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33,000 empty housing units should join market

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While property prices and rents rise due to a shortage in supply, some 33,000 homes across the island are unused, the Cyprus Technical Chamber ETEK, advises the government to introduce incentives for them to join the market.

The government advisory body has told Interior Minister Constantinos Ioannou that the authority should consider the availability of these 33,000 empty homes when drawing up the policy to promote affordable housing.

In a letter to Ioannou, ETEK’s chair Constantinos Constanti argued that the state should introduce incentives or disincentives for owners of properties not used to enter the market.

He argued that 33,000 homes, or 8% of the housing units, are off the market.

ETEK relied on data from the Electricity Authority of Cyprus, which indicated that over 8,000 units do not have power, while most of the remaining properties consumption is very low.

Breaking down the data, Constanti pointed out that in the capital alone, 9,181 homes are available, of which 2,176 are off the EAC grid, while another 7,005 have very low consumption.

In Limassol, where rents have gone through the roof, there are 8,324 vacant housing units, of which 1,662 do not have power.

In Larnaca, the total number of homes not being used is 5,440, of which 1,361 do not have electricity.

In Famagusta, according to the data collected by ETEK, there are 2,286 available housing units.

Paphos has some 7,362 vacant homes that could join the market.

ETEK argues that commercial buildings could be converted to residential units with appropriate incentives and urban planning tools.

Regarding incentives for owners to put their property on the market, ETEK proposed the following incentives.

(a) They benefit from tax exemption for expenses related to repairs and maintenance, up to €3,000.

(b) They benefit from a reduced VAT of 5% for renovation or repair work.

(c) If the inclusion of these units in the housing market through renting, the rents for the first 24 months can be exempted from income tax.

(d) If these units are included through a sale, the transferable fees should be reduced by 33%.

ETEK also proposes that properties kept off the market should be burdened with an annual tax of 2% of the property value, as estimated by the Land Registry.

Real estate agents confirm that the lack of housing units has led to an unprecedented increase in rents and property prices.

In comments to the Financial Mirror, Pavlos Loizou, CEO of Ask WiRE,  said: “We’ve seen prices hike in the past ten years, with supply moving in the opposite direction.”

Loizou argued that just a few housing projects were built in the past 15 years, excluding high-end properties.

“This undersupply has pushed up prices, and the only way to bring down prices is to increase supply.

“This would mean not only an increase in housing projects but affordable housing units.”

He argued that government intervention would not solve the problem, as it would only cater to hundreds of citizens whilst there is a demand for thousands of homes.

“Drastic measures are needed to bring new properties onto the market, even by taxing unused properties and land.”

Pavlou also noted that large plots of land are kept off the market, as a recent Ask WiRE survey identified 2,369 plots with a total area of 1,689,921 square metres in Nicosia.

Surveyors recorded 9,240 residential units within these blocks with a total area of 1,131,791 sqm.

Based on the existing urban planning zones, a total of 2,149,741 sqm can be built on.

Therefore, the unutilized building factor is 1,017,950 sqm.

“Our findings show that in Acropolis (Nicosia), which is in high demand, just 53% of the allowed building coefficient has been used.

“There is room for another 10,180 apartments”.

Ask WiRE did a similar survey close to Limassol city centre, finding comparable results.

According to surveyors, there is room for another 8,000 apartments in the uptown area.