Cyprus Parliament Extends Moratorium on the Sale of Mortgaged Property

Парламент Кипра продлил мораторий на продажи залоговой недвижимости
23 April 2021 Liza Medvetskaya

Cyprus Parliament extended on Thursday, April 22 the moratorium on the sale of mortgaged real estate until the end of July 2021.

In particular, 48 deputies voted for the suspension of sales of mortgage housing, and 6 were against.

Thus, problem borrowers received a grace period of 3 months.

It is worth noting that this time the officials decided to suspend the sale of property that is used as the main residence and the value of which does not exceed EUR500 thousand. Also under the moratorium are commercial premises owned by small companies with fewer than ten employees and an annual turnover of less than EUR2 million. Finally, the government froze the sale of land plots worth up to EUR250 thousand.

As you may know this bill was put to the vote in parliament by AKEL members Giorgos Loukaides, Stefanos Stefanou, Aristos Damianou and Andreas Kafkalias, as well as Christiana Erotokritou from DIKO.

Speaking at the plenary session, one of the speakers, AKEL deputy Giorgos Loukaides, noted that the new amendments were drawn up taking into account the conditions in which the inhabitants of Cyprus found themselves due to the coronavirus pandemic.

The deputies who voted against the introduction of the next moratorium noted that the 3-month ban on the sale of mortgaged real estate is not a solution to the problem, since in the end the owners will have to repay the debt to the bank or sell their real estate.

Some have mentioned the "Bill on the foreclosure of mortgaged property." In their opinion, it could have provided more substantial support, but "it was provocatively recalled by the government a few hours before the start of the plenary session."

Парламент Кипра продлил мораторий на продажи залоговой недвижимости

Meanwhile, on Friday, April 23, it became known that all the changes made by the Cypriot parliament to the "Law on the sale of mortgaged real estate" will be subject to the control of the supervisory authorities of Frankfurt and Brussels.

In this regard, the technocrats of the Central Bank intend to prepare a comprehensive report that will include all changes made by the legislature to the contested sales law. At the same time, the opinion of the national supervisory authority on the amendments will be recorded for appropriate assessment by the supervisory authorities in Frankfurt.

The technocrats of the Ministry of Finance have already begun to assess the changes in the bill on state guarantees introduced by the outgoing deputies of the current composition of the chamber.

The report, which will include the detailed views of the Ministry of Finance, should be sent to the European Commission's Directorate General for Competition to investigate whether the institutional framework of state aid is being violated.

By the way, the supervisory bodies in Frankfurt and Brussels are concerned about what has been happening recently in the Cypriot parliament.

The Cypriot authorities have already received a signal from the ECB and the Commission.

The leaders of these regulatory bodies are concerned about political interference with the sales law. According to the ECB, changes in the institutional structure for the sale of assets are not permissible. On the contrary, the legislature must ensure that changes are made that support banks' efforts to reduce NPLs, rather than lead to their possible increase.

Supervisory reluctance is not limited to amendments to the law in question, however, extends to the “tolerance” of the national banking supervisor to permanently agree to the suspension of the asset sale law.

So, the first suspension of sales was made for the period from March to June 2020, then it was extended until August, the next suspension covered the period from December to March 2021, and the fourth moratorium was introduced from April to July 2021.
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