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Foreclosure laws to face Supreme Court scrutiny in June

Nigel Howarth
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Foreclosure laws to face Supreme Court scrutiny in June

A legal showdown over Cyprus’ foreclosure framework is set to begin in mid-June, as the country’s Supreme Constitutional Court prepares to hear referrals submitted by President Nikos Christodoulides concerning controversial property laws passed by parliament earlier this month.

According to reliable information from the Cyprus News Agency, the hearing before the full bench of the Supreme Constitutional Court is expected to begin in mid-June following the completion of legal filings.

The laws were approved by the House of Representatives on 6 April 2026 and introduce significant changes to property repossessions, mortgage enforcement and borrower protections.

During Wednesday’s court proceedings, parliament requested additional time to file an objection – a request that was accepted by the court.

Both sides have also been given a deadline to submit written arguments ahead of the hearing.

Court documents are expected to be finalised within approximately 10 weeks, meaning the exact hearing date is likely to be confirmed in June through the Supreme Court’s official website.

The latest development effectively creates a two-month pause before what could become a landmark legal battle for Cyprus’ property and banking sectors.

Legal concerns over foreclosure reforms

The President’s referrals are understood to rely heavily on legal advice from the Law Office of the Republic of Cyprus, which reportedly identified what it described as “clearly unconstitutional provisions”.

The legal opinion also raised concerns that parts of the legislation may conflict with key constitutional protections.

Officials have also warned that legal ambiguity within the new laws could create wider risks for Cyprus’ financial system, particularly for lenders managing non-performing loans tied to real estate assets.

What the new foreclosure laws include

The legislation referred to the court includes measures aimed at strengthening protections for borrowers and guarantors.

These include:

  • Limiting guarantor liability so it cannot exceed the original loan amount when a mortgaged property is repossessed or sold
  • Requiring lenders to exhaust all legal options against the primary borrower before pursuing guarantors
  • Writing off any remaining debt after a property sale if proceeds fail to cover the full loan balance and accrued interest
  • Suspending foreclosures on primary residences valued at up to €350,000 until the end of the year

Potential impact on Cyprus real estate

The case is being closely watched across Cyprus’ property sector, with banks, investors and homeowners all likely to be affected by the final ruling.

Any decision by the Supreme Constitutional Court could reshape how lenders recover debts, influence investor confidence and alter the risk profile of residential property lending across the island.

For a market still balancing housing demand, affordability pressures and legacy debt issues, the court’s ruling may prove pivotal.

Banks fear fallout from cancelled building permits

Nigel Howarth
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Banks fear fallout from cancelled building permits

The Association of Cyprus Banks is growing increasingly concerned over the fallout from cancelled building permits, as lenders face potential losses tied to residential developments found to have planning infringements.

The issue extends far beyond homebuyers purchasing flats in apartment blocks, self-build homeowners and architects. Banks that have financed these developments are also exposed, particularly if loans have been issued for projects that are later deemed non-compliant.

If planning approvals are withdrawn after mortgages or development finance has already been granted, projects could be delayed indefinitely – or abandoned altogether – leaving lenders facing significant financial uncertainty.

According to reports from local newspaper Phileleftheros, following a series of permit cancellations by Cyprus’ District Local Government Organisations (DLGOs), the Association of Cyprus Banks has written to the authorities seeking clarification over the increasingly uncertain regulatory environment.

Nicosia and Limassol developments under scrutiny

Industry sources say the most serious problems are emerging in Nicosia and Limassol, where a substantial number of planning applications are reportedly problematic – some involving minor infringements, others far more serious violations.

In cases involving major planning violations, affected projects may never be legalised under current laws. Developers could instead be forced to wait for future planning amnesties, which may still result in a “Certificate of Unauthorised Works” being attached to title deeds. This Certificate prevents the property being sold or mortgaged.

A major criticism centres on what is known as a “desk-based review” process, where authorities assess planning applications largely on paper without carrying out sufficient on-site inspections.

This raises concerns that some developments are being built differently from what was originally approved — potentially making them unlawful.

Weak enforcement adds to market uncertainty

The problem is compounded by the fact that Cyprus’ proposed system of independent building inspectors has yet to become operational.

These inspectors were intended to replace some of the oversight previously carried out by planning authorities and were presented as a key safeguard when traditional planning and building permit procedures were streamlined.

Cyprus Scientific and Technical Chamber (ETEK) president Constanti Constantinos commented on recent findings from the Nicosia District Local Government Organisation, which showed that 54% of building permits reviewed contained significant irregularities.

These included:

  • Miscalculated development density ratios
  • Dysfunctional parking layouts
  • Reduced boundary distances
  • Negative impacts on neighbouring properties

In some cases, these issues resulted in permits being revoked.

Constanti said the fast-track licensing system was designed for low- and medium-risk developments while maintaining legal compliance. Under current rules:

  • Low-risk projects receive automatic approvals after 20 working days
  • Medium-risk developments receive approvals after 40 working days

This includes projects such as small apartment buildings, row housing developments and mid-rise residential blocks under specific conditions.

He argued that authorities should be using this timeframe to conduct proper strategic reviews but said this is not happening consistently.

Calls for regulatory reform

ETEK said it will now review the common mistakes identified in planning submissions and issue new guidance to its members.

The organisation also called for a broader overhaul of outdated planning legislation, arguing that certain regulations need to be simplified.

Meanwhile, following the revelations, the Nicosia DLGO announced it will recommend that Cyprus’ Ministry of Interior of Cyprus establish a special technical committee.

The proposed body would act as a nationwide second-level review panel for potential permit cancellations, with the aim of ensuring fair treatment for developers, architects and applicants.

For the Cyprus property sector, the controversy highlights a growing concern: when regulatory oversight fails, buyers, developers and banks can all end up paying the price.

Cyprus passport scandal: Court restores investor citizenship

Nigel Howarth
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Cyprus passport scandal: Court restores investor citizenship

Five years after the findings of the inquiry led by Myron Nicolatos triggered a wave of citizenship revocations linked to Cyprus’ disgraced “golden passport” scheme, authorities are now facing growing scrutiny over how those passports were later stripped away.

A ruling delivered yesterday by Cyprus’ Administrative Court of Cyprus found in favour of businessman Anubhav Aggarwal, overturning administrative decisions that revoked his Cypriot citizenship. The judgment effectively means Aggarwal is once again recognised as a Cypriot citizen.

The businessman, represented by lawyer Simos Angelides of Andreas S. Angelides LLC, challenged the government’s decision to strip him of his nationality – and won.

The case raises uncomfortable questions for the Cypriot state. It suggests that not only were foreign investors granted citizenship under questionable circumstances before the scheme was “irrevocably terminated” in 2020, but that some revocations may also have been carried out improperly.

The citizenship of members of Aggarwal’s family had also been revoked as part of the same case.

Court finds lack of proper investigation

In her ruling, Judge Ariadni Zervou said the applicant had legitimate grounds to complain about a lack of proper investigation, insufficient reasoning, factual errors and breaches of the principle of proportionality.

She found that the original inquiry had never explicitly recommended that Aggarwal be stripped of his citizenship. Instead, it suggested only that authorities examine whether revocation should be considered.

Despite this, the Council of Ministers moved ahead with the decision without carrying out further investigation, later reaffirming its position based largely on the opinion of an independent review committee.

The judge also concluded that Aggarwal’s right to present his case had been granted only in a formal sense, rather than in any meaningful way.

Statelessness concerns ignored

A major issue highlighted by the court was the failure of authorities to consider whether revoking Aggarwal’s Cypriot citizenship would leave him stateless.

According to evidence presented in court, Aggarwal automatically lost his Indian nationality after obtaining Cypriot citizenship, in line with Indian law.

Judge Zervou said this issue was clearly raised by his legal team in a detailed letter sent in December 2021, which referenced international treaties, EU legal principles and case law. Yet authorities failed to properly assess the consequences before making their decision.

The court also questioned claims that Aggarwal had concealed involvement in criminal proceedings in India.

While authorities argued he failed to disclose his alleged involvement in a criminal case, the court found there appeared to be no active criminal proceedings against him at the time he applied for Cypriot citizenship – a crucial point that was never properly investigated.

Fallout from Cyprus’ passport scandal continues

The case stems from findings in the inquiry into Cyprus’ controversial investor naturalisation scheme, which concluded that Aggarwal failed to disclose his links to ARK Imports Private Limited and an investigation by Indian authorities connected to the NSEL trading scandal.

The report alleged he submitted false or misleading information about his business activities.

However, this latest ruling underlines the legal complexities now facing Cyprus as it attempts to undo years of controversial passport approvals.

What began as a scandal over handing out passports too freely may now be evolving into a second controversy — whether the government acted unlawfully in trying to take them back.

KSIA joins calls for urgent dangerous buildings reform

Nigel Howarth
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KSIA joins calls for urgent dangerous buildings reform

The Cyprus Land & Property Owners Association (KSIA) has joined calls for urgent reforms to deal with the growing issue of dangerous buildings.

In a statement signed by its president, Kyprianos Theocharides, KSIA called for a modern and practical legal framework to remove barriers that are preventing essential repairs and maintenance work.

Among its key proposals is the introduction of a fast-track process for collecting unpaid communal fees in jointly-owned buildings. It is also calling for mandatory sinking funds to help property owners plan for major repair costs, including structural reinforcement works and waterproofing.

Faster action on unsafe buildings

KSIA is also proposing the appointment of professional building managers in developments where management committees are not functioning properly.

It wants special legal procedures introduced to allow the immediate evacuation of buildings deemed unsafe, while also speeding up approvals for maintenance work on listed properties.

Mr Theocharides said most property owners want to invest in and improve their buildings, stressing that proper maintenance is essential for both safety and long-term property values.

However, he said many owners are unable to carry out repairs because of serious legal and institutional obstacles.

Why repairs to jointly-owned buildings are often delayed

In jointly-owned buildings, weak systems for collecting unpaid service charges often leave responsible owners covering costs for those who fail to pay.

Lengthy court cases frequently make matters worse, with legal claims often delayed or dismissed on technical grounds.

Another major issue is that many jointly-owned building management committees are run by volunteers with limited expertise, leading to poor planning and delays in identifying urgent repair needs.

The Association also highlighted problems linked to tenancy agreements and Cyprus’ rent control laws.

Even when funding is available, landlords can struggle to carry out major works because some tenants refuse to leave properties temporarily, while legal proceedings can take months or even years.

Lack of financial incentives for landlords

Many landlords also have little financial motivation to invest in ageing properties.

The Association said strict limits on rent increases often prevent owners from recovering maintenance costs, turning necessary upgrades into a financial loss.

Mr Theocharides said building safety should be treated as a matter of public safety, adding that the recent fatal building collapse should act as a wake-up call for policymakers.

While acknowledging there are cases of negligence, he stressed that these should not define most property owners, many of whom are simply asking for the right tools to protect their assets.

54% of Nicosia new builds have serious planning breaches

Nigel Howarth
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0
54% of Nicosia new builds have serious planning breaches

More than half of the residential developments under construction in Nicosia have been found to have serious planning breaches, raising fresh concerns about the fast-track permitting regime and the unacceptable risks facing homebuyers.

According to findings from the Nicosia District Local Government Organisation (DLGO), 54% of developments currently under construction that were reviewed through spot inspections were found to have significant deviations from approved planning requirements.

The findings have sparked fears that some buyers, as well as individuals building their own homes,  could ultimately discover that their properties are not legally compliant, despite receiving planning consent.

Under Cyprus’ accelerated licensing framework, planning and building permits are often issued almost automatically, with much of the responsibility placed on private consultants and designers rather than planning authorities.

Nicosia DLGO spot checks reveal widespread breaches

On-site inspections carried out by technical teams at Nicosia DLGO examined 13 planning approvals issued between March and August 2025, representing around 15% of applications submitted during that six-month period.

The findings were striking:

  • Just 15% of projects were fully compliant
  • 31% showed minor irregularities
  • A staggering 54% contained serious breaches

Among the major issues identified were:

  • Exceeding permitted development density due to calculation errors
  • Poorly designed or unusable parking spaces
  • Reduced distances from neighbouring property boundaries
  • Negative impact on neighbouring residents’ amenities
  • Potential breaches involving building heights and floor limits

If these findings reflect wider trends, some developments may be encroaching on neighbouring plots, adding unauthorised square footage, or creating long-term disputes over parking and land boundaries.

Experts warn that if such projects are completed without intervention, they could trigger years of legal battles between neighbours, court claims and costly compliance disputes.

Fast-Track licensing under scrutiny

Cyprus introduced fast-track planning approvals to tackle long delays that previously left applications stuck in the system for months — and sometimes years.

Initially, the scheme applied to Category A developments, covering up to two residential units, including detached and semi-detached homes. These permits are now issued within 40 working days.

In March 2025, the system expanded to Category B developments, including:

  • Up to 12 terraced housing units
  • Apartment blocks of up to four storeys
  • Buildings with up to 20 flats and one basement level

These approvals are now issued within 80 working days.

The reform was widely welcomed by developers because it reduced bureaucracy significantly. However, critics say the speed of approvals may now be creating unintended legal risks.

Under the current model, responsibility for design compliance largely rests with architects, engineers and planning consultants. Local authorities carry out only preliminary checks and if they fail to respond within strict deadlines, permits are automatically deemed approved.

Permit revocations and work stoppages

Nicosia DLGO said serious violations leave authorities with little room for flexibility under existing legislation.

Where major deviations are identified, planning approvals must be revoked. In many cases, related building permits are also cancelled.

Authorities said pending applications linked to revoked approvals are also being rejected.

For projects where construction has already begun, enforcement teams may step in to halt works and impose legal measures.

The organisation also highlighted limitations within the government’s Ippodamos digital licensing platform, stating that the software does not allow applications processed under the automatic approval system to be flagged as incomplete for revised drawings or additional documentation.

Buyers could face the biggest risk

According to sources familiar with the matter, Nicosia DLGO is not seeking to slow development but rather prevent buyers from being caught in costly legal complications.

The biggest concern is that ordinary buyers may invest their savings into purchasing a home, only to discover later that the property is not fully legal – through no fault of their own.

Officials are reportedly exploring solutions that would allow development activity to continue while ensuring buyers are protected.

The DLGO has also proposed the creation of an independent technical disputes committee that would review permit cancellations and resolve issues stemming from fast-track approvals.

For Cyprus’ property market, the message is becoming increasingly clear: faster approvals may be boosting development. But without stronger safeguards, they could create significant legal headaches for homeowners down the line.

(Translated & summarised from an article in philenews)

Repossession laws head to Supreme Court for review

Nigel Howarth
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0
Repossession laws head to Supreme Court for review

The legal framework governing property repossessions and insolvency in Cyprus has moved into a new and critical phase, as four legislative amendments introduced by MPs have been formally referred to the Supreme Court for constitutional scrutiny.

Following the resolution of five earlier presidential referrals concerning repossession laws and insolvency rules, attention now turns to a fresh set of challenges submitted by President Nikos Christodoulides. The cases will be examined by the Supreme Constitutional Court of Cyprus, with proceedings scheduled to begin this coming Wednesday.

The Republic will be represented by the Attorney General, while Parliament has appointed a private legal team to defend the legislation. At the heart of the dispute are amendments to the Transfer and Mortgage of Property Law, which the Legal Service argues contain provisions that may be clearly unconstitutional and in breach of fundamental constitutional safeguards.

Constitutional scrutiny of property repossession reforms

The four contested legislative proposals reflect a broader political effort to reshape how secured lending and repossession processes operate in Cyprus’s property market.

  • A DISY, EDEK, DIPA and independent MPs bill, seeks to cap guarantor liability so that it does not exceed the original loan amount when mortgaged property is sold or repossessed via auction.
  • A DIKO bill, would require lenders to exhaust all collateral and obtain a court ruling against the primary borrower before taking action against guarantors.
  • An AKEL, DIKO and DIPA bill, provides for the cancellation of remaining debt after a forced sale if the proceeds do not fully cover the outstanding mortgage and interest.
  • A DIPA bill, temporarily suspends repossession procedures for primary residences valued up to €350,000 until the end of the year.

Government concerns

Government sources argue that if these laws were approved, they could distort the financial system rather than improve fairness in the property market. According to officials, weakening repossession mechanisms may increase risks for lenders, encourage strategic default, and create inequality between consistent borrowers and those who delay repayments.

They also warn that such reforms could undermine debt restructuring efforts and increase moral hazard across the banking sector, potentially affecting overall financial stability.

The state, they emphasise, must balance social protection with maintaining effective enforcement tools to ensure discipline within the lending system and stability in credit markets.

Next steps for Cyprus property legislation

On the same day, the Supreme Constitutional Court will also review a separate law concerning basic payment account access for very small businesses, following an earlier presidential referral that was rejected by Parliament.

Meanwhile, four additional laws recently reviewed by Parliament are expected to be sent to the President shortly. Legal analysts suggest that three of these may ultimately be approved, while one could still be referred for judicial review.

The final decision now rests with the Presidency and the Attorney General’s guidance. If further referrals are made, Cyprus’ property and insolvency framework could once again face prolonged legal uncertainty.

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