Cyprus’ Parliament has approved four revised foreclosure related law referrals from President Nikos Christodoulides, while rejecting one, in a move likely to have significant implications for homeowners, lenders and the wider property market.
The House of Representatives voted to accept four of the President’s referrals after amendments were made by the Finance Committee, while rejecting a fifth referral tied to legal access for borrowers challenging debt claims and unfair contract terms.
The decisions come amid growing political pressure over property foreclosure, non-performing loans and the protection of vulnerable homeowners facing financial hardship.
New legal powers for district judges
Lawmakers unanimously approved changes to legislation originally proposed by Christiana Erotokritou (DIKO), allowing district court judges to hear financial disputes.
Supporters say the measure will help speed up legal proceedings involving debt-related property cases and improve access to justice for borrowers.
Parliament also unanimously approved amendments to interest rate legislation that will prevent banks from charging additional interest once a borrower’s outstanding debt, including accrued interest, reaches double the original loan amount.
The measure is expected to offer relief to borrowers whose debts have escalated significantly over time.
Stronger protection for borrowers
MPs also backed amendments to insolvency legislation covering personal repayment plans and debt relief orders for individuals.
In addition, Parliament approved legislation preventing licensed credit institutions, vulture funds and loan servicers from demanding extra collateral when a property mortgage already exceeds the value of the outstanding loan.
The reforms are widely seen as an attempt to strengthen protections for borrowers who are struggling financially but acting in good faith.
Christiana Erotokritou emphasised that the revised legislation includes a 12-month period designed to give borrowers additional time to secure workable financial solutions.
She said the measures are intended to protect responsible borrowers who are making genuine efforts to meet their obligations.
Parliament rejects one presidential referral
The only referral rejected by Parliament concerned legislation proposed by AKEL and the Greens, which aimed to give borrowers greater legal recourse over unfair contractual clauses and disputed debt amounts.
MPs voted against the referral by 38 votes to 13, with one abstention.
Aristos Damianou (AKEL) argued the referral was unnecessary and maintained that the proposal was fully constitutional, citing both Cypriot and European legal protections guaranteeing access to justice.
Meanwhile, Averof Neofytou (DISY) broke ranks with his party and said he would support the law, expressing surprise that the President had referred legislation he described as constitutionally sound.
Political tensions over property foreclosures
The debate exposed growing divisions between the government and political parties over how Cyprus should tackle non-performing loans and home repossessions.
Marinos Sizopoulos (EDEK) criticised successive governments for prioritising banks over homeowners, while Alekos Tryfonides (DIPA) called for the immediate rollout of the “Mortgage to Rent” scheme to prevent vulnerable residents from losing their homes.
Stavros Papadouris also questioned the government’s legal arguments, claiming that issues previously described as political disagreements are now being framed as constitutional concerns.
For Cyprus’ real estate sector, the latest reforms signal continued political intervention in the foreclosure market – and a clear effort to balance financial stability with greater protections for property owners.
