Cyprus real estate MPs had concluded discussions that will allow those wanting to buy property to do so under a leasing agreement rather than acquiring it with the help of a mortgage. It will be presented as an alternative process of borrowing, hoping to bring the legislation to the plenum by April 7.
Angelos Votsis, the committee's acting chair, stated that efforts to begin leasing goes back a number of years. A home buyer wishing to acquire a property will indicate the property to the bank. He said that the lender will purchase the property and lease it. Then, the lessee or tenant will pay the agreed installments. And from there on, the possibility of buying the property will be offered.
Cyprus real estate banks issued guidance explicitly informing the public of their rights and obligations under a leasing agreement. Votis added that whoever entered into such an agreement needed to know that it is not a mortgage, and should be made aware of the risks and advantages. The MP introduced leasing as a way to help the banks tackle the problems of non-performing loans, according to a report from Cyprus Property News.
Non-performing loans on owner-occupied properties accounted for less than 15 percent of all NPLs, according to an earlier Central Bank of Cyprus report. However, the ratio of NPLs as a percentage of banks' overall loan portfolio was 45.8 percent higher in December 2015. Total NPLs in the Cypriot banking system was at €26.7 billion. During prior discussions of the leasing bills, the banks pointed to tax and other incentives, as well as quicker procedures utilizing both lessors and lessees. One proposal presented was that the two parties to a leasing agreement will be exempted from capital gain taxes.
The Cyprus real estate arrangement will also allow the parties to be exempted from paying the specific defence contribution, according to a feature from Balkans.
