Interior Ministry unveils new unified housing policy

In an effort to alleviate the housing problem, the Interior Ministry has unveiled a new unified housing plan featuring multi-level actions and measures employing €77 million over a five-year timeline.

The Minister of the Interior, Constantinos Ioannou, presented the new unified housing policy that was drawn up, and which, as he explained, includes solutions and measures that move on two axes.

The first axis includes short-term and long-term measures which will increase production in the housing stock and ensure, in addition to the numerical increase, the availability on the market of houses and apartments, which will be rented or sold at affordable prices that are not prohibitive for the low-income and medium-income classes. This is because, in addition to the production of new residential units, incentives will be offered for the utilisation of the existing idle stock, in order to provide immediate options.

Within the second axis, measures have been included that facilitate citizens' access to affordable housing, aiming to provide options and solutions to population groups with specific characteristics, enhancing their purchasing power.

The focus, as Konstantinos Ioannou mentioned, concerns young people, young couples and families, low-income households, the moderately paid, but also the socially vulnerable, without deviating from the state's fiscal capabilities.

PILLARS OF NEW HOUSING POLICY

A. AFFORDABLE HOUSING

Defining the target population:

1. The target group of the programmes is the population group that can gain access to affordable housing either through ownership or through affordable rent.
2. For the purposes of determining this population group, the income categories used in the existing plans of the Welfare Service, Cyprus Land Development Corporation and the Housing Plan for Critical Areas have been selected:

• Individual Single Persons: Up to €25,000,
• Couples (family of two) or a single parent family: Up to €45,000,
• Family of 3: Up to €50,000,
• Family of 4: Up to €55,000,
• Family of 5 people or more: Up to €65,000

Determining affordable rent:

1. Affordable rent is defined per province (and in more detail per Municipality) and per type of apartment, based on the market rent (average market price reduced by 30%).
2. The calculated average affordable rent will be the upper limit for affordable housing purposes.
3. Monitoring and readjusting the calculations according to changes in the market rent and evaluate any distortions will be required.

Determining affordable home purchase costs:

The affordable housing for purchase will be determined by the Cyprus Land Development Corporation based on the construction cost price which will be adjusted on an annual basis

PROPOSALS/PILLARS

A1. MEASURES TO INCREASE THE SUPPLY OF HOUSING

Renovation and rental plan for inactive residential units

1. It aims to bring vacant/idle homes into the rental market by subsidising the owners for their renovation/upgrading.
2. Owners: natural or legal persons
3. The goal through the above incentive is to include a percentage of the units in question in the market (around 1,000 in total, over a period of 2 years)
4. The residential unit should be listed as vacant / unused for the last 12 months preceding the date of publication of this plan, i.e. based on the EAC account statement, the consumption of electricity should not exceed 200 kilowatt hours per year.
5. The residential unit must be at least 15 years old.
6. The subsidy concerns renovation/repair costs, which are proven by relevant documents with the following upper limits of financial support:

• for a 1-bedroom residential unit up to €15,000
• for a 2-bedroom residential unit up to €25,000
• for a 3-bedroom residential unit up to €35,000

Renovation work must be completed within 6 months from the date of approval of the application.

• Renovation with a minimum rental obligation at an affordable rent*[1] for a period of 4 consecutive years (annual contracts).
• Beneficiaries of the plan's affordable housing: See target population above. Beneficiaries will be approved through the Implementing Agency of the Grant Scheme.
• All available units will be registered on a website platform that will be created for this purpose on the website of the Affordable Housing Agency.
• The above scheme is the most direct means of strengthening the market with available units is attractive since it is accompanied by the following tax incentives:

- Income from affordable rent will be exempt from income tax at 60% for the period it remains affordable.

- Additional exemption of 3% of the extraordinary defence levy for all properties included in the plan

- Increased capital allowances for the period they remain in the affordable rent scheme (5% instead of the current 3%) on capital expenditure. In addition, increased capital allowances for the purchase of equipment on the subject property, 15% instead of the current 10%.

• Plan validity period: 2 years
• Start Time: 1st quarter 2024

Review of existing urban planning incentives

2.1 Expansion of urban planning incentives, with the introduction of two new alternative options for the utilisation of an additional building factor, depending on the needs and planning of each interested land development entity.

2.2 The new Special Housing Incentive concerns an increase in the maximum allowed building factor, as follows:

(a) up to 45% of the applicable one, for Residential Zones with a building ratio greater than 1.00:1 and

(b) up to 25% of the applicable rate, for Residential Zones with a building ratio equal to or less than 1.00:1.

2.3 The Incentive may be applied as follows:

(a) with a minimum net area of ​​1,000 sq.m. for incentive 2.2. (a) above and

(b) in immovable property with a minimum required net area of ​​4,000 sq.m., for incentive 2.2. (b) above.

It is understood that the incentive can be applied to new or ongoing developments.

2.4 For purposes of utilsing the Incentive, alternative options are provided as follows:

(a) utilisation of an increased building factor in the property under development, under the conditions of paragraph 2.3, with the obligation to provide affordable housing units, as follows:

(i) for incentive 2.2(a), the increase in building factor by 25% of the applicable amount to be distributed for the purposes of producing affordable housing (at the price of the construction cost of affordable housing as determined by the Cyprus Land Development Corporation), while the remaining part of the incentive, up to an increase in building factor by 20% of the applicable amount to be distributed for the benefit of the owner (at free market prices).

(ii) for incentive 2.2(b), the increase in building factor by 15% of the applicable amount to be distributed for the purposes of producing affordable housing (at the price of the construction cost of affordable housing as determined by Cyprus Land Development Corporation), while the remaining part of the incentive, up to an increase in building factor by 10% of the applicable amount to be distributed in favor of the property under development (at free market prices).

(b) Utilisation of the incentive, as mentioned in paragraph 2.2 and under the conditions of paragraph 2.3, by paying a sum of money (redemption) to the Affordable Housing Fund of the Management Agency, for the purposes of producing affordable housing, at a price determined by the Land Registry Department and building factor increased by 50% of the value of the General Estimate of the building factor.

The above incentives will only be valid for 2 years for all urban planning applications submitted from the date of validity of the incentives.

Expected Effective Date: December 2023.

Production of affordable housing units by the Cyprus Land Development Corporation

3.1 Implementation of programming within the existing Moderately Paid Housing Scheme for sale of units, Subdivision and Sale of Plots Creation of units / housing structures for particularly vulnerable groups and minors for Department of Social Integration of Persons with Disabilities and Social Welfare Service

3.2 State Financing of a total amount of €16 million for a period of 4 years for the production of 138 units of the Affordable Rent Project 1 project (St. Nikolaos Limassol).

Built to Rent plan on private land

4.1 New Special Housing Incentive concerning the design, construction and rental of a number of residential units with the utilsation of an additional building factor, with a commitment to rent most of the units in the development by the interested investor partly at market rent and partly to beneficiaries of affordable housing.

4.2 The new Special Housing Incentive concerns an increase in the maximum allowed building factor of up to 45% of the current one, for Residential Zones with a building factor greater than 1.00:1 and a minimum net area of ​​at least 1,000 sq.m.

4.3 For purposes of utilising the Incentive, the obligation is provided as follows:

(a) provision of all the units resulting from the factor increase (up to 45%) for rent at an affordable rent to beneficiaries, for a period of at least 6 years.

(b) provision of 20% of the residential units of the applicable building factor, for rent at market rent, for a period of at least 6 years.

(c) possibility of selling the remaining 80%, of the applicable building factor, of the units on the free market by the owner.

Subsequently, after the end of the mandatory period of availability of residential units with affordable or market rent respectively, it will become possible to pass the units on through sale.

It is understood that the incentive can be applied to new or ongoing developments.

The plan will be implemented in a similar way (disposal procedure, determination of beneficiaries, conditions and tax reliefs) with the "Renovate-Rent" plan.

The above incentives will be valid for 2 years for all urban planning applications submitted from the date of validity of the incentives.

Expected Effective Date: Q1 2024.

Quick Licensing Settings

5.1 Arrangement so that the Town Planning and Building Authorities consider as a matter of priority applications for developments that provide for the utilisation of town planning incentives for the production of affordable housing.

5.2 Urban planning applications, of the same interested party, which concern the production of residential development and which are submitted within one year of the start of the implementation of licensed development concerning the production of affordable housing, will also be considered on a priority basis by the Urban Planning Authorities.

5.3 Provided that, the mentioned applications concern developments on real estate for which the necessary development conditions of the area in which it is located have been ensured, that the said applications are submitted fully and complete and are fully compatible with the provisions of the applicable Development Plan, then the requested planning permission will be granted within two (2) months from the date of its submission.

Student Residence Plan

Re-evaluation of Order 1/2003 of the Minister of the Interior.

They will be examined after prior consultation with the Cyprus Scientific and Technical Chamber

A'2. MEASURES TO ENHANCE CITIZENS' ACCESS TO AFFORDABLE HOUSING

Housing subsidy scheme for young couples and/or young people up to 41 years of age

• One-off grant of €20,000 to a single young person, €45,000 to a couple and €50,000 to a couple with one or more children for the purchase of a residential unit.
• The beneficiary is a person who acquires a residence, which he will use for his own residence and provided that he or his spouse/cohabitant does not own or has owned in the last five (5) years preceding the date of submission of his application another privately owned residence himself.
• The total useful area for the acquisition of a residential unit cannot exceed 85 sq.m.
• Income criteria as specified on page 1.
• Financial aid is granted for the legal acquisition of a privately owned residence for permanent ownership for at least ten (10) years.
• The Plan concerns the provision of financial support for living in Municipal areas and the plot under development or consideration is within the limits of a residential zone/area. A Detailed List of Plan application areas/communities will be prepared.
• Plan validity period: 2 years

Mortgage Interest Rate Subsidy Scheme

• Implementing body: Ministry of Finance
• It will concern borrowers for whom loans of up to €350,000 and a subsidy of 2 percentage points for two years have been issued or will be issued during the period 1/1/2022-31/12/2023 at a calculated cost of €20 million per year.
• Application period : 2 years
• It will be addressed to households with an annual income of up to €50,000.

B. SOCIAL/ REFUGEE HOUSING

PROPOSALS/PILLARS

Plan to provide Social Housing in Refugee Settlements

A study is being carried out for the construction of housing units on suitable plots of land within the refugee settlements which will be part of a social housing plan, which will be implemented in collaboration with the Deputy Ministry of Social Welfare and will be provided to beneficiaries based on their special characteristics with a procedure to be determined by the Deputy Ministry.

Preliminarily, the construction of approximately 10 apartment buildings is estimated, with a maximum number of apartments of 16-20 per apartment building (about 160-200 apartments in total ), depending on the characteristics of the plot of land under development. The Plan is expected to start in 2025 with a 3-year implementation horizon.

Revision of plan for the allocation of plots to families with low incomes

Reinstatement of the Land Allocation Scheme for Low-Income Families under certain conditions.

• The state plot under development must be within a development limit, where the construction of a residence is permitted in the community area.
• The Community Council will forward a preliminary list with the number of interested young families who wish to be granted government land in the Community for the construction of their residence through the Housing Scheme for the Allocation of Plots to Low-Income Families.

Beneficiaries:

Marital status

Organic families, with or without children, should be defined as beneficiaries. Priority will be given in order to large organic families, organic families, divorced persons with parental responsibility for minor children. An organic couple is considered to be two people with a published engagement notice or official cohabitation agreement or marriage certificate.

Income criteria

Beneficiaries should be considered families whose annual income does not exceed the following amounts, depending on the case:

• Family Composition, Income Criteria (€)
• Couple (Family of 2) €45,000
• Family of 3 €50,000
• Family of 4 €55,000
• Large children of 5 persons and above €65,000

Plot value:

The price of the plot paid by the beneficiary should include all costs for the specific separation (infrastructure works, such as roads, water and electricity transport, etc.) and a percentage of 25% of the value of the plot. The land value will not include the area available for public open spaces and public road network.

Terms of repayment of the plot:

The applicant must pay the value of the plot upon signing the Rental Purchase Agreement.

Beneficiary Commitments:

(a) The beneficiary to whom a plot is granted will have the obligation to build a residence within a period of two years from the signing of the Rental Purchase Agreement.

(b) The relevant District Administration may approve an extension of the period for an additional year, if it considers that this is justified, while in exceptional cases it is possible to approve an extension for an additional year.

(c) The construction period of the residence will not exceed a total of four years, even in cases where the above extensions have been secured by the relevant Provincial Administration.

Duration of the Plan: 5 years

Continuation of disposal of existing 500 already separated unallocated plots.

(Source: InBusinessNews)