The issue of the cost of buying houses or apartments in Cyprus is well known and has become a significant concern, especially in recent years. There is certainly a particular problem in the level of residential rents, as rents and values have increased by around 20% in cities over the last two years. This surge is attributed to inadequate construction of new units and a shortage caused by Airbnb-type short-term rentals with very high rents.
The increased number of students has added to the demand in areas close to various colleges. Coupled with private sector salaries remaining stagnant, especially for lower-paid roles such as ordinary office staff, the situation is becoming increasingly untenable. Focusing on the issue of rents in particular, the problem is expected to grow. Here are some proposals to alleviate the housing crisis:
Increase of Area Ratio
In cases within or on the periphery of cities, increasing the building coefficient by 30-40% on land beyond 2,000 sq.m. could be beneficial. This increase would apply to projects that will be let out for at least 10 years with relevant evidence. These units can also be sold to third parties, provided that these buyers have the same obligation to rent.
The Nonsense of Minimum Areas
The abolition or reduction of minimum area restrictions, which have been in place since 1990, could lead to an increase in units and a reduction in costs. For instance, apartments for rent for a decade should not require a parking space per apartment but one space per two apartments. This proposal would reduce construction costs and consequently rents, making it suitable for student rentals.
Low-Cost Units
There is debate over whether to import prefabricated wooden units or involve the Land Development Agency in increasing the number of new settlements. Regardless, it will take 2-3 years for these measures to begin resolving the issue. As a temporary measure, apartments for rent should be entitled to a tax reduction for five years to encourage existing owners to rent.
A large percentage of landlords withdraw their units from rent due to defaulters exploiting lengthy court proceedings. A partial adoption of a proposal for immediate eviction with summary procedures in court, reducing the eviction period to no more than three months, could help mitigate this issue.
Colleges and Universities
These institutions could rent directly from owners and sublet to students. An investor would likely offer a lower rent if renting multiple units with secure income rather than chasing individual students. Although these institutions would bear some cost, they could outsource management to private offices, helping solve their students’ housing issues.
Housing Finance Corporation & Land Development Agency
These state-owned organizations currently lack the capacity and appropriate land to construct developments at a scale that would address the problem. Constructing 50-100 units per annum across Cyprus does not solve the issue immediately or in the future. Immediate discussion with the Minister of the Interior is needed, focusing on abolishing or reducing minimum areas and increasing building coefficients before adopting other measures.
Everything else is theory aimed at keeping the public happy, especially in an election year.
