House votes against freeze on property foreclosures

By Elias Hazou and Andria Kades

 

The House on Thursday voted against another extension to a freeze on property repossessions, the majority of MPs deciding to give the new government some time to come up with its own proposals to assist distressed debtors.

The previous halt on foreclosures had already lapsed at the end of January – meaning that property repos have since legally resumed.

Parliament had fast-tracked a bill – co-sponsored by Akel, the Greens and Edek MP Costis Efstathiou – to renew for another three months the moratorium on property repossessions by banks.

But the bill was defeated in a vote of 19 for, 22 against.

The Diko party, who had previously consistently supported freezes on property repos, swung to the other camp and joined Disy by voting against a new extension.

At the plenary session, Diko had tabled an amendment of their own – instead of an extension of three months to the moratorium, they proposed one month.

This, said party leader Nicolas Papadopolous, would give the administration ample time to come to parliament with proposals to resolve the issue.

Papadopoulos said he had information that the new finance minister has some “ideas” about the issue.

What Papadopoulos had in mind was the prior government’s proposal for a mortgage-to-rent scheme.

“It won’t be the end of the world [if the freeze extension is not passed], since the previous deadline has already come and gone,” he offered.

Diko had said that if its amendment did not pass, it would vote against the repos extension bill – which is what happened.

On the same wavelength, Dipa MP Alekos Tryfonides said his party agreed with the proposal to give the finance minister two weeks to come with proposals for dealing with non-performing loans.

But he also conveyed the message to credit-acquiring companies that they should cease their “predatory assault” on homeowners until parliament can “restore balance in the relationship between banks and borrowers.”

In his own remarks on the House floor, Akel’s Giorgos Loukaides agreed that lenders were taking advantage of the resumption of repos to “kick people out of their homes.”

Under the mooted mortgage-to-rent scheme, intended to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily surrenders ownership of their home to their lender. An entity buys the home from the lender and becomes the landlord. The borrower no longer owns their home, but will continue living in as a tenant.

The scheme needs the nod from Brussels.

The mortgage-to-rent plan was seen as the previous administration’s lifeline to some 4,000 distressed borrowers, after the lack of success with the ‘Estia’ debt relief scheme.

The plan was for Kedipes – the successor entity set up to manage the non-performing loans, real estate and other assets of the failed cooperative bank – to acquire the properties tied to the mortgage at 50 per cent to 60 per cent of their current value.

This way, the debtors would maintain occupancy of the property but not its ownership.

In exchange, the outstanding debt would be written off.

Borrowers will then be given the option to stay in the property, paying rent equal to 2 per cent or 3 per cent of its market value.

The value of the home must not exceed €250,000.

Foreclosures freezing has long been a contentious issue. The last time deputies voted to extend the freeze until the end of January 2023, the Bank of Cyprus chief called it ridiculous, and a move “tragic for the country.”

Last year, former President Nicos Anastasiades sent the bill to the Supreme Court citing unconstitutionality, however court ruled against the appeal.

Temporary foreclosures freezes have been implemented since 2021, usually for a span of a few months, until MPs vote it through into law anew.