Newly approved regulatory changes and financial incentives, aimed at tackling the country’s housing challenges, are an innovative move for Cyprus, according to Interior Minister Constantinos Ioannou on Wednesday.

The Cabinet approved two key pillars of the government’s unified housing policy: the ‘built to rent’ and ‘renovate to rent’ schemes.

These plans offer additional free building coefficient—a measure determining the building-to-land ratio. They encourage developers to construct more residential units and motivate property owners to refurbish vacant properties, making them available in the market for rent at reduced prices.

The dual approach aims to boost housing supply, and the apartments built through the schemes should be offered at affordable rent. The plans also include tax incentives and exemptions.

Following the ministerial council session, Ioannou emphasised that the unified housing policy aims to provide affordable housing options for those in need.

The ‘built to rent’ plan on private land offers an additional free building coefficient of up to 45 per cent, combined with tax incentives. The goal is for developers to offer the additional apartments resulting from the increased building coefficient for at least six years at affordable rent. Approximately 800 additional residential units are expected to be built through this plan over the next three years.

Regarding the revised town planning incentives, the modification grants a free increased building coefficient of up to 45 per cent.

Land development professionals are required to allocate 25 per cent of the additional units for sale at affordable prices.

For example, with a 45 per cent increase in the coefficient, if 100 apartments were to be built, now 145 can be built instead. Out of these, 25 must be offered for sale at prices for affordable housing.

Ioannou underscored that by providing the free building coefficient, a state asset, they demonstrate support for the welfare state.

Interested parties can apply for participation in the plans as of Thursday.

When asked about the ‘Renovate-Rent’ plan, Ioannou mentioned that the detailed guide for the plan and its implementation start date will be published in January. This plan encourages property owners to renovate their unoccupied properties, making them available in the market at discounted rates.

Ioannou expressed confidence in the interest in all housing policy plans, considering them the result of consultations, study, adoption of best practices from other countries, and coordination with all stakeholders from the private and public sectors for maximum effectiveness.

Based on the calculations of the Department of Town Planning, there will be a need for 6,000 to 7,000 additional housing units in the government-controlled areas in the next three to four years.

“However, this is very relative because it depends on how the economy will move in the coming years, whether we will attract even more businesses and foreign labour force, which is also the goal,” Ioannou noted.

To boost business activity and the recovery of the economy, the cabinet also approved the one-year extension of the Town Planning Incentives Scheme for the Recovery of Business Activity, which has been in effect since 2013.

The scheme has been revised with modifications strengthening it to better align with the policies of the new government. As part of this extension, the compensation percentage for all developments will increase from 10 to 20 per cent and be deposited in a special fund to contribute to the implementation of the government’s housing policy.

In the context of streamlining the licensing process, permits will now be valid for two years instead of one, allowing land development entrepreneurs sufficient time to prepare the necessary documents for a comprehensive and accurate application. Ioannou emphasised that a correct and complete application would significantly reduce the time required by the Department of Town Planning and Housing for evaluation, thus minimising delays.

Since the plan’s implementation in May 2013 to the end of November 2023, a total of 1,044 planning applications were submitted for developments in all districts, of which 845 applications were approved.