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Property

Cabinet tweaks Estia criteria pending EC approval

Estia allows households to benefit by having one third of their monthly loan repayment subsidised by the taxpayer

THE cabinet on Thursday gave the nod to minor tweaks to a controversial debt relief scheme for vulnerable homeowners, with the government now awaiting final approval from the European Commission.

Dubbed Estia, the scheme’s beneficiaries will have one-third of their monthly loan repayment subsidised by the taxpayer.

It applies to households and small and medium-size enterprises which have non-performing loans with primary residence worth up to €350,000 as collateral.

The alterations to the scheme, announced by finance minister Harris Georgiades, relate to the eligibility criteria.

“The changes to Estia do not alter its substance, its philosophy, but they are changes which make the plan fairer and more functional,” Georgiades told reporters.

To be eligible, a household’s annual net gross income must not exceed €60,000 for couples with four dependents or more; €55,000 for a couple with three dependents; €50,000 with two dependents; €45,000 with one dependent; €35,000 with no dependents; and €20,000 for single persons.

Previously, all households (irrespective of dependents) with an annual income of up to €50,000 had been eligible.

Additionally, under the updated criteria, a household’s net assets, excluding the primary residence, cannot be more than 80 per cent of the market value of the primary residence. The cap on the value of the other assets is €250,000.

During the first seven years of repayment of a restructured loan, a floating interest rate will be charged, based on the six-month Euribor rate plus 2.50 per cent.

The aggregate interest rate (six-month Euribor plus margin) of a restructured loan cannot be greater than 3.5 per cent.

“We are aware that there cannot be such a thing as a perfect scheme,” Georgiades said, responding to criticism.

“But it’s a necessary action, one that will allow to us to tackle definitely this huge legacy of non-performing loans,” he added.

The scheme requires approval from the European Commission, which must ensure that it does not constitute state aid.

The Commission is expected to weigh in sometime in November, said Georgiades.

Assuming it gets the go-ahead, the Estia scheme is slated to go live on January 1.

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