Five laws concerning foreclosures have been sent back to parliament by President Nikos Christodoulides, who said they were unconstitutional, legally vague and may adversely affect the economy and banking system, it was reported on Wednesday.

The laws had been voted by a rushed House plenum on April 6. The parliament’s finance committee will convene on Thursday to examine the referrals before they are sent to the plenum later in the day to be voted on before parliament is set to dissolve ahead of the May 24 parliamentary elections.

The House will also have to examine five more referrals concerning the social cohesion fund, the provision of state land, the supervision of children and renewable energy sources.

Regarding foreclosures, the president referred the amended law on courts, which allowed a district court judge to examine appeals concerning mortgages. The law was found to contain ambiguities and to contradict existing legislation. The president also said the legislature intervened in the authorities of the judiciary.

He also referred the amended law on credit for consumers regarding immovable assets earmarked for housing. The law forbade banks, credit acquisition companies and administrators from demanding additional guarantees when the housing loan was fully covered by the mortgage and the borrower’s creditworthiness. The referral said there were ambiguities which should be reworded.

The president also referred the amended law on the liberalisation of the interest rates, which provided for a ceiling on interest rates. The reason for the referral was that the law was not clear on the scope of implementation and could raise issues of retrospective implementation and violate the constitutional right of freedom of contract.

The fourth referral was the amended law on transfers and mortgages, which said that exercising a legal remedy, such as challenging the amount of the debt or invoking unfair terms, would lead to the suspension of the foreclosure process until a final decision was issued. This, the president argued, would lead to mass delays, as the borrowers could cite unfounded claims and overload the courts. Christodoulides also said this risked encouraging a culture of non-repayment of loans, an increase in the cost of a loan and restrictions in new credits.

The fifth law to be referred has to do with the insolvency of individuals, the aim of which was to bring about balance between lenders and borrowers. However, the president pointed to serious weaknesses that need to be fixed, particularly concerning the exemption of debtors from obligations emanating from guarantees.

Regarding the other five laws parliament will have to deal with before it dissolves, the first concerns the social cohesion fund, where the president found problematic clauses that extend the exemptions from the obligation to pay employer contributions, particularly in shipping and non-Cyprus residents. This, he said, would mean refunding contributions that would place a burden on public finances and may contradict European legislation.

The second referral concerns the provision of state land of a value over €500,000, which the president said limited the discretion of the executive power in managing state property.

The third referral has to do with the supervision of students on school grounds outside schooling hours, which the president said lacked specifics about infrastructure and manpower on how it would be implemented.

The two other referrals concern the energy sector and particularly renewable energy sources, namely the compensation for surplus electricity and the restrictions for installing projects on agricultural and environmentally sensitive land.

The president said the compensation mechanism created a fiscal burden, without specifying where the money would come from, while the restrictions on available land may slow down the development of renewable energy sources to the detriment of Cyprus’ energy aims for 2030.