Cyprus moves to revive mortgage-to-rent scheme

Nigel Howarth
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Cyprus moves to revive mortgage-to-rent scheme

Cyprus is poised to reopen its “Mortgage-to-Rent” scheme for a limited period, in a move aimed at easing pressure on distressed homeowners.

Finance Minister Makis Keravnos signalled to Parliament’s Finance Committee that the government is open to accepting new applications for several months, provided the existing eligibility criteria remain unchanged.

Maintaining the current framework is seen as essential to avoid a fresh approval process from European authorities, an outcome officials are keen to avoid due to time constraints and the risk of rejection.

The proposal to revive the Mortgage-to-Rent scheme was put forward by MPs and has been met with a positive response from the ministry, so long as it does not place additional strain on public finances.

Foreclosure reform bills tabled in parliament

At the same time, two key bills targeting Cyprus’ foreclosure framework have been formally submitted to the House of Representatives. The legislation, approved by the Council of Ministers earlier this week, is designed to support borrowers and prevent the loss of primary residences.

Central to the reforms is the strengthening of the Financial Ombudsman’s role, alongside enhanced protections for homeowners. Lawmakers were briefed during a closed-door session of the Finance Committee, reflecting the sensitivity of the issue.

Stronger protections for borrowers

Among the proposed measures is the introduction of binding decisions by the Financial Ombudsman for disputes of up to €20,000, which covers the majority of cases, according to government data. Borrowers would also gain earlier access to the Ombudsman to facilitate debt verification and restructuring.

In addition, the reforms provide for the creation of structured repayment plans through insolvency advisers, allowing borrowers more time to stabilise their finances and avoid foreclosure.

Balancing stability and social pressures

Keravnos stressed that safeguarding financial stability remains the government’s overriding priority, particularly amid global economic uncertainty and inflationary risks. He cautioned against measures that could unsettle the economy or undermine growth.

Political divisions persist

Despite broad agreement on the need for reform, political tensions remain. Opposition figures have criticised the government for resisting broader legal rights for borrowers to challenge foreclosures in court.

Debate is expected to intensify in the coming days, with several party-backed proposals also under consideration before Parliament potentially dissolves ahead of upcoming elections.

Cyprus apartment prices surge as housing index climbs

Nigel Howarth
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Cyprus apartment prices surge as housing index climbs

Apartment prices in Cyprus continued their sharp upward path in the final quarter of 2025, driving a broader acceleration in the country’s housing market, according to the Central Bank of Cyprus.

The bank’s latest House Price Index report shows that annual apartment price growth reached 9.6% during the fourth quarter, significantly outpacing the 3.4% increase recorded for houses. Overall, residential property prices rose by 7.1% year-on-year, up from 5% in the previous quarter.

This sustained growth reflects robust demand from both domestic and international buyers, coupled with rising construction costs and a gradual increase in housing supply.

Apartments led gains as quarterly momentum builds

On a quarterly basis, the general housing price index rose by 2.3% in Q4 2025, compared with a 1.2% increase in Q3. Apartments led the gains with a 3% quarterly rise, while house prices increased by 1.2%.

The figures underline a clear shift in market momentum, with apartments continuing to outperform other residential segments.

Regional trends show mixed performance

Price movements varied across Cyprus’ districts. Nicosia recorded a modest annual increase of 1%, returning to growth after a previous decline. Meanwhile, Limassol and Larnaca saw strong acceleration, with price rises of 9.9% and 8.3% respectively.

In Paphos, growth slowed to 7.6%, while Famagusta remained broadly stable compared with the same period a year earlier.

When broken down by property type, house prices declined in Nicosia for a fifth consecutive quarter, falling by 1.3% year-on-year. By contrast, apartment prices rose across all regions except Famagusta, where they fell by 4.1%.

Notably strong gains were recorded in Paphos (13.6%), Larnaca (12.2%), Limassol (9.3%) and Nicosia (3%).

Sales activity rises sharply

Transaction volumes also increased significantly, highlighting continued strength in demand. Data from the Department of Lands and Surveys show that property sales rose by 18.7% year-on-year in Q4 2025, reaching 4,941 transactions.

Sales to domestic buyers climbed by 15.3%, while foreign buyer activity surged by 23.9%, underlining Cyprus’ ongoing appeal to international investors.

Limassol recorded the highest number of transactions, followed by Nicosia, Larnaca and Paphos, with Famagusta posting the lowest figures.

Foreign buyers dominate in key regions

The composition of buyers varied significantly by district. Domestic purchasers accounted for 84% of transactions in Nicosia and 67% in Limassol. In Larnaca and Famagusta, local and foreign demand was broadly balanced.

However, Paphos remained heavily reliant on international buyers, who made up 68% of transactions in the district.

Supply and lending trends support growth

On the supply side, the number of approved building permits continued to rise throughout 2025, pointing to a gradual expansion in housing availability.

At the same time, lending to households for home purchases maintained a steady upward trend, reinforcing the market’s positive momentum.

Despite increasing supply, elevated construction costs and sustained demand pressures suggest that upward price trends, particularly in the apartment sector, are likely to persist in the near term.

Cyprus tightens regulations boosting safety in property sector

Nigel Howarth
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Cyprus tightens regulations boosting safety in property sector

The construction sector is entering a new phase of modernisation following the publication of updated regulations reshaping the framework governing mechanical and electrical (M&E) installations in buildings.

The reforms are designed to enhance safety, improve construction quality and strengthen the energy performance of new developments.

The changes mark a significant shift in how building systems are designed, implemented and monitored, reflecting growing demands for higher standards across the property sector.

ETEK welcomes long-awaited regulations reform

The Cyprus Scientific and Technical Chamber (ETEK) has described the introduction of the new regulations as a development of “particular importance”. According to the organisation, the move addresses a long-standing call for a substantive upgrade in the way M&E installations are handled throughout the construction lifecycle.

The updated framework is expected to lay stronger foundations for improved building control, higher-quality construction, enhanced installation safety and greater protection for property owners and occupants. It also elevates the role of engineers while promoting more energy-efficient buildings.

New requirements for building permit applications

Under the new rules, all applications for building permits submitted after 11 March 2026 must include comprehensive studies of mechanical installations. This requirement covers heating and air conditioning systems, domestic hot water production, as well as any specialised technical systems where applicable.

In a notable expansion of scope, the regulations now apply to single-family homes, removing previous exemptions and significantly broadening the framework’s reach across residential development.

Regulations include supervision & compliance checks

For the first time, the regulations establish compulsory supervision and inspection of M&E installations by the design engineer. Property owners will be required to appoint the study engineer as the supervising engineer, ensuring that project execution aligns fully with the approved designs.

Upon completion of works, developers must submit formal certification from both mechanical and electrical engineers, confirming that installations have been carried out in accordance with the approved study and the terms of the building permit.

New registry to raise professional standards

The reforms also introduce the creation of a Register of Study and Supervising Engineers under ETEK. Mandatory registration for the submission of studies will come into force in July 2028.

The registry framework will include requirements for ongoing education, professional indemnity insurance and strengthened practical training. These measures aim to ensure high levels of professionalism, competence and accountability within the engineering sector.

ETEK emphasises that the implementation of these regulations represents a decisive step towards modernising the construction landscape, laying the groundwork for a safer, higher-quality and more sustainable built environment.

At the same time, the organisation confirms it remains in continuous consultation and cooperation with the Ministry of the Interior to ensure the smooth rollout of the new regulatory framework across the sector.

Third-country nationals face two-plot limit in Cyprus

Nigel Howarth
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Third-country nationals face two-plot limit in Cyprus

Cyprus is preparing to introduce sweeping restrictions on land acquisitions by third-country nationals, limiting ownership to a maximum of two plots with a combined area of up to 1,100 square metres.

The move follows a joint effort between the government and parliament to consolidate four separate legislative proposals into a single bill, incorporating recommendations from the Ministry of the Interior. The unified proposal is now advancing through parliamentary scrutiny, with a vote expected in early April.

Key restrictions and unresolved questions

While there appears to be broad agreement on the overall land cap, authorities have yet to finalise the permissible buildable area for residential, commercial, and office use tied to such plots.

The draft legislation, currently under article-by-article review by the parliamentary Interior Committee, signals a decisive shift towards tighter regulation of property ownership by third-country nationals in Cyprus.

Ban on sensitive and strategic land

The proposed framework introduces outright prohibitions on third-country nationals’ ownership of:

  • Forest and agricultural land
  • Property adjacent to the ceasefire line
  • Land near critical national infrastructure, including ports, airports, military bases, and coastal zones

These measures are intended to safeguard strategically sensitive areas and address longstanding concerns over national security and land use.

Closing loopholes and strengthening oversight

The bill also seeks to eliminate existing legal provisions that have enabled indirect acquisition of property by third-country nationals without approval from the Council of Ministers.

In their place, stricter control mechanisms and transparent eligibility criteria will be introduced, aiming to ensure more effective oversight of foreign investment in the property market.

Political consensus emerging

Aristos Damianou, chair of the parliamentary Interior Committee, noted that the consolidated proposal appears to command majority support and is likely to pass.

He criticised what he described as decades of largely unchecked acquisition of Cypriot land by third-country nationals, stating that a significant share of property transactions in recent years, reportedly up to one in two, has involved third-country nationals.

Market impact and broader context

The proposed cap of approximately 1,050 to 1,100 square metres across two plots reflects an emerging consensus, though finer details remain under discussion.

The reforms come amid heightened sensitivity around land ownership in Cyprus, a country still divided and hosting foreign military bases, adding further complexity to property governance.

If passed, the legislation is expected to mark a turning point in Cyprus’ real estate landscape, signalling a more controlled and strategic approach to property investment by third-country nationals.

Cyprus banks warn on unfair contract terms reform risks

Nigel Howarth
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0
Cyprus banks warn on unfair contract terms reform risks

The Cyprus banks have issued a stark warning over proposed legislation targeting unfair contract terms, as the measures head for a parliamentary vote.

The Cyprus Banking Association has voiced strong opposition, arguing that the reforms could trigger legal uncertainty and ripple effects across the wider economy, including the property market.

In last-minute submissions to the House Commerce Committee, the Association cautioned that the amendments are legally flawed and risk imposing significant burdens on businesses, ultimately affecting economic stability.

Banks concerned over legal certainty & investment

At the heart of the dispute is a proposal to amend the Consumer Protection Law, aimed at strengthening safeguards for borrowers and consumers dealing with credit institutions. While the intent is to rebalance protections, banks argue the approach introduces overlapping provisions and unnecessary duplication.

The sector warns that such legislative layering could undermine confidence in the Cyprus legal framework, which is a key consideration for international investors, particularly in real estate and development. Any perceived erosion of legal certainty may weigh on investment flows and the country’s competitiveness.

Constitutional and EU law implications

Banks have also raised constitutional concerns, suggesting that certain provisions may infringe on fundamental rights, including freedom of contract and the ability to conduct business.

Additionally, the targeted restriction of banking charges is seen as potentially breaching principles of equal treatment and free competition under EU law. Industry representatives argue that singling out banks could place domestic institutions at a disadvantage compared with their European counterparts.

Banks warn of retroactive risk and market disruption

A separate legislative proposal seeks to apply the 2021 Consumer Protection framework retrospectively to older contracts. This has sparked alarm within the financial sector.

Banks warn that retroactive enforcement could expose businesses to immediate administrative fines for agreements that were fully compliant under the legal regime in force at the time. Such a shift could create widespread uncertainty, especially across loan agreements tied to property transactions.

For the real estate sector, where financing structures often span decades, this raises the prospect of contractual disruption and unforeseen costs, factors that could dampen market activity.

Broader economic impact

The Association maintains that the combined effect of the proposals could destabilise financial operations and impose unpredictable financial liabilities.

Ultimately, the banking sector argues that while consumer protection remains essential, reforms must be carefully calibrated to avoid unintended consequences for the Cyprus financial system and property market, both of which rely heavily on legal clarity and investor confidence.

Smaller flats, smarter living: Cyprus housing shift

Mersina Isidorou
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Smaller flats, smarter living: Cyprus housing shift

The discussion surrounding minimum permissible apartment sizes in Cyprus is often clouded by concerns over a perceived “decline in quality of life” or so-called “shrinkflation”. Yet a more measured assessment of housing suggests something quite different: this is not a downgrade, but a necessary step towards modernisation.

Minimum size requirements were rightly established under the conditions of their time. Households were larger, lifestyles differed significantly, and urban environments functioned in another way entirely. Today, however, patterns of living, financial realities and the very structure of society are evolving rapidly. As needs change, so too must regulation.

The central question is not whether apartments will become smaller. Rather, it is whether the regulatory framework enables the market to deliver homes that genuinely suit those who need them at prices they can realistically afford.

Lessons from housing in Europe

Across much of Europe, there is no rigid, one-size-fits-all minimum apartment size. Instead, regulations prioritise quality: natural light, ventilation, ceiling height, hygiene standards and energy efficiency.

In Germany, compact and highly functional homes of 25–35 square metres have become commonplace, particularly for students, young professionals and single occupants. These developments have enabled more residents to access central urban locations that would otherwise be out of reach.

The Netherlands has embraced small urban apartments and co-living models, placing emphasis on functionality rather than sheer size. Shared spaces, intelligent design and proximity to transport links have increased housing supply while reducing per-unit costs.

In Copenhagen, regulatory adjustments followed a rise in single-person households. Rather than building unnecessarily large homes, the focus shifted to aligning housing provision with the actual size and financial capacity of residents.

The Cypriot imbalance

Cyprus presents a clear mismatch. On one hand, single-person households are increasing, many young professionals face limited purchasing power, and demand is growing for housing near workplaces.

On the other, current regulations effectively steer the market towards larger apartments.

When developers are compelled to build larger units, the total cost of purchase or rent rises even if the price per square metre remains stable. As a result, many households are priced out of the market, despite being able to afford smaller, more suitable homes.

Revising minimum size requirements does not automatically reduce the price per square metre. It does, however, create a more flexible market that can:

  • Lower the overall cost per dwelling
  • Increase the range of available options
  • Allow for more units on a single plot of land
  • Help the market remain resilient during periods of high interest rates

In a country like Cyprus, where developable land is limited and construction costs continue to rise, flexibility acts as a balancing mechanism between supply and demand.

Quality over quantity

Quality of life is not defined solely by square metres. It is shaped by intelligent layout, natural light, ventilation, shared amenities, and access to services and transport.

A well-designed 40 sqm apartment can, in practice, offer greater functionality than a poorly planned 55 sqm unit. Regulation, therefore, should safeguard qualitative standards rather than enforce rigid size thresholds.

A meaningful revision of minimum apartment sizes should be accompanied by:

  • Strict qualitative standards
  • Urban planning incentives for high-quality shared spaces
  • Regional differentiation
  • Ongoing monitoring of housing affordability

Fundamentally, this marks a shift from regulating “how big” to regulating “how good”.

Housing market at a crossroads

Cyprus’ housing market stands at the intersection of new demographic and economic realities. Regulations that once served society effectively now require updating to continue doing so.

The issue is not whether apartments should be smaller or larger. It is whether there is sufficient choice for all.

In a modern economy, choice is what sustains both markets and citizens alike.

About the author

Mersina Isidorou is the General Manager of the Cyprus Property Developers Association.

(Translated from an article in incyprusproperty)

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