The Cyprus Land Development Organisation (Koag) is preparing to start building 220 new homes by the end of the year.

Most of them will be in Nicosia and Limassol and will be offered at affordable prices, either for sale or for rent.

The announcement by Interior Minister Constantinos Ioannou during a press conference in Nicosia, he outlined the government’s latest housing plans.

Work is also finally set to begin in May on a long-delayed project in Limassol’s Ayios Nikolaos area.

The development will include 138 rental units for people who qualify for support through Koag, the state organisation responsible for affordable housing.

In addition to these two projects, another major step is expected later this year, with land development work starting on 135 new plots in Nicosia, Larnaca, Limassol and Paphos. These will be used for future housing.

“Housing is one of the most important social issues we face,” the minister said.

“Every citizen has the right to affordable, safe and decent housing. It’s a key part of the government’s overall strategy.”

He pointed out that Cyprus isn’t alone in dealing with the housing crisis.

Across Europe, he said, countries are struggling with rising prices and a lack of available homes — which is why the European Commission recently included housing in the responsibilities of the Energy Commissioner.

“This shows how seriously the issue is being treated at EU level,” he added.

But in Cyprus, he explained, the challenges are even greater because there simply aren’t enough homes.

“The lack of available stock and limited options for low- and middle-income families make the problem even harder to solve,” he said.

Koag, which has a social mission to support vulnerable groups, is now taking on a much stronger role.

“In the past, the organisation’s activity was almost frozen,” Ioannou said.

“In 2023, it only managed to complete 16 homes in Nicosia. And this year, no units have been delivered so far, although 24 are now under construction in Larnaca.”

He said that’s now changing. With stronger funding and more authority, Koag is no longer just a public agency but a key partner in delivering affordable housing.

“We’ve turned Koag into a one-stop shop,” he said.

“It can now support developers from the very beginning of a project all the way through to construction.”

New funding has come from a series of schemes tied to urban planning and housing incentives. These include ‘Build to Rent’, ‘Renovate &Rent’, and several others, all connected to the Interior Ministry.

So far, over €12 million has been channelled into Koag’s affordable housing policy, with more expected.

“This has allowed us to bring forward some of the projects we thought would only be possible next year,” the minister said.

“We’ve moved faster than planned.”

Still, he was clear that Koag won’t be able to fix the housing shortage on its own. “We need the private sector too,” he said.

“Developers can play a complementary role by making use of the incentives available.”

The ministry is also working on changes to existing planning rules.

One of the proposals involves lifting restrictions on apartment types in tourist zones, bringing them in line with what’s allowed in residential zones.

Another proposal would allow more apartments to be built on the same plot by reducing the required area per unit to 15 per cent.

There are also plans to expand the ‘Build to Rent’ scheme to include commercial areas, allowing mixed-use developments that can support workers’ housing needs.

“Our goal is to remove barriers and open up opportunities,” Ioannou said.

“We want housing to be a steppingstone, not a roadblock.”

The chair of Koag, Elena Kousiou-Hadjidimitriou, also spoke at the event, announcing that 75 apartments will be sold at €125,000 each, making them accessible to buyers who have struggled to keep up with soaring prices on the private market.