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The government is considering reopening the “Rent in Exchange for Installment” housing scheme for a limited period of a few months, as pressure grows to address ongoing foreclosure issues affecting borrowers.
Finance Minister Makis Keravnos said the proposal is being viewed positively, stressing that any relaunch would take place under the same terms as before to avoid delays or complications with the European Commission. Changing the scheme’s structure, he noted, could require fresh approval, risking rejection and slowing down implementation.
The scheme allows vulnerable homeowners to remain in their homes by paying rent instead of loan installments, offering temporary relief to those unable to meet mortgage obligations.
However, the Minister acknowledged that reinstating the program is not solely a government decision, as participation by credit-acquiring companies would be required. Authorities would need to secure their cooperation to make the scheme operational again.
Focus on financial stability
The discussion comes at a time when Cyprus faces continued challenges related to non-performing loans and property foreclosures, particularly involving primary residences.
Keravnos emphasized that the government’s priority remains safeguarding financial stability while addressing social concerns. He warned against adopting measures that could create additional risks for the economy, especially during global uncertainty, including ongoing conflicts and inflationary pressures.
“We must protect the resilience and growth of our economy so we can respond to potential inflationary developments,” he said.
Government proposals
Rather than introducing sweeping changes, the government is proposing targeted adjustments to improve existing procedures.
Key measures include extending the time available for borrowers and the Financial Ombudsman to reach agreements before foreclosure processes advance, and granting binding authority to the Ombudsman’s decisions in disputes involving amounts up to €20,000.
In addition, borrowers may be given the option to work with insolvency advisors to establish structured repayment plans aligned with their financial capacity.
According to the Finance Ministry, these proposals build on a framework introduced in 2023.
Political reactions
AKEL criticized the government for failing to restore borrowers’ right to seek court intervention to suspend foreclosures, arguing that individuals should be able to challenge potentially abusive loan terms or disputed balances through the judiciary.
EDEK acknowledged that the government’s approach moves in the right direction but argued that it addresses only a small portion of a systemic problem, particularly regarding the protection of primary residences.
Meanwhile, DIKO welcomed elements of the plan, especially the binding nature of the Ombudsman’s decisions, but called for stronger measures. These include terminating loans that have significantly increased beyond their original value and ensuring that debts are cleared once mortgaged properties are sold.
The party also supports making the housing scheme permanent, arguing that new vulnerable borrowers continue to emerge.
Next steps
Discussions are ongoing within the Parliamentary Finance Committee, which is reviewing 26 proposals submitted by political parties. Lawmakers are expected to decide shortly which proposals, estimated at around seven to eight, will be put forward for a vote.
There is growing urgency to finalize decisions before the possible dissolution of Parliament, with the Finance Minister expressing hope that key measures can be approved in time.
Balancing act
The debate showcases the challenge facing policymakers: providing meaningful relief to struggling borrowers while maintaining confidence in the financial system.
As discussions continue, the potential reopening of the housing scheme is emerging as a short-term measure within an effort to address one of Cyprus’s most persistent economic and social issues.
