The measures announced by President Nikos Christodoulides as part of the government’s housing policy did not come under any scrutiny. They were welcomed as the objective was to provide affordable housing, but nobody asked whether these measures would be effective and have the desired results.
Those that were straightforward – cash assistance to young home-buyers – will work, but schemes designed to secure ‘affordable rents’ by offering incentives to property owners and developers to provide housing are unrealistic. Offering young couples an amount of cash (ranging from €20,000 to €50,000) towards buying a home or subsidising the interest on their housing loan for a specified period of time is a clean arrangement, if the state can afford it.
It is questionable whether schemes such as ‘renovate to rent’ or ‘build to rent’ through the offer of a higher building coefficient will work. The idea is to increase the supply of housing to push down rents, but who would develop properties when there will be an obligation to offer these at ‘affordable rent’ which could be significantly below the market rates and not provide an adequate return on the investment?
As for the ‘renovate to rent’ scheme, aimed at encouraging owners to do up empty properties and put them on the market, the cash incentives, according to people involved with real estate, are unattractive – especially as the property would have to be rented at ‘affordable rent’ for four years. Would anyone apply for such a scheme, given the high prices of building materials and construction work?
Arguably, the biggest obstacle to the government’s schemes for ‘affordable rents’ is the law, which is heavily weighted in favour of the tenant. A property-owner, for example, is unable to evict a tenant that has not been paying their rent, or whose contract has expired. It takes, on average, five years for the courts to evict a tenant not paying rent. This is a disincentive to rent and is one of the reasons there are many empty properties.
No incentive scheme will work when no legal protection is offered to a property owner. The president of the Association of Property Owners told Stockwatch website, “the subsidy (for renovate to rent) is not enough for someone to rent at a low price and then not be able to get rid of the tenant, if for any reason he needs the house.” There is also the danger that after the four years of reduced rent, the tenant will refuse to pay a market rent or to vacate the property. The landlord would need another five years to secure an eviction order from the court.
It remains to be seen whether the affordable rent schemes will be taken up by anyone, but as things are, and with a legal framework that offers no real protection to property owners, it does not look very likely.
