Since 1980 we have been writing about issues concerning the construction industry, and in our approximately 1,500 English articles, we tackled the problems expressing our suggestions for their correction.
In recent months, the problem of high rents has appeared in the media, which in addition to the social problem they cause, now has numerous side effects.
These include the inadequate supply of residential units/apartments and their influence in discouraging students in our colleges/universities, especially in attracting students from abroad, adding to social problems, especially for young couples and the lower paid.
Politicians submitted various suggestions with the usual demand for a rent subsidy, the offer of units by the Municipality of Limassol; others propose the “hospitality” of students in private residential units for €200/month and provision of hotel accommodation.
Good announcements are nice, but they do not help to solve the problem, while the expected increase in students (according to the Ministry of Education, their number will double in 2-3 years) does not seem to solve the issue at least short term.
We have also recorded deficiencies in the student accommodation development regulations, whereas if the universities themselves are unwilling to help, such as taking over the payment of rent from their students, the problem of statutory tenants.
At the same time, the inability of the educational institutions to deal with the problem to some extent, we are surprised by the government’s indifference.
These institutions benefit from state land (given free), low-interest loans (1%) and others. Still, even with these “grants”, the cost to build the universities’ units is approximately double/triple the cost of the private sector.
We remind you of the issue with the University of Cyprus, where in a joint meeting about the student halls, the person in charge of the university service informed us that the University would not be involved in “rubbish units” developed by the private sector.
It is better not to have a sufficient number of apartments than to have even lower quality (according to the University, mind you) units.
VAT
And yet the issue can only be resolved with the participation of the private sector, which is ready to offer the corresponding number of units in various locations with incentives that will not cost the state money, except for the postponement of VAT collection.
We cite an example of a client of ours for the construction of 160 student residences 50m away from the University of Cyprus, which was viable with existing permits and financing in place but adding the 19% VAT increased costs to such an extent that it showed negative financial results.
Therefore, we suggested that the VAT is reduced to 5% with the owner’s obligation to rent his units for approximately 8-10 years and, if the owner sells his units in the meantime, to pay the state the proportional difference (14%).
Another issue is the absurdity of the existence of minimum extents for residential units pushing up the cost.
As the Prime Minister of Ireland stated, “the market should build units that buyers can pay for.”
This evidently is not for us blue-blooded Cypriots because the position of the Planning Authority is that “Cypriots should live in decent units”.
What nonsense, since, by extension, the Cypriots should not drive lower-priced cars, regardless of whether they have money for more expensive ones.
The issue of unpaid utilities, common expenses, and the complicated process for evicting bad tenants do not encourage investors for income.
So, we are still discussing a very urgent matter that should have been solved at least two years ago.
Our government should have some vision in the whole approach, while it would not be unreasonable to suggest that the state should “pull the ear” of the state institutions as a start.
Perhaps we should also involve the student unions in the effort to shake up the impossible situation.
Antonis Loizou FRICS – Antonis Loizou & Associates EPE – Real Estate Appraisers, Real Estate Sellers & Development Project Managers
