Applications for the new mortgage to rent scheme will be accepted starting October, the finance ministry said on Thursday, a day after the scheme was given the nod of approval during a cabinet meeting.

In an interview with the Cyprus News Agency, Ioanna Markidou, financial officer at the ministry, said that applications for the scheme will be addressed to Kedipes and that the process will be simple and with little paperwork.

It is expected that the plan will concern around 2,500 households which are struggling with mortgage payments. There will two categories for applicants, the first including people receiving guaranteed minimum income, single-parent families, households with multiple children, and people receiving disability living allowance.

The second category will concern existing applicants to the Estia and Oikia schemes who were either assessed as non-viable but high risk or who were originally approved for inclusion in the plans but subsequently had their membership terminated because they were unable to keep up with their payments

The maximum property value for those wishing to join the scheme is €250,000, with a higher maximum value of €350,000 for applicants who had previously been assessed as eligible for or part of the Estia scheme.

Markidou said that people who choose to join the plan will be able to remain in their current residence, but will become tenants in their properties rather than homeowners.

Following a preliminary assessment, Kedipes will buy the property at 65 per cent of its market value. That amount will be given to the mortgage lender, who in turn will write off the original loan.

In the case that 65 per cent of the property’s value exceeds the repayable amount on a former homeowner’s mortgage, the difference will be paid back to the owner.

Rental contracts will be drawn up under the scheme which will have a duration of 14 years, with the state covering rent costs.

After five years have passed following admission to the scheme, former homeowners or first-degree relatives will be eligible to buy their house back for the same price at which it was purchased by Kedipes, plus administrative expenses.

“We want people to buy back their house if they can”, Markidou said, adding that the plan will be presented to creditors, credit institutions, and loan management companies in September.

However, she warned that if a creditor does not wish to participate in the scheme, applications to the scheme involving that creditor will not be accepted.