Cyprus needs rental policies that do more than limit rent increases. The priority should be to increase the supply of homes available to rent, according to Yiannis Misirlis, President of the Real Estate Development Association.
He said a debate about limiting rent rises is entirely justified, particularly when a sudden increase can place significant pressure on a household budget. However, the key question is how such rules would affect the wider property market.
According to Mr Misirlis, international experience shows that limits on rent increases can provide security for existing tenants. But if such measures are too strict or remain in place for the long term, they could reduce investment in new rental housing.
There is also a risk that market activity could fall, creating two distinct groups. One would include people who have already secured a home, while the other would be made up of households looking for a new property at higher market rents.
Demand is outpacing supply
In Cyprus, the main issue is not simply rising rents. Mr Misirlis said demand has grown faster than supply in some cities and housing categories.
When many households compete for a limited number of available homes, controlling prices alone cannot create the missing housing stock.
“The best protection for a tenant is to give them more choice.”
Mr Misirlis said genuine bargaining power exists when people can choose between a larger number of suitable homes.
He stressed that this does not mean allowing a rental market without rules. The state can still provide protection against extreme or abusive practices, but such measures should be targeted and objective.
The aim, he said, should be to protect tenants without discouraging the development of new homes.
Build-to-Rent could increase supply
Mr Misirlis also called for targeted financial support for households that are genuinely struggling with housing costs. He argued that this would be preferable to broad measures covering the entire rental market.
He placed particular emphasis on creating an effective Build-to-Rent framework. This would give institutional and private investors a stronger incentive to develop homes specifically for long-term rental.
New investment that increases the available housing stock should not, he argued, be undermined by rules that weaken the investment case from the outset.
Another option is to bring empty or underused homes back into the market. Incentives for renovation and long-term letting could help unlock additional rental properties.
At the same time, planning and licensing procedures for new residential developments need to be significantly faster.
Mr Misirlis said it made little sense to express concern about a shortage of affordable homes while new developments remain tied up in the approval process for years.
Landlords also need certainty
Increasing the supply of rental homes will also require long-term renting to remain predictable and financially viable for landlords, he said.
That means effective dispute resolution, greater certainty around tenancy agreements and guarantee schemes for vulnerable tenants. Such measures could reduce risk and encourage more owners to place properties on the rental market.
The housing problem has no single cause, Mr Misirlis concluded, and cannot be solved with one measure.
A successful policy should therefore provide protection for tenants, security for landlords and, above all, more housing supply.
Its success should not be judged only by whether a rent increase was held back in the short term. The real test will be whether, five years from now, a new family has more homes to choose from at prices it can genuinely afford.
(Translated from an article by Yiannis Misirlis)
