Vacant housing can help alleviate the shortage of supply

While property prices and rents are rising due to a shortage of supply, around33,000 residential homes across the island are sitting empty. The Cyprus Scientific and Technical Chamber ETEK recommends the government to introduce incentives to bring them into the market.

The advisory body of the government recommends in a letter to the Minister of Internal Affairs Konstantinos Ioannou to take into account the presence of these33,000 vacant houses when developing a policy to stimulate affordable housing. ETEK Chairman Konstantinos Konstanti asserts that the state should offer incentives or disincentives to owners of currently unused properties. He notes that33,000 houses, or8% of residential properties, are not participating in the market processes..

ETEK relies on data from the Cyprus Energy Authority showing that over8,000 properties are without electricity, with most of the remaining properties having very low energy consumption. In the capital, Nicosia,9,181 residential buildings are available, of which2,176 are not connected to the electricity grid, and7,005 have very low energy consumption. In Limassol, where rental prices have skyrocketed, there are8,324 vacant residential properties, of which1,662 are without electricity. In Larnaca, the total number of vacant houses is5,440, of which1,361 have no electricity. According to ETEK, there are2,286 available residential properties in Famagusta, and around7,362 vacant houses in Paphos that could be brought into the market..

ETEK believes that commercial buildings can be converted into residential units through appropriate incentives and urban planning tools.

Regarding incentives for owners who have agreed to put their property on the market, ETEK offers the following measures:

• exemption from taxes on expenses related to repairs and maintenance, up to 3,000 euros;
• a reduction of VAT to 5% on repair work;
• exemption from income tax on rental income for the first 24 months;
• a 33% reduction in fees for re-registration upon sale.

ETEK also proposes the introduction of an annual tax of 2% of the property value, as assessed by the Land Registry, for properties not involved in market processes.

Realtors confirm that the housing shortage has led to an unprecedented rise in rental and property prices. Pavlos Loizou, CEO of Ask WiRE, states: "We are seeing price increases over the last ten years alongside a decrease in supply." He notes that only a few residential projects have been built in the last 15 years, excluding luxury real estate.