being payable.