By Marinos Kineyirou,
Investing in real estate is one of the wisest decisions one can make. The truth of the matter is proven with every passing storm.
As we go through this difficult period, I have to admit that the crisis in real estate sales is inevitable but not insurmountable.
Instead, I believe that the COVID-19 crisis has made us wiser.
The real estate industry, and in particular the real estate agent’s profession, has clearly been struck by the coronavirus pandemic which has hit our small island.
The business world, as a whole, has already been hit hard as businesses saw their turnovers shrink or even frozen as a result of the measures imposed by the government to stem the spread of coronavirus.
During this difficult period, we all need to make the right moves and be prudent, to cope with the circumstances.
Declining turnover in real estate sales does not necessarily mean that it is the beginning of a crisis.
On the contrary, in the aftermath of each crisis, there is a renewal with new prospects for each sector.
Real estate investments will not stop, especially on an island with incredible prospects and big construction projects in progress, such as the new port and marinas in Larnaca and Ayia Napa.
Despite the fact the day after will not be the same as before the pandemic, however, we must maintain our composure and our optimism that better days are ahead while maintaining the quality of services provided, avoiding mistakes of the past.
It is an opportunity for every entrepreneur or investor to take advantage of this stagnation and reorganize.
The real estate market in Cyprus is of great interest to foreign investors, especially due to the good climate and the fact that Cyprus is among the five safest countries in the world.
Rents and strategically bad tenants
Regarding rents, a number of views have been put forward which do nothing but create room for bad tenants to take advantage of the current situation.
This is where the incentive schemes voted in by the House of Representatives for landlords to reduce rents and suspend evictions until the end of September comes into play.
On the one hand, these schemes reassure landlords but on the other, it does not shield their rights granted to them by the rent law, as it was recently amended by Parliament.
Recent amendments provided more cover to property owners putting an end to the practices of strategically bad tenants.
I could not help but agree with the government on granting incentives to reduce rents.
However, it should be made clear that the incentives, according to Finance Minister Constantinos Petrides, concern owners who will reduce their rent for three months.
In particular, the House has passed a bill aimed at granting a tax credit to owners if they reduce their rent for a period of up to three months.
The tax credit to be granted is equal to 50% of the rent reduction amount, provided that the said rent reduction does not exceed 50% and is not less than 30% of the monthly rent.
- The tax credit will be granted for a reduction in rent for a period not exceeding three months and falls within the tax period 2020, regardless of the agreed reduction months.
- The rent reduction will be agreed in writing between the owner and the tenant.
- The tax credit will not be granted in the event that the landlord and the lessee are affiliated persons, as defined in the Income Tax Law.
- The tax credit can be used against the total tax that arises for the tax year 2020.
- Any refundable tax resulting from this credit may not exceed the amount of tax paid.
Also, Parliament has unanimously approved a law suspending evictions.
Finally, I would like to emphasize that at this time we should avoid tension in the economy at any cost.
Tensions will only create a climate of uncertainty putting off investors.
Let’s not forget that our small island is a paradise with its warm climate and other favourable factors for entrepreneurial investors!
The writer is President of the Council for Registration of Real Estate Agents