By Peter Stevenson
THE SMALL shopkeepers’ union POVEK on Friday hailed Thursday’s decision by deputies to approve new legislation which aims at slashing residential and industrial rents.
It is hoped the reduction in rent, which will last for a year, will ease the pressure on tenants and shopkeepers during the financial crisis.
POVEK called on the state to adopt other new practical measures to reduce interest rates, extend loans and provide small businesses with liquidity and funding assistance. The union also called on the government to restore normal working hours after it had decided to extend the decree allowing shops to stay open later and on Wednesday and Saturday afternoons and Sundays back in July.
“We would like to thank the parliamentary parties of AKEL, DIKO and EDEK and MPs George Perdikis from the Green Party and Demetris Syllouris from EVROKO for their positive vote,” a POVEK statement said.
It added that it is a practical and positive measure in the right direction which supports small businesses, tenants of business premises and other vulnerable groups.
“Taking into consideration the negative impact of the financial crisis and the current state of affairs that we are facing financially and socially, implementing this measure for a year will give hope to thousands of tenants,” the statement said.
POVEK called on property owners who have not reduced their rents off their own bat to now go ahead and do so in an attempt to restore the relationship between tenants and owners that might have been damaged during the financial squeeze.
But the Industrialists Union (OEV) on Friday strongly opposed the decision to reduce rents.
“Firstly the government is intervening in agreements between owners and tenants that are already regulated and the majority of owners have agreed to reduce rents, in some cases less than the amount which has been set by the new law,” an OEV statement said.
OEV said it believes that the new legislation is one-sided and is aimed at protecting the interests of tenants, ignoring the needs of property owners.
“The market has already regulated itself according to the current financial situation after agreements were reached by tenants and owners so the only thing the new law achieves is to confuse and cause problems,” the statement said.
Legally fixing rents will discourage investors, both Cypriot and foreign, who wish to purchase property on the island, as the result of their investment – i.e. rent – will not be dependent on the market, the union added.
“By reducing rents there will be an increase in the number of non-performing loans at banks while the value of property which is connected to rent will fall with a chain reaction of consequences hitting the construction sector,” OEV said.
The union called on President Nicos Anastasiades to refer the law back to parliament and for MPs to review their decision.
AKEL MP Yiannos Lamaris said that the move to approve the legislation on Thursday was a small yet important step in helping thousands of traders, tenants and households.
“We would like to express our satisfaction that even after a number of months of discussion an agreement was reached with all the political powers,” he said.
Residential rents up to €300 will see a reduction of 15 per cent (up to €45). From €300 and above, a reduction of 20 per cent applies, with a maximum reduction in absolute terms of €120.
Commercial rents up to €600 will be slashed by 15 per cent (€90). For rents in the €600 to €2,000 bracket, there will be a 20 per cent decrease, but with a reduction cap of €250, including the €90 in the first bracket. Rents over €2,000 will see a reduction of 20 per cent with a cap of €400.
The law has starts from November 1 this year and ends on October 2014. It applies to all contracts (rents and leases) concluded prior to October 2012.
Lawmakers however have omitted to provide for a mechanism to resolve disputes, for example in the event a landlord refuses to comply with the provisions of the new law.