Mortgage-to-rent scheme launched amid massive interest (updated)

The Cyprus Borrowers Association (Syprodat) on Monday released a statement expressing its satisfaction with the official launch of the mortgage-to-rent scheme, which went into effect today.

The scheme has already recorded massive interest, according to statements made by state-owned asset management company Kedipes, the organisation charged with the implementation of the scheme.

The association urged all eligible borrowers to seriously consider applying to the scheme in order to “seize the opportunity that it presents”.

Syprodat highlighted that the main goal of the plan is to protect the homes of families who are in a vulnerable financial position by making sure they can completely pay off the loan tied to their primary residence.

Eligible borrowers categorised as “trapped buyers”, meaning those who have deposited their sales contract with the Land Registry and have secured the so-called “distribution document”, are entitled to apply for participation in the scheme.

Under a 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 for five years to their lender.

An entity, in this case the state-owned asset management company Kedipes, buys the home from the lender and becomes the landlord.

During that time, the borrower no longer owns their home but will continue living in it as a tenant.

Furthermore, the scheme stipulates that applicants meeting the basic criteria – provided they have a title deed – will transfer the title to Kedipes, who at the same time will sign a 14-year rental contract with the individual concerned.

Moreover, under this plan, the state will cover the rent for a period of 14 years, with an option for the previous owner to re-acquire the property after five years.

This gives the tenant, meaning the previous owner, or a first-degree relative, the right to repurchase the residence.

The repurchase price will consider property value changes, expenses, and rental payments.

In their announcement, Syprodat specified the criteria for the scheme. These encompass unserviced loans securing the primary residence up to €250,000, and specific beneficiaries of certain allowances.

It also includes borrowers with a primary residence with a value of up to €350,000 which was previously considered non-viable for inclusion in other housing schemes, such as the Oikia initiative, as well as individuals whose participation in such housing schemes has expired or ceased.

“The homeowner becomes a tenant for a duration of 14 years or until the end of their life if they are over 65 years old,” Syprodat said.

“The tenant has the right to repurchase the residence after five years and before the expiration of the 14-year period at a fair price, considering factors such as property price changes, expenses, and rental payments,” the association added, noting that “repurchase can be executed either by the entitled person or a first-degree relative”.

Syprodat concluded by stating that in the event of non-repurchase, “the ownership of the property remains with Kedipes”.

Meanwhile, Kedipes, who is in charge of implementing the scheme, on Monday said that the call centre created to support the applicants of the scheme has been receiving hundreds of calls since the official launch of the scheme.

In addition, people are visiting the Kedipes regional service offices in Nicosia, Limassol, Larnaca, Paphos, and Famagusta.

In a statement, the president of Kedipes Lambros Papadopoulos expressed satisfaction with the positive response to the scheme so far and highlighted that applications are now being accepted.

He urged eligible borrowers “to seriously consider this opportunity offered by the scheme, as it provides a very favourable settlement for their non-performing loans”.

Moreover, operators at both the regional service offices and the Kedipes telephone centre, which can be reached by dialling 22-743400, are available to answer questions and resolve any queries, especially regarding borrowers’ potential eligibility, and to assist in completing their applications.

What is more, according to Kedipes’ estimates, there are approximately 2,500 eligible borrowers. The scheme will be open for a total of nine months.

Applications can be submitted at the five Kedipes service offices, where application forms can be obtained, as well as from the official Kedipes website, which can be accessed by clicking this link: www.kerdipes.org.cy.