Panayiotis Rougalas
A new effort to suspend foreclosures is underway until the end of the year. Members of parliament are dissatisfied with the current foreclosure framework, and just days before Parliament dissolves ahead of the parliamentary elections, numerous legislative proposals are on the table. The goal is to modify the framework while once again placing a temporary halt on the foreclosure process. In other words, lawmakers want to suspend foreclosures until the Ministry of Finance presents its own changes, which include expanding the powers of the Office of the Financial Ombudsman.
Over the past five years, Cyprus has seen many suspensions of foreclosures. But how many exactly? During this period, foreclosures in Cyprus have been closely linked to repeated suspensions. In many cases these measures were introduced as responses to extraordinary economic conditions, from the pandemic to the energy crisis and rising inflation. Others occurred during periods that coincided with parliamentary or presidential elections.
The first major period of borrower protection occurred during the COVID-19 pandemic. From March to June 2020, banks implemented the first universal voluntary suspension of foreclosures. The suspension was then extended for two additional months, from July to August 2020.
Later, from December 2020 through March 2021, a legislative suspension of foreclosures took effect. It covered primary residences valued at up to €350,000 and also applied to small businesses after economic activity had been affected by COVID-19. A new legislative extension followed from April to July 2021. This extension led to a conflict with the Presidency and resulted in a referral to the Supreme Court.
Parliamentary elections took place in May 2021. The last suspension approved by Parliament during that period was considered the broadest measure adopted. It covered primary residences valued up to €500,000, small and medium-sized enterprises, and agricultural land.
Suspensions linked to the war
Suspensions returned in the following years in response to the economic pressures caused by Russia’s war in Ukraine. The conflict triggered an energy crisis and strong inflationary pressures that affected the size of loan payments.
From November 2022 to January 2023, a legislative suspension of foreclosures was implemented during a period that also coincided with the campaign leading up to the 2023 presidential elections.
Then, from March to December 2023, banks made a series of consecutive voluntary commitments not to proceed with foreclosures of primary residences valued at up to €350,000. These commitments were usually made on a three-month basis. The measures remained in place while the government prepared a new legislative framework for foreclosures and the implementation of the “Rent for Installment” program.
More targeted measures
After the new foreclosure framework was adopted at the end of 2023, suspensions became less common, though they did not disappear entirely. During 2024, protection for borrowers focused mainly on the “Rent for Installment” program and on targeted voluntary suspensions affecting specific groups of borrowers.
During 2025 and early 2026, new decisions extended voluntary suspensions for groups such as trapped buyers and other vulnerable borrowers. These measures were extended through July 2025. For example, in November 2025 authorities approved a three-month suspension of auctions until Feb. 28, 2026 for homes located in refugee housing settlements.
Institutions are watching
International institutions are closely observing the repeated efforts to suspend foreclosures or introduce processes that operate intermittently. They are not certain whether they would downgrade an entire country’s economy because of a single decision such as suspending foreclosures for a few months.
This is one reason the arguments made by banks or credit-acquisition companies about a possible downgrade often fail to gain traction. Reports typically include brief references to the importance of maintaining a stable legal framework without frequent interventions.
For banks, changes to the framework do not significantly affect the nonperforming loans currently on their balance sheets because those amounts are relatively small. However, suspensions and other policy changes can affect the loans banks plan to issue in the future. In practical terms, banks may feel less certain that they will be able to recover the money they lend using the collateral provided by borrowers.
For credit-acquisition companies, the impact is different. During periods when foreclosures are suspended, they cannot pursue the purpose for which they originally purchased nonperforming loans from Cypriot banks. In the past, the European Central Bank has expressed concern about such measures. In a special report it noted that they may create unjustified delays in legal proceedings and affect the recoverability and value of assets.
