PRESIDENT Nicos Anastasiades has sent back to Parliament a law aiming to reduce residential and commercial rents for a period of a year on the grounds it was unconstitutional.

The law, meant to come into effect on Friday and expire on October 31, 2014, was applicable to all contracts (rents and leases) concluded prior to October 2012. Parliament will now have 15 days as of Wednesday – the day of the law’s referral – to issue a response, including sending back the law as is or else amending it.

In a letter informing House President Yiannakis Omirou of his decision, Anastasiades said Article 26 of the Constitution protected the freedom of parties to reach their own contract agreements.

To bypass the constitution, parliament would need to evoke the Law of Necessity, a measure that is “justifiable only in exceptional circumstances,” Anastasiades said. The law of necessity was passed after the Turkish Cypriots abandoned parliament and governmental posts in the 1960s, to enable the state to function in a way that would not conflict with the 1960 constitution.

Anastasiades argued that Supreme Court case law did not justify applying the law of necessity in this case since market forces had been regulating rents anyway, pushing them down. The law of necessity had previously been used during states of emergency in the 1960s and in the 1974 Turkish invasion when the state was trying to keep order and prevent its collapse, he said.

The reasons cited by parliament, that of the financial crisis “are not comparable nor should be put on a par with the ones mentioned before [the 1960s and 1974]…,” Anastasiades said.

According to the law passed two weeks ago, residential rents up to €300 would have seen a reduction of 15 per cent (up to €45). From €300 and above, a reduction of 20 per cent applied, with a maximum reduction in absolute terms of €120.

Commercial rents up to €600 would have been reduced y by 15 per cent (up to €90). For rents in the €600 to €2,000 bracket, there would have been a 20 per cent decrease, but with a reduction cap of €250, including the €90 in the first bracket. Rents over €2,000 would have seen a reduction of 20 per cent with a cap of €400.

Voting on the law- pursued by opposition party AKEL- had been postponed several times. Business groups opposed the bill, arguing the market should be left alone, and warned they would contest the law’s constitutionality in the Supreme Court.

The small shopkeepers’ union POVEK hailed the law which they said would ease pressure on tenants and shopkeepers. A different rent control law already allows tenants to go to a specially set-up court if they feel their rent is unfair. Anastasiades said in his letter this made further legal regulation unnecessary and an intervention on the existing institutions.

THE STATE wants to see town planning applications processed within three months the Interior Minister said yesterday in a statement entailing drastic changes for a department that notoriously takes years to answer applications.

Socrates Hasikos said the state did not want to get in the way of major development and considered a three-month timeframe for most town planning applications “doable”.

He was talking in the context of a meeting with dozens of departments and authorities that deal with town planning permission, which are being asked to expedite procedures.

According to the latest report by the Ombudswoman, who investigates grievances by the public against governmental bodies, complaints to do with immovable property and addressed to the land registry, local authorities and the town planning department remain “consistently large”.

A building in Cyprus may be unlicensed for reasons that vary widely in their gravity. For example at least 100 petrol stations in Cyprus are unlicensed with local authorities and municipalities often allowing them to operate without a final approval from the Interior Ministry. The head of the petrol station owners’ association previously told the Cyprus Mail it could take a station three years to get a licence for a window. But a different petrol station might be illegal for failing to meet safety standards and different authorities do not necessarily communicate with each other to tease out the serious issues from the trivial ones.

And the House Environment Committee was yesterday told that 250 out of 600 industrial units that could trade carbon emissions in Cyprus as part of an EU policy on climate change did not actually have town planning permission. The Green Party’s deputy, Giorgos Perdikis, said this had to do with a lack of coordination between different state departments.

“The civil service should be one. [It] should have a horizontal structure and work as a well-wound clock if we are to get out of this financial crisis, or else we’ll end up in square one,” Perdikis said.

Hasikos said yesterday that over 30 different departments may be involved in a single town planning permission, and added he was consulting with all stakeholders as part of a move to encourage development and “change gear in the civil service”.

“What we are attempting today, which will take place with all departments in collaboration with private consultants, is to bring things to a point where the time taken to issue a town planning permission does not go beyond three months,” Hasikos said.

The minister conceded the number of departments involved in issuing town planning permission could be reduced but said this would emerge from a consultation with stakeholders.

The goal is to give relevant departments two months to get the necessary papers to town planning which would then have a month to issue a licence, Hasikos said.

He said that whether people wanted to build a house or a hotel, the state “would not get in the way”.

The town planning department falls under the auspices of the Interior Ministry and is the proper authority for implementing town and country planning law and overseeing housing, planning and development control. It is also the administrative umbrella for local planning authorities.

CYPRUS Finance Minister Harris Georgiades presented the 2014 budget to Parliament yesterday, warning that it will be the most difficult year for the island’s economy.

He stressed the need for proper management of the €10 billion loan agreement with the Troika to avert a new Memorandum.

The Minister explained to MPs that a key feature of the budget is a reduction in public spending and that this was not an option but something that was imposed by the economic reality and many of the proposed savings should have been made a long time ago.

Mr Georgiades pointed out that the €10 billion loan agreement under the Memorandum is the government’s only source of funding and that it cannot afford expenditure increases at a time when the island excluded from borrowing on the international money markets.

He also said that there is a balance in the state’s coffers from the €4.7 billion that has been pumped in so far, which lead him to conclude that the next tranche will probably be very small.

The Minister was also reported as saying that restrictions on bank transactions, imposed after the Eurogroup’s decision on Cyprus in March, will be gradually lifted by spring 2014, with the exception of the transfer of money to banks abroad.

Referring to the banking restrictions during an interview with Bloomberg in September, President Anastasiades was reported as saying that “The controls are being lifted. They will end within a timeframe of January 2014.”

This latest announcement by the Finance Minister will not be welcomed by those who have managed to sell their properties on the island but who have been unable to repatriate the total proceeds from their sale to their home countries.

Update 25 October (Cyprus Mail)

CYPRUS has scrapped more financial restrictions imposed after its international bailout in March, taking a further step towards undoing currency controls designed to prevent a run on its banks.

The finance ministry said it had scrapped a requirement for supporting documentation on domestic business transactions exceeding €300,000, though a bank could still seek such information if it deemed it was necessary.

The ministry also raised the threshold for businesses making transactions abroad to €1 million for each deal from €500,000.

Cyprus’s finance minister had told lawmakers on Monday he anticipated all currency controls related to domestic transactions would be lifted by spring 2014.

Friday’s decree was the 22nd since the island became the first euro zone member to enforce capital controls at the end of March. It is applicable until November 24.

Under the strict financial controls, travellers abroad could initially not shift more than 1,000 euros out of the country. This has now been raised to €3,000.

There have also been relaxations on the amount of money individuals could transfer from one bank account to another for payments, with the limit now set at €15,000 without the need for approval.

In return for €10 billion in aid from international lenders, the island in March agreed to wind down one major bank – Laiki – and impose losses on depositors in a second under-capitalised bank, Bank of Cyprus.

Other subsequent restrictions such as a €300 daily withdrawal limit for individuals, a ban on the cashing of cheques, a ban on breaking fixed-time deposits and the opening of an account at another bank remain in place.

European Central Bank data on Friday showed cash withdrawals from the Cypriot banking system had slowed in September.