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Our View: Housing policies do not always benefit those in most need

ΠτΔ – Σύσκεψη για στεγαστική πολιτ

Hearing the announcement of the government’s housing policy plans for this year, people could have been mistaken into thinking that President Anastasiades would be seeking a third term. It was an announcement that had ‘elections’ written all over it, with government spokesman Marios Pelekanos going through a long list of planned expenditures on different housing schemes aimed to help people in need.

He also announced that 15 per cent of the state revenue from the Limassol casino resort, expected to be €35 million this year and €50 million in 2023, would go the Cyprus Land Development Corporation (CLDC) to finance housing schemes, including 800 affordable units over the next few years. These units would be made available to buy or to rent for ‘financially vulnerable’ groups. How a house or a flat would be made affordable for a ‘financially vulnerable’ family to buy, the spokesman did not explain.

The government has budgeted €125 million for housing policies this year, half of which will go to refugees, or to be more precise people with refugee ID cards, because most people who were actually forced to leave their homes in 1974 would be too old to be eligible to apply for housing loans. Some €22 million will be used to subsidise rents and interest on housing loans, which seems rather paradoxical. If someone could afford to buy a house, why is the taxpayer subsidising the interest? And who is entitled to subsidised rent? It is not people on minimum guaranteed income because there is another expenditure item of €12 million earmarked for them.

There were other interest subsidy schemes as well, not to mention the Estia scheme by which the state will help some 800 housing loan defaulters repay their loans at huge cost to the taxpayer. How many of the CLDC borrowers have defaulted on their loans? This is after all a state corporation that cannot be seen to kick people out of their primary residence because they are not making their loan repayments.

It is very difficult to know who is actually benefiting from these state ‘support’ schemes. Subsidising or covering the rent of people on minimum guaranteed income, or low-income, large families is justified, but providing ‘affordable’ units to buy and giving special assistance to people with refugee status when there are non-refugees who are more in need does not seem a very rational approach.

It is like the reduced VAT (5 instead of 19 per cent) for all primary residences up to 200 square metres, which benefited even the people buying €2m homes. According to the auditor general, someone buying a house of such a value would pay €70,000 VAT instead of €260,000. The European Commission has taken action against the Republic for its failure to comply with EU rules on VAT. This is a perfect illustration that the housing policies that the government is so proud of do not always benefit the people who need assistance.

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