How much will property owners in Cyprus be able to raise rent in the coming years?

Rent increase is one of the main problems that Cypriot tenants are facing today.

Over the past year, rental rates in Cyprus have increased 2 to 3 times. Many are wondering if there are legislative restrictions on rent increases in Cyprus?

It should be noted that in Cyprus, there is a difference in the regulation of rent depending on the age of the property. In other words, all properties are divided into two categories: those subject to the "1983 Rent Control Law (23/1983) as amended" (the Law) and those that are not.

Accordingly, the Law applies to properties built before January 1, 2000, except for certain special places outside the "controlled areas," and provides protection against substantial rent increases and eviction of tenants who are classified as "statutory tenants."

To fall under the Rent Control Law, the following requirements must be met:

1. A lease agreement has been concluded between the landlord and the tenant, provided that the tenant has a EU/EEA passport (exception: the tenant can be a citizen of a third country, is married to a Cypriot citizen).

2. The lease term has expired.

3. After the lease term has expired, the tenant retains the premises and pays the last agreed-upon rent.

4. The property is located in the territory of the Republic of Cyprus.

5. The property was built before December 31, 1999.

6. The tenant becomes a "statutory tenant" only if the premises in question were also leased or available for lease before December 31, 1999.

If all of the above requirements are met, the issue of rent increase is regulated by the Law, regardless of any provision of any lease agreement (valid, expired, or terminated), and any disputes related to rent are resolved in the Rent Dispute Court. According to the Law, the landlord can request a rent increase only every two years, and such an increase should not exceed the maximum percentage set by the Law.

Initially this figure was 14%, but by the end of 2022, it was reduced to 0%.

However, recently the Ministry of Justice issued a decree stating that owners of real estate falling under the Law's scope will be able to raise rent rates to their tenants by a maximum of 6% during 2023-2025.

The Council of Ministers, exercising the powers conferred upon it by subparagraph (a) of subsection (4) of Article 8 of the "Rent Control Law of 1983 (23/1983) as amended," on the recommendation of the Minister of Justice and Public Order, has set 6% as the upper limit for rent increases over two years, starting from April 2023 to April 21, 2025, the department said.

Under the Law, a landlord may request a rent increase only every two years, and such increase should not exceed the maximum percentage set by the Law.

Based on the above, if the landlord requests a rent increase of more than 6%, any legal tenant has the right to refuse it, giving the landlord the opportunity to file a claim in the Rent Disputes Court to establish a fair rental value. The same applies on the tenant's side, if the tenant believes that the rent is significantly higher than the market price. In such a lawsuit, the Rent Disputes Court will determine a reasonable rent, taking into account, among other things, the location, size, and year of construction of the building, as well as the condition of the premises.

It should be noted that if the rent does not fall under the Law's scope, the question of rent increase is mainly regulated by the provisions of the lease agreement.

If the lease agreement does not have clearly expressed provisions on rent increase, or if the written lease agreement is completely absent, the landlord may demand a rent increase, and the tenant, in turn, may demand a reduction. The parties can also negotiate and agree on revised terms, effectively changing the conditions of the original lease agreement. In case of disagreements on rent, either party, but more likely the landlord, may try to terminate the lease agreement or, in most cases, refuse to renew it, thus demanding the immediate return of the leased premises.

It should be noted that if the tenant refuses to vacate the premises due to termination or expiration of the lease agreement, the tenant must file a lawsuit in court for breach of the agreement. Unfortunately, legal proceedings (even in such cases) are very lengthy in Cyprus.

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