Minister ‘disappointed’ as plenum approves further freeze on foreclosures

Disregarding warnings from the government and financial authorities, the House plenum on Thursday extended a freeze on property foreclosures to the end of October.

The bill – amending the laws governing the transfer and mortgage of immovable property – extends to October 31 a moratorium on repossessions.

It is the latest in a series of such extensions, with the initial freeze on foreclosures dating back to August 2021.

Despite prior and repeated warnings that a further extension would disrupt banks’ ability to reduce the stock of non-performing loans (NPLs) on their books, the majority of MPs voted in favour – arguing they wanted to protect homeowners amid the ongoing economic slump.

The moratorium on foreclosures relates to a debtor’s primary residence valued at €350,000 or less, business premises where the business’ annual turnover does not exceed €750,000, and parcels of land with a value of €100,000 or less.

Finance Minister Constantinos Petrides later expressed “great disappointment” with MPs for going ahead with the new extension.

In a statement, Petrides said their move foils the good work achieved by the passage of two other bills relating to debtors.

Those bills – relating to credit acquiring companies’ access to debtors’ financial information – were also passed on Thursday; and are crucial towards unlocking for Cyprus access to an €85 million tranche from the EU’s Recovery and Resilience Fund.

“As always just before elections, populist voices threaten the country’s credibility and its very economy,” said the minister.

“And this at a particularly difficult time when the economy faces international crisis; at a time when any downgrade of the Cypriot economy’s credit rating could spell disaster.”

The economy czar said he could not see the rationale behind MPs’ insistence on the foreclosures freeze, given that the government has rolled out various schemes aimed at affording protection to financially distressed homeowners.

“Suspending foreclosures at this crucial period also endangers the rollout of the much-anticipated ‘Mortgage to Rent’ scheme – a scheme worth €400 million which protects the residence of vulnerable households including the non-viable debtors under the ‘Estia’ programme, since the EU’s approval of it will depend on the effectiveness of the foreclosures framework.”

Petrides reiterated that an ineffective foreclosures framework “works punitively for consistent debtors, and involves risk for depositors, depriving valuable liquidity for investment and growth.”