In recent months, the problem of high rents has been all over the media. High rents cause social problems, especially for young couples and the lower paid, and discourage students from attending our colleges and universities.
Various suggestions have been submitted by politicians and others. There have been the usual demands for subsidising of rents (which might cause a further increase), the municipality of Limassol has offered units (it will regret it in two to three years) and there have been proposals for private residences to host students in for €200/month. None of this helps to solve the problem and, according to the Ministry of Education the number of students is expected to double in two to three years.
Regulations for the development of student accommodation has shortcomings and the the problem of statutory tenants is also an issue.
At the same time educational institutions seem to be indifferent to the problem, despite the fact that these institutions benefit from state land given to them for free, low interest loans and so on.
Even with these benefits the cost for universities to build units is approximately double or triple the cost in the private sector. Though some, like the University of Cyprus refuse to use the private sector, the issue can only be resolved with the participation of the private sector that is ready to offer the necessary units in various locations, units with incentives that will not cost the state money, except for the postponement of VAT collection.
A client of ours was looking into the construction of 160 student residences next to the University of Cyprus, which had permits and financing in place, but adding the VAT of 19 per cent increased costs to such an extent that it wan’t financially viable. Therefore, we suggested that the VAT be reduced to 5 per cent with the owner being obliged to rent the units for approximately eight to ten years and if the owner sold the units in the meantime, they would have to pay the state the 14 per cent difference.
Another issue is the absurdity of the existence of minimum extents for residential units pushing up the cost. As the prime minister of Ireland stated, “the market should build units that buyers can pay for.” This evidently is not for us blue-blooded Cypriots, because the position of the planning authority is that Cypriots should live in decent units. What nonsense is this? By extension Cypriots should not drive lower priced cars, regardless of whether they have the money for the more expensive ones.
Then the issue of unpaid utilities and common expenses and the labyrinthine process for evicting bad tenants do not encourage investors.
The matter is very urgent and should have been solved at least two years ago. Our government should have some vision in their approach, while it would not be unreasonable to suggest that the state should pressure the state institutions at least as a start. Perhaps we should also involve students unions in the effort, in an effort to jump start some kind of progress on the matter.
Antonis Loizou & Associates EPE – Real Estate Valuers, Estate Agents & Property Consultants, www.aloizou.com.cy, [email protected] FRICS