Addressing the Affordable Housing Challenge in Cyprus
In the face of a growing affordable housing crisis, Cyprus, alongside other EU nations, is grappling with socio-economic challenges. The Liege Declaration, a recent initiative by EU housing ministers, has called for a European New Deal for Affordable and Social Housing. This ambitious plan aims to foster collaboration among EU institutions and stakeholders through annual summits and the establishment of an EU Platform to share best practices and build partnerships.
The European Investment Bank (EIB) has highlighted in its discussion paper that land use regulation is a key factor influencing housing affordability. In Cyprus, proposals from Etek and the Productivity and Competition Committee have been considered, but a comprehensive solution remains elusive. The interior minister has suggested measures such as Build to Rent schemes and tax relief on rents to encourage private sector investment in affordable housing.
Development of affordable housing is crucial, with factors like land prices, construction costs, and financing playing significant roles. Government-owned land in prime locations is being considered for development, while agricultural land not used for sustainable farming could also be repurposed. The Cyprus Land Development Corporation (CLDC) could potentially facilitate this by borrowing from European institutions to lend to private developers.
Financing of affordable housing requires long-term, low-cost solutions. The CLDC’s role could be pivotal in securing funds from entities like Invest EU and the EIB. Additionally, Public-Private Partnerships (PPP) and hybrid models with government support could offer viable alternatives for project financing.
When it comes to ownership of affordable housing, public sector regulation is key, with models like community cooperatives being considered. Based on successful European examples, such as Vienna’s Limited Profit Housing Associations, Cyprus could explore Social Enterprises (SE) focused on affordable housing, where profits are reinvested into the sector.
Governance of affordable housing ownership is essential for the system’s effectiveness. Good governance involves clear stakeholder roles and state involvement in setting up favorable conditions for private funding. The SE model, regulated by the Commissioner of Co Operatives and Social Enterprises, could ensure accountability and transparency through internal and external audits and government oversight.
Erol Riza’s insights into the pillars of development, financing ownership, and governance of affordable housing highlight the multifaceted approach needed to tackle Cyprus’s housing challenges. With proper implementation and regulation, new initiatives may pave the way for resolving the affordable housing shortage in Cyprus.
