President Nicos Anastasiades on Thursday signed the foreclosures law, almost two weeks after he referred it back to parliament.

Signing the law means it will be published in the government gazette and come into force.

The foreclosures freeze law has been a thorny issue for the government, with Anastasiades saying it aims to reward loan defaulters rather than protecting vulnerable groups.

It was voted into law in November, where deputies voted to extend the foreclosures freeze until the end of January 2023.

Anastasiades refused to sign off the law and sent it back to parliament. As was expected, parliament rejected his motion to recall the law.

If parliament rejects a referral, the President has two avenues: either sign it or send it to Supreme Court to assess its constitutionality.

Government spokesman Marios Pelekanos told the Cyprus Mail that since parliament did not accept his referral, Anastasiades had no other choice but to sign it.

“Sending it to Supreme Court was not an option. This was the path he took six months ago, and the law was declared constitutional.”

“The government said it disagreed with the law, sent it back to illustrate this but it is the parliament that legislates.”

In June, the Supreme Court overruled the objections raised by the attorney-general – representing Anastasiades – and said the bill violated neither the right to freely enter a contract nor the principle of separation of powers between the executive and legislative branches of government.

Moreover, the court found that the state did not prove its case when arguing that extending the moratorium on foreclosures would cause banks to increase their provisions on loans, given that the extension was “a temporary measure.”

The moratorium on foreclosures applies 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.

Both the government and the Central Bank had warned against a new freeze on repossessions, saying it would undermine the island’s foreclosures framework and jeopardise the country’s sovereign credit rating.

They also cautioned it would encourage strategic defaulters and lead to an increase in the stock of non-performing loans, forcing banks to raise their capital provisions.