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Cyprus

Deputies discuss plan to protect first-time homeowners

The state could buy up homes and allow the owners to rent for a period of time

By George Psyllides

THE government is looking to protect first residences from foreclosure and people from eviction, by buying the property and allowing people to stay for a fee, it emerged yesterday.

Lawmakers at the House human rights committee heard that the finance ministry was studying a scheme that concerned loans of up to €200,000 taken out to buy a first residence.

In case the borrower could not pay, the state would step in and buy the property and allow the people to live there for a fee in the form of rent.

Conditions would be set for long-term repayment of the amount, according to the scheme, but no other details were disclosed.

DISY MP Rikkos Mappourides said there were several issues that needed clarification, like which homes would be protected, the size, and the minimum values.

Mappourides said MPs wanted to know how borrowers would be safeguarded and how they could eventually buy back the property.

AKEL MP Skevi Koukouma charged that banks were encouraging people with problematic loans to sell their houses, or give them to the bank and pay rent.

The scheme, or something similar, was floated during the summer.

At the time it had been reported that it would be implemented through the Cyprus Land Development Corporation (KOAG), a semi-state corporation that is under the jurisdiction of the interior ministry.

KOAG will buy from the banks properties facing foreclosure at their current estimated market value.

In the event this value exceeds what the property owner owes to the bank, the difference will be credited to the homeowner’s account.

The plan provided for low rent, and promised to keep confidential a person’s change of status from property owner to tenant.

To implement the scheme, KOAG would be topped up with an additional €60 million for three fiscal years (2013, 2014 and 2015), it was said.

The finance ministry claimed the plan could be implemented with a “neutral fiscal effect.”

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