New mortgage-to-rent scheme by the government to help homeowners: what you need to know
27 novembre 2023

New mortgage-to-rent scheme by the government to help homeowners: what you need to know

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To help homeowners who are struggling financially, the government is introducing the "Mortgage-to-Rent" program on December 4. In order to assist individuals maintain their houses, this project entails paying off loans.

In a major step to assist homeowners facing financial challenges, the government is set to launch the "Mortgage-to-Rent" program on December 4. With the help of this innovative project, struggling households will be able to keep their houses and have their debts canceled. Here's a detailed explanation of everything you need to know about this significant program.

At a press conference, Finance Minister Makis Keravnos presented the scheme, highlighting its part in a larger plan to deal with non-performing loans and close current gaps in assistance programs. It is recommended that qualified homeowners investigate this potential as a proactive measure to address their housing-related issues.

The European Commission has approved the plan, which requires qualified borrowers to give the state-owned Asset Management Agency, KEDIPES, ownership of their residences. In exchange, the state would pay their rent to KEDIPES for a duration of 14 years and totally write off their outstanding loans. Interestingly, after five years, tenants can still choose to buy back their houses.

The scheme's budgetary components were explained by George Panteli, the Permanent Secretary of the Finance Ministry, who estimated that the program will cost €200 million over the next two years, or 0.9% of GDP.

The importance of the program for vulnerable borrowers was emphasized by Lambros Papadopoulos, President of KEDIPES, who also emphasized its advantageous conditions in comparison to similar efforts in other EU member states. As security for non-performing loans, KEDIPES will purchase main houses up to €250,000, or 65% of their market value. After the banks write off the remaining loan debt, KEDIPES will rent the residences to the borrowers, with the state paying the rent for a period of 14 years.

Participants who receive public assistance allowances and mortgage holders whose primary residences are worth up to €350,000 but are declared non-viable under the Estia and Oikia programs are eligible.

Speaking to concerns of strategic defaulters, Minister Keravnos stated that the program, in conjunction with proposed legislation, has the ability to recognize and handle incidents of this nature. Although about 2,500 debtors are eligible for the program, KEDIPES projects that, based on the participation rate of other programs, namely Estia, about one-third will take part.

To summarise, the Mortgage-to-Rent system is a purposeful effort by the government to offer a fair and comprehensive solution to homeowners who are experiencing financial difficulties. It targets both households who are considered vulnerable and those that have been classified as strategic defaulters.