The problem of stranded property buyers in Cyprus has escalated again.
Recently, the Association of Distressed Loan and Mortgage Management Companies (SEDP) decided to lift the moratorium on house auctions and repossessions previously agreed with parliament.
This poses a threat to property owners who could lose their homes due to the debts of construction companies. Nikos Tornaritis, Chairman of the Parliamentary Legal Affairs Committee, expressed his deep displeasure in an official letter to the Chairman of the Board of SEDP. In the letter, he strongly condemned the association's refusal to extend the moratorium on the sale of mortgaged properties until the new legislation protecting the rights of distressed buyers comes into force. Tornaritis urged the agency to refrain from any action regarding the sale of assets until the matter is finally resolved.
The letter also stressed that the need to temporarily suspend the auctions was necessitated by a recent ruling by the Court of Appeal, which declared unconstitutional the provisions of the current law that provided protection for such buyers. As a result, the situation requires urgent legislative intervention.
The Chairman of the Commission recalled that Parliament is already in the final stages of drafting a new law to fill the legal vacuum that has arisen. The text of the document is expected to be presented and discussed in the coming weeks.
In his letter, Tornaritis said that Parliament intended to act swiftly and responsibly to protect citizens who had invested in housing in good faith. He expressed hope for the cooperation of SEDP and urged the association to refrain from conducting sales, auctions and other foreclosure actions until at least the end of July 2025, when discussions on the legislative changes are expected to be completed. Tornaritis stressed that the issue at hand is extremely complex and requires in-depth analysis, as it affects the rights of thousands of buyers and the sustainability of the property market as a whole.
It should be recalled that the Parliamentary Legal Affairs Committee had earlier called for a moratorium on the sale of all mortgaged properties in Cyprus pending the adoption of a new law aimed at resolving the problems of thousands of stranded property buyers.
Specifically, officials began looking for solutions after the Supreme Court ruled that certain parts of the Property Transfer and Mortgage Law 2015, Law N. 139(I)/2015, were unconstitutional.
The committee asked banks and lending institutions not to touch troubled borrowers until the new rules are in place. KEDIPES and SEDP agreed to make concessions and imposed another moratorium until the end of April 2025. At the same time, the organisations said they would continue to send notices to their clients asking them to submit all necessary documents to prove their legal rights to the property.
For its part, the Cypriot government, with the help of legal experts and other stakeholders, intends to finalise and adopt a law that will allow for the issuance of separate title deeds for trapped buyers. The working group is preparing a new draft law, which is expected to be submitted to Parliament for a vote shortly.
The bill contains six major changes to the current law. Its main purpose is to allow the Land Department to cancel previous encumbrances (such as mortgages) and transfer title to buyers. Other changes include stricter application and review deadlines, requiring the consent of previous owners of distressed properties to sell them, and setting a two-year deadline for issuing a certificate of title. According to preliminary estimates, the changes will affect about 4,000 people.