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‘A generation cannot build a future,’ MEPs warn over soaring EU rents

Kyriacos Nicolaou
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‘A generation cannot build a future,’ MEPs warn over soaring EU rents

European Parliament adopts roadmap to tackle EU-wide housing crisis

The European Parliament adopted recommendations on the EU housing crisis on Tuesday, calling for a range of measures aimed at improving access to decent, sustainable and affordable housing across the European Union.

The report from the Special Committee on the Housing Crisis, which was adopted by 367 votes in favour, 166 against and 84 abstentions, urges EU initiatives to tackle rising prices and shortages by supporting construction and renovation.

The report states that millions of Europeans face precarious living conditions as a result of the housing crisis and calls for coordinated action to improve supply and affordability across member states.

MEPs emphasised the need to improve living standards by ensuring decent housing conditions and by strengthening the Commission’s Affordable Housing Plan.

Lawmakers said that the plan should allocate specific funds for renovation and energy performance improvements in residential buildings in order to combat energy poverty and improve overall housing quality.

They also stressed that all new dwellings should meet quality standards related to insulation, energy efficiency and indoor air quality.

The parliament also addressed the growing expansion of short-term rentals, urging that upcoming legislation strike a balance between the development of tourism and ensuring access to affordable housing.

MEPs said that EU legislation should establish common objectives at EU level while allowing member states, regions and local authorities the flexibility to design and implement measures suited to their territorial realities and housing markets.

The report also calls for an adequate share of public and social housing in EU cities, aimed at improving housing affordability and supply for vulnerable groups.

In addition, the parliament strongly condemned squatting, describing it as the illegal occupation of homes, and called for stricter measures to protect property owners.

At the same time, lawmakers urged member states to strengthen tenant protections by ensuring fair rental conditions and preventing disproportionate rent increases.

On fiscal policy, MEPs advocated incentive-based tax systems to support low- and middle-income households, as part of broader efforts to improve housing accessibility.

They also proposed removing tax barriers faced by first-time buyers, such as high registration fees, and establishing tax conditions that make long-term rentals more affordable.

The report calls for greater EU investment in housing through better coordination of existing funding programmes.

It also suggests reallocating unused resources from the Recovery and Resilience Plan to support the construction and renovation of social, public, cooperative and affordable housing.

Lawmakers further said that any revision of state aid rules should facilitate public investment in social housing while respecting the diversity of national housing markets across the EU.

MEPs also urged the European Commission to introduce a housing simplification package to reduce red tape in the sector.

They called for simpler permitting procedures, including digital permit-granting processes, and recommended that planning permits be processed within a maximum of 60 days.

The report additionally emphasises the importance of strengthening the EU’s construction and renovation sector.

MEPs said the EU must enhance its industrial sovereignty in the construction and renovation sector by scaling up innovative and sustainable products.

They also urged the Commission to reinforce the single market for raw materials and introduce minimum “Made in EU” origin requirements for components used in EU co-financed projects.

Finally, the report highlights the need to improve the working conditions of skilled workers in the sector through training initiatives and fair wages.

Lawmakers also called for easier labour mobility within the EU, mutual recognition of professional qualifications and, where necessary, the recruitment of skilled workers from third countries.

“A generation that cannot afford a home cannot build a future. Europe is short 10 million homes, rents are up by more than 30 per cent, and young people and families are paying the price,” said rapporteur of the housing report Borja Giménez Larraz.

“For the first time ever, the European Parliament is setting out a roadmap a housing simplification package, faster permits in 60 days, investment in skills, legal certainty and protection for property owners and tenants, the mobilisation of private and public investment, and stronger support for young people, families and people with disabilities,” Larraz added.

“No more excuses,” the MEP stressed. “Member states must now deliver,”

Meanwhile, Housing committee chair Irene Tinagli stated that “housing is a fundamental social priority, and in the past year our committee has demonstrated that the housing crisis in the EU is real, affecting people in all member states”.

“Today, the European Parliament is taking action to address this urgent social and economic crisis by putting forward practical and innovative solutions,” Tinagli said.

“The housing crisis has far-reaching consequences for the quality of life of Europeans, impacting people’s health, social cohesion, and access to economic opportunities,” she added.

“EU action is essential to restore balance and fairness in the housing market, because everyone deserves a place to call home,” Tinagli concluded.

CM

New Cyprus laws target unfair clauses in mortgage contracts

Nigel Howarth
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New Cyprus laws target unfair clauses in mortgage contracts

Cyprus lawmakers have taken a decisive step towards tightening protection for borrowers, as Parliament’s Commerce Committee agreed on Tuesday to send two proposed laws to the full House for a vote aimed at shielding consumers from unfair clauses in mortgage contracts.

The move comes amid strong objections from key institutions, including representatives of the Legal Service, the Consumer Protection Service, the Cyprus Bar Association and the Cyprus Banks Association, all of whom voiced concerns about the proposed regulations.

The parliamentary initiative follows a recent enforcement decision by the Consumer Protection Service, which imposed a €160,000 fine on Alpha Bank Cyprus after determining that certain clauses in its mortgage agreements with borrowers were abusive.

Growing scrutiny of mortgage contracts

The penalty against Alpha Bank is the latest in a series of actions targeting lenders’ contractual practices in the Cypriot mortgage market.

Earlier rulings by the Consumer Protection Service included an €800,000 administrative fine against Bank of Cyprus and €600,000 against Eurobank – formerly Hellenic Bank. In both cases, the banks were ordered to amend problematic clauses affecting more than 22,000 mortgage agreements.

Separately, the Housing Finance Corporation was subject to a court injunction relating to similar contractual concerns.

These developments have intensified the debate over how Cyprus should regulate mortgage contracts and enforce consumer rights within the banking system.

Conflicting provisions in existing legislation

Stavros Papadouris, president of the Ecologists Movement and sponsor of the first bill, told the committee that the issue has now become a matter of political decision.

According to Papadouris, the wide-ranging consumer protection legislation introduced in 2021 contains conflicting provisions regarding the termination of abusive clauses in contracts.

He pointed to EU Directive 93/13/EEC, which obliges member states to adopt measures preventing unfair terms in contracts between consumers and professionals.

Under the directive, abusive clauses do not bind the consumer, while the remainder of the contract remains valid provided it can continue without those terms.

Papadouris also referred to a court ruling involving Société Générale Bank, where a contract containing 14 clauses was annulled entirely. He further criticised delays by the Legal Service in resolving cases dating back to 2016.

Questioning the timing of decisions in more recent cases involving banks, he suggested that enforcement priorities may ultimately reflect political choices.

Purpose of the legislative proposals

Papadouris’ proposal seeks to amend the core legislation so that contracts concluded before the introduction of the new consumer protection framework are assessed under the current law.

The second proposal, submitted by DISY MP Kyriakos Hadjiyiannis, aims to strengthen consumer rights more broadly, recognising borrowers as the weaker party when entering agreements with credit institutions.

Dispute over retroactive application

Elena Papachristoforou, representing the Consumer Protection Service at the Ministry of Commerce, argued that the two legal opinions issued by the Legal Service on the matter are not contradictory.

However, she stressed that the Consumer Protection Law includes provisions prohibiting retroactive application in relation to unfair contract terms — a factor that must be carefully considered.

She added that the draft legislation had been referred to the Legal Service because it raises complex legal questions. The service continues to examine mortgage agreements signed before the 2021 legislation under the previous legal framework.

Notably, the Legal Service has issued sharply differing interpretations.

In an opinion submitted to the Commerce Committee on 5 February 2025, government lawyer Froso Sotiriou concluded that retroactive application of the Consumer Protection Law to remove abusive clauses from earlier loan agreements would not be justified under the Constitution.

Yet a second opinion, requested by the Ministry of Commerce and submitted to Parliament on 12 February, recommended the deletion of Article 75 of the 2021 Consumer Protection Law.

Legal and banking sector concerns

The Cyprus Bar Association warned that the proposed changes could create constitutional complications.

Ira Emilianidou said the association’s main concern is that the legislation may conflict with Article 16 of the Constitution, which protects freedom of contract.

Similarly, Elena Frixou of the Cyprus Banks Association expressed serious reservations, arguing that the proposals raise significant constitutional issues.

She maintained that the current law already aligns with European directives, while also voicing concern over additional categories of abusive clauses introduced in the second bill.

Consumer groups back reforms

Consumer organisations, however, broadly support the proposed legislation.

Jenny Papacharalambous, Director-General of the Cyprus Consumer Protection Association (SYPRODAT), said the group agrees with the proposed measures.

She also noted that court proceedings in the case involving Bank of Cyprus have concluded, with the judge currently reserving judgment.

Meanwhile, the case involving Hellenic Bank — now Eurobank following their merger — continues to face repeated delays.

DISY MP Averof Neophytou criticised what he described as an “à la carte” approach to retroactive legislation.

“When retroactive provisions benefit citizens, they are labelled unconstitutional,” he said, “yet when they serve the interests of the state, they suddenly pose no problem.”

Alpha Bank Cyprus fined €160k for unfair mortgage clauses

Nigel Howarth
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Alpha Bank Cyprus fined €160k for unfair mortgage clauses

Cyprus’ Consumer Protection Service has ruled that a series of clauses included in standard mortgage loan agreements issued by Alpha Bank Cyprus are abusive under national consumer law.

The findings follow an ex officio investigation carried out under the Consumer Protection Law of 2021. As a result, the authority imposed an administrative fine of €160,000 on the bank. Alpha Bank Cyprus indicated it intends to remove the disputed clauses, a move that was considered a mitigating factor when determining the penalty.

Investigation into mortgage loan agreements

The probe focused on contractual terms used in mortgage agreements signed between the bank and consumers. The review forms part of a broader regulatory examination of lending contracts used by banking institutions across Cyprus.

According to the authority’s decision, several clauses were found to breach Articles 50 and 52 of the legislation and were deemed unfair.

These provisions relate to matters including the purpose and amount of the loan, the disbursement process, contract termination and borrower defaults, as well as the bank’s right to assign contractual rights or claims arising from the agreement.

Nearly 5,000 mortgage contracts affected

The Consumer Protection Service found that the clauses had been included in a significant number of mortgage agreements signed between 2017 and the end of 2025.

In total, approximately 4,971 consumer contracts were affected, with borrowers primarily aged between 20 and 45.

Under the decision, Alpha Bank Cyprus must cease using the specific clauses and implement measures to prevent similar breaches in the future.

Should the bank continue using the terms after a 60-day compliance period following service of the decision, it may face an additional administrative fine of €1,000 for every day the violation persists.

Bank plans contract changes

During the investigation process, Alpha Bank Cyprus informed the Protection Service that it intends to amend the disputed provisions in new mortgage agreements.

For existing contracts, the bank said it plans to notify affected borrowers and waive any rights deriving from the contested clauses.

55% of borrowers facing foreclosure reach restructuring deals

Nigel Howarth
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55% of borrowers facing foreclosure reach restructuring deals

More than 71,600 borrowers in Cyprus have had their loans transferred to credit acquisition and servicing company portfolios since the management of non-performing loans began, according to Anthi Exadaktylou, president of the Association of Credit Acquiring and Servicing Companies.

Speaking before Parliament’s Finance Committee on Monday, Exadaktylou revealed that solutions have been found for around 39,500 borrowers, representing roughly 55% of those whose loans were moved to these companies’ portfolios.

Her comments came as lawmakers opened discussions on 26 legislative proposals aimed at reforming Cyprus’s foreclosure framework, amid calls for a new suspension of property foreclosures until the end of the year.

Majority of settlements reached amicably

According to Exadaktylou, 88% of loan restructurings were achieved through mutual agreement between borrowers and credit management companies. In many cases, negotiations began amicably from the outset, while others reached agreement following the issuance of foreclosure notices.

She also noted that about half of these consensual settlements occurred after the foreclosure framework was activated, arguing that the system is functioning effectively and encouraging borrowers willing to repay their debts to reach solutions.

However, she warned that strategic defaulters remain a concern, stressing the need for targeted measures to address borrowers who deliberately avoid repayment despite having the means to do so.

Most settlements, she added, allow borrowers to retain ownership of their property, rather than resolving debts through asset swaps.

€20 billion in outstanding loans

Data presented to the Finance Committee by the Ministry of Finance shows that total loans linked to the issue amount to approximately €20 billion. Of this, about €18.5 billion is held by vulture funds, while €1.5 billion remains on bank balance sheets.

Roughly €7 billion of these loans are held by state-owned asset manager KEDIPES, with many already classified as terminated loans.

Officials also highlighted progress in reducing private debt in Cyprus. Prior to the 2013 financial crisis, private debt stood at around 350% of GDP; today it has fallen to approximately 180%.

Vulnerable borrowers and support schemes

Exadaktylou acknowledged that elderly refugees and other vulnerable borrowers struggling to repay mortgages on their primary residence require state intervention. In such cases, companies often delay enforcement procedures while potential solutions are explored.

Foreclosures are also paused for borrowers participating in government housing support schemes until a final decision is reached.

Meanwhile, government programmes aimed at protecting primary residences — including “Estia”, “Home”, and “Mortgage-to-Rent” schemes — are expected to benefit between 3,000 and 3,500 borrowers overall.

Foreclosure freeze under consideration

Political parties are currently debating a temporary freeze on foreclosures for homes valued up to €400,000, potentially lasting six to eight months, to allow time for legislative reforms.

A government bill is also being prepared to strengthen the authority of the Financial Ombudsman and improve insolvency procedures, though its passage before the current parliamentary term ends remains uncertain.

Final decisions on both the legislative proposals and a potential foreclosure suspension are expected in the coming days.

How geopolitics is shaping the Cyprus property market

Nigel Howarth
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How geopolitics is shaping the Cyprus property market

The resilience of the property sector in Cyprus will largely depend on how long the current geopolitical crisis lasts. So far, however, the market has proven remarkably robust, according to professionals across the industry.

If the conflict ultimately proves short-lived, Cyprus could actually benefit as a safe investment destination. Market insiders point out that similar reactions followed major global disruptions in recent years, from the Covid-19 pandemic onwards.

For the moment, the sector appears to be weathering uncertainty, though temporary delays and concerns about rising costs remain.

War disrupts travel and pauses property interest

Michalis Zavos, CEO & MD of the Zavos Group, told StockWatch that the closure of airports has already created tangible challenges.

“Clients cannot travel, so some sales have effectively been put on hold,” he said.

However, he believes the momentum of the past few years will quickly return once flights resume.

“Cyprus remains a safe destination for foreign investors,” Zavos noted, adding that competing markets such as Dubai, Abu Dhabi and other neighbouring locations are currently facing difficulties.

“As a result, many foreign investors may wish to leave those markets, and Cyprus could become an attractive alternative – especially if the war ends soon.”

Interest from Israeli buyers remains strong, particularly for second homes, although current hostilities have halted activity temporarily.

Zavos also highlighted Cyprus’ strengthened position within Europe.

“The support shown by European states such as Greece, France, Italy and Spain further reinforces Cyprus as a safe European country,” he said.

Meanwhile, a new buyer group is emerging. Poland has recently entered the market, with growing investment activity – particularly in Paphos – where Polish buyers appear drawn to a quieter lifestyle.

Yet the sector continues to grapple with a long-standing challenge: labour shortages. With airports closed, workers are unable to travel to Cyprus, leading to delays in construction projects.

Concerns over rising Cyprus property prices

George Mouskides, General Manager at FOX Smart Estate Agency, believes the economic impact will largely depend on the duration of the conflict.

“If the unrest lasts only a few weeks, the side effects of the war will be minimal,” he said.

However, a conflict stretching beyond three months could create wider economic pressure.

Energy costs would rise, triggering a chain reaction across multiple sectors and increasing inflation. Construction materials would become more expensive, pushing property prices higher.

“Initially, prices will increase for newly built properties,” Mouskides explained. “That will inevitably affect rental values and eventually pull up the prices of older homes as well.”

A prolonged conflict could also dampen demand from the domestic market.

“When citizens are being asked to prepare emergency bags and supplies for shelters, their priorities inevitably change,” he said.

If the war ends quickly, however, Mouskides expects the property market to rebound rapidly.

“No transactions will ultimately be lost – they will merely be postponed.”

Demand from Israeli buyers for second homes close to their country is expected to remain strong, as is interest from Lebanese investors.

A further unknown is Dubai

“The key question is whether investor interest there will continue as it has in recent years – or whether Cyprus will become a more appealing option,” he said.

Transactions delayed, not cancelled

George Chrysochos, Executive Director of Cyfield Group, believes any slowdown will prove temporary.

“Even if some transactions are delayed by a few weeks, they will still go ahead later,” he said.

According to Chrysochos, a short-term pause in activity will not undermine the market’s long-term trajectory.

“We saw similar situations during Covid, and later with the war in Ukraine and the conflict in Gaza,” he noted.

“Despite those challenges, real estate not only remained resilient but ultimately strengthened.”

Construction activity in Cyprus is continuing as normal, although Chrysochos warned that rising oil prices could fuel inflation and push property prices upwards.

One lesson from the past decade, he added, is clear.

“Whenever tensions escalate in our region, Cyprus ultimately benefits.”

Strong opposition to 30 foreclosure law proposals in Cyprus

Nigel Howarth
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Strong opposition to 30 foreclosure law proposals in Cyprus

The Cyprus banking sector has voiced strong concerns over roughly 30 proposed amendments to the country’s foreclosure framework, which are scheduled for discussion on Monday at the Parliamentary Finance Committee.

In a briefing note, Michalis Kronides, Senior Director of the Cyprus Banks Association, warned that passing the proposed legislation could have negative consequences for credit institutions, the stability of the financial system and potentially the credit rating of the Cypriot economy. The proposals could suspend or significantly delay property foreclosure procedures.

According to Kronides, the existing legal framework already includes reliable mechanisms allowing borrowers to challenge foreclosure proceedings. Debtors can seek court injunctions to suspend a sale and may also turn to the Financial Ombudsman for disputes relating to charges, unfair contract terms and mediation.

Foreclosure delays may raise credit risk

He warned that repeated attempts to amend the foreclosure framework risk making the process ineffective, particularly given the already lengthy delays in the court system.

International organisations, including credit rating agencies, the European Commission and the International Monetary Fund, have consistently identified Cyprus’ high private debt as the country’s main economic challenge. Kronides stressed that this issue requires a comprehensive solution rather than repeated legal amendments.

He noted that most problematic loans date back decades and have already been terminated, subject to court proceedings or even court judgments. Simply suspending foreclosures, he argued, does not solve the problem but prolongs uncertainty and keeps borrowers outside the banking system.

Data from the Financial Ombudsman also raised questions about borrower engagement. In 2025, around 200 applications were submitted to suspend foreclosures, yet only six requests were made to review the outstanding debt amount.

Question of constitutional validity

The banking association also questioned the constitutionality of several proposals. Some provisions would give additional procedural rights to mortgaged borrowers while restricting creditors’ property and contractual rights under the Constitution.

Warning of increased cost of borrowing

Banks are particularly opposed to proposals that would halt interest charges once a debt reaches twice the original loan amount. According to Kronides, such a measure could increase borrowing costs, encourage strategic defaults and weaken loan portfolios.

Additional concerns relate to proposed changes affecting guarantors and the possibility of writing off remaining debt after a property auction if sale proceeds do not cover the outstanding balance.

European supervisory authorities, including the European Central Bank and the European Banking Authority, have previously warned that changes to foreclosure timelines can increase credit risk and raise capital requirements for banks.

The association concluded that approving the proposals could increase the risk profile of Cyprus’ banking system, create legal uncertainty and potentially lead to a downgrade of the country’s creditworthiness.

 

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