CYPRUS: Tenancy laws pose a headache for landlords

3 mins read


The anachronistic law on statutory tenancies is one of the many drawbacks in the Cyprus real estate market.

Statutory tenancy exists only in certain areas (e.g. the towns and some rural Municipalities such as Platres/Ayia Napa/Paralimni etc) and for buildings which are erected/completed before the end of 1999. 

It covers all sorts of buildings, but it excludes hotels and vacant land.

The problem of eviction in such tenancies are restricted only to certain specific wrongdoings of the tenants (basically the non-payment of rent, nuisance, change of use with no due approval by the landlord and other specific causes).

Notwithstanding the validity of the landlord’s claim (the simplest one non-payment of rent) eviction is not a straightforward procedure.

Due notice must be given to the tenant (3 months) and then the court proceedings start, which until a decision is made, it might take anything between 2-3 years. 

In the meantime, the tenant is occupying the premises undeterred and the non-rental payment is mounting up. 

The landlord may have his own financial obligations e.g. loans to the banks, so he is also in trouble as the financiers may be foreclosing the loan.

As is the norm, the tenant gets away with it in exchange of giving up the premises, but with the landlord losing at least 410 times the rent (plus legal costs etc). 

Notwithstanding personal guarantors (suggested to be the tenant’s wife as a primary guarantor) there are all sorts of “tricks”, making repossession/eviction even more difficult and disheartening.

Admittedly, the main cause of the whole mess is the court delays (one of the worst on this count) especially in cases of lets to companies, whose shareholders may change.  In one case the original tenants transferred their shareholdings (to some unemployed, students and others) so, even if the landlord gets an eviction with an order to pay due rents, the shareholders have no money to repay with the court ordering the tenants to pay €100 p.m. (for a debt of €8,000)!!

We have followed similar cases in the U.K. (where there are no statutory tenancies) but there the legal proceedings are so complicated that they produce similar results (on one occasion it took 3 years for the eviction to be secured and by the end the landlord lost his house due to non-payment of the mortgage instalments).

This whole situation gets worse with the new “lets” of Airbnb.  In such cases, lets with furniture for less than 6 months do not fall within the statutory tenancy provisions.

So, if one lets his property to an Airbnb agent for one year he may get a shock if he cannot repossess!!

Evictions apart, bear in mind that existing statutory rent may not increase up to 4/2021 save some exceptions.

There was a ray of hope under a bill introduced by the right-wing party (DISY), which suggests more or less “immediate” eviction if no rental payment, but in “exchange” the landlord has to forego the rents due.

Even this non-satisfactory proposal was shelved, and no one knows when and if it will become law.

This is a major issue not only for landlords but also for the financiers who are left with swap deals or foreclosures with the tenants (let alone common expenses which is in a mess). 

Besides, all sorts of crooked deals come up, such as the landlord leasing the property for very low rent and for a long period (before repossession) and the financiers are left with a huge problem (see some hotels in the Famagusta area and so many others concerning lets). 

This, of course, can be disputed in court but then it is an added problem.

Apartments show nowadays a return of approximately 5% but considering the statutory provision/risks involved, this could be reduced to less than 3%.

One wonders how such circumstances can exist in a European country, but then in small Cyprus with even worse small politics and no majority of the ruling party in the House, how can the situation improve? 

The end result is that buildings are fast depreciating due to little maintenance, whereas statutory occupation may show a reduction in their resale value of more than 15%-20% (hence landlords prefer to forego their rights rather than suffer such a reduction).

Everything is not negative mind you, landlords can protect themselves through the use of a knowledgeable advocate (not abundant in this sphere of work) who can produce a “proper” tenancy agreement, whereas increasing rents which recently have shot up by around 30%-50% over the last 2-3 years is a protection of a sort.

P.S.  Please note that if there is a written agreement for the lease, its terms cannot be changed/ accepted by the courts unless the amendments are also in writing.