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COVID19: Real estate investment is the hidden ace

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By Marinos Kineyirou

The Covid-19 pandemic and measures taken to stem the spread of the virus were also an opportunity to put our economy to the test once again after the 2013 financial crisis.

There is no denying that the real estate sector has clearly been affected, but at the same time it is a period for reconstruction.

The government and consequently the House of Representatives, in addition to business support measure announced, have supported, and continue to support the country’s citizens with financial measures to protect our quality of life.

We are talking about a large support package for our economy, which includes more than 60 measures and which, in total, will cost €1.2 bln.

It concerns, among other things, a very important direct sponsorship of small and medium-sized enterprises, which will help businesses to cover rents or other operating expenses.

It also includes support measures for young couples who want to buy a home.

Measures that help out the tourism sector, which is especially vital for the economy, in its effort to recover.

This package strengthens the liquidity in the market making use of all the tools and mechanisms provided to the Government by European institutions.

The interest rate subsidy plan for new housing loans was one of the important measures taken by the Government for the construction sector and the real estate market to continue to be not only viable but also competitive.

The aim of the plan is to support households in obtaining loans (it cannot exceed € 300,000), for the purpose of owning a home.

The competent and sponsoring authority of the measure will be the Ministry of Finance.

This measure is in line with the guidelines included in the European Commission’s “Temporary Framework to support the economy in the context of the coronavirus outbreak” and specifically with the provisional measures of state aid in the form of direct grants.

The above measure concerns mortgages that have been concluded or will be concluded between 1.3.2020 to 31.12.2020.

Interest on these loans will be capitalized once a year – every December- so any credits needed to cover the scheme will be included in the 2021 budget.

This plan strengthens citizens who want to acquire their own home but were having second thoughts due to the pandemic.

For these people, this measure presents them with a good opportunity to buy real estate for homeownership.

However, further measures will need to be adopted to reinstate the former glory of the real estate sector.

The measures that I propose as a professional in the field with many years of experience concern:

  • Acceleration and boosting the Citizenship for Investment scheme
  • Keep the VAT on property sales at 5% for the next 3 years.
  • The abolishment, at least for a certain period of time (3 years), income tax and capital tax related to the purchase of real estate property.
  • To allow for housing development on agricultural land, in cases where there is a registered road.
  • To grant a tax amnesty, for a period of 6 months, to those who proceed with real estate investments.
  • Regarding transactions made with the land registry, the public service procedures should pick up speed, as it is unthinkable for a transfer to be scheduled after a month following the agreement.
  • It is equally important to facilitate those who do not have the ability to perform cadastral-related work online.

It is worth noting that the above measures have been put before the government and some of them are already being promoted.

The ultimate goal of any measure should be the recovery of the Cypriot economy.

The writer is President of the Council for Registration of Real Estate Agents