Inclusion into the market of 30,000 empty homes with subsidies

Finance Minister Makis Keravnos will introduce a new plan to take in vacant homes into the rental market with affordable rates at the upcoming Cabinet meeting. The idea aims to provide numerous incentives to property owners to renovate or upgrade their empty homes and rent them out at lower prices.

The key motivation behind this proposal is a government subsidy that ranges from €15,000 to €20,000, depending on the number of bedrooms in the property.

30,000 vacant units identified

According to the National Housing Fund, there are now over 30,000 empty housing units in the country, the majority of which are single-family homes. The Finance Ministry's proposal aims to put these unused homes back into the market, providing much-needed affordable housing for families in need and young couples.

Subsidized rent at 30% below market rates

Under the proposed plan, property owners who receive state subsidies will be required to offer rents that are 30% below the current market average. Additionally, the plan includes tax incentives, such as the deduction of rental income from the owner's taxable income. Owners will also benefit from a reduction in the defence tax linked to rental income.

This move is expected to increase the availability of affordable rental properties, helping balance the rental market, particularly in high-demand areas like Limassol and Nicosia, where rents have increased in recent years.

Challenges keeping properties empty

A recent survey found that many of these vacant homes have remained off the market due to inheritance disputes, with heirs unable to agree on how to use the properties. Additionally, some of these homes are located in areas where land values have risen, making renovations unattractive to owners who prefer to wait for property values to increase further.

Bureaucratic delays and pending planning applications

Another big issue keeping houses off the market is a bureaucratic backlog in the processing of planning licenses. Polis Kourousides, President of the Association of Real Estate Appraisers, stated that over 33,000 housing units and apartments need planning approval. He stated that the existing bureaucratic delays are unreasonable and proposed that some of these applications be outsourced to the private sector to speed up the process.

Kourousides stressed that speeding the licensing procedure for these apartments would greatly reduce rental pressures, since the coming of so many additional homes would most likely result in lower rent prices.

Criteria for inclusion in the scheme

To qualify for inclusion in the scheme, properties must meet several criteria. The home must have been vacant for at least 12 months prior to the plan’s announcement, which is determined by energy consumption of less than 200 kWh per year, according to the Electricity Authority's records. The property must also be at least 15 years old and cannot be rented to immediate family members.

Additionally, the property must have all necessary legal permits, and in cases of co-ownership, the consent of all parties involved is required for participation in the program.

The government had previously announced the "Renovate Rent Plan," so that the first homes would be included in the scheme by the first quarter of 2024.