More than 950 property owners in Cyprus have applied for participation in the government's Mortgage for Rent program.
This was announced on Friday, February 9, by the head of the Cyprus Property Management Company (KEDIPES) Lambros Papadopoulos.
According to him, all applications are currently being actively processed. This process takes some time, as in the context of including potential beneficiaries in the plan, an appraisal of the property they own is necessary. In addition, the service center established by KEDIPES receives dozens of calls daily from potential beneficiaries who want to participate in the scheme. The greatest interest in the program is shown by residents of Nicosia. They are followed by residents of Limassol, Larnaca, Paphos and the free neighborhoods of Famagusta.
The acceptance of applications from potential beneficiaries began on December 4, 2023.
The Mortgage to Rent scheme covers overdue loans secured on the main dwelling up to €250,000.
Beneficiaries are people belonging to low-income groups and pensioners, whether or not they have applied to join the ESTIA and Oikiaia schemes.
The program is also open to borrowers who have defaulted on their mortgage but their application to join the ESTIA and Oikia schemes was rejected because they were classified as unviable due to low income.
A separate company, KEDIPES EED Ltd, was set up to administer the new scheme and will maintain separate accounting records, including a Fixed Asset Register. As part of the scheme, arrangements have been made to ensure the properties that will come into the possession of KEDIPES.
Call centers and service points have also been set up in 5 towns in Cyprus, staffed by qualified personnel who will be able to answer any questions the public and those interested in participating in the scheme may have.
The main function of KEDIPES is to buy up bad debts and other high-risk assets from Cypriot financial institutions.By transferring non-performing loans to the balance sheet of a "bad bank", the Cypriot banking system will be able to get rid of toxic debt totaling €10 billion. In turn, small borrowers will be less vulnerable to the threat of foreclosure of their primary residence if they default on their loans, as they will be able to participate in the "Mortgage to Rent" program.
As envisioned, KEDIPES will purchase mortgage homes from debtors. The troubled borrowers will then have the opportunity to rent their real estate from the "bad bank" for 14 years. During this period, they will be charged rents at 65% of market averages. By the way, the rent for each property will be set individually.
At the end of the term, they will be able to get the asset back if they pay the arrears. The current property price for borrowers in arrears will be equal to the price at which KEDIPES purchased the property, less the rent paid for 14 years. If the debtor is unable to buy the property back, for example for lack of funds or in the event of death, his next of kin will be entitled to do so on the same terms. Finally, if the conditions of the scheme are not met, after 14 years KEDIPES will be able to sell the property at its discretion.