President agrees to foreclosure law extension

President Nicos Anastasiades on Thursday signed the foreclosures law extension until January, despite the government’s previous insistence on defrosting it.

In an unexpected move, the President signed the law he had referred back to parliament just two weeks earlier.

The law amendment, passed in November, sees the foreclosures freeze extended until the end of January 2023.

The foreclosures freeze law has been a thorny issue for the government, with state officials saying it would reward loan defaulters rather than protect vulnerable groups.

Finance Minister Constantinos Petrides and Anastasiades expressed their concern that the frequent renewal of the freeze will lead to the measure becoming permanent rather than a temporary fix during a time of hardship.

The latest decision is the fifth in a series of extensions imposed in August 2021 as borrowers came under pressure from COVID-19 lockdowns.

Anastasiades initially refused to sign the law and sent it back to parliament. As was expected, parliament rejected his motion to recall it.

If parliament rejects a referral, the President has two avenues: either sign it or send it to Supreme Court to assess its constitutionality.

In comments to CyBC, government spokesperson Marios Pelekanos said that since parliament did not accept his referral, Anastasiades had no choice but to sign it.

“Sending it to Supreme Court was not an option.

“This was the path he took six months ago, and the law was declared constitutional.”

Pelekanos was referring to a Supreme Court decision overruling the objections raised by Attorney General George Savvides for the state.

The court had ruled that the bill violated neither the right to enter a contract freely nor the principle of separation of powers between the executive and legislative branches of government, as was argued by Anastasiades.

The foreclosure freeze will be in effect until the end of January, evoking the tough financial climate created by the coronavirus pandemic and the Ukraine war.

It means that first homes worth up to EUR 350,000, commercial premises with a maximum value of EUR 750,000 and plots of land worth EUR 100,000 cannot be seized.

Both the government and the Central Bank had warned against a new freeze on foreclosures, arguing it would jeopardise the country’s sovereign credit rating.

Homeowners cheated state of 16.2 mln VAT

Over 270 people, mostly foreign investors eyeing a Cypriot passport, benefited from the reduced rate of 5% VAT for first-time home buyers instead of paying the standard 19% rate, with state coffers denied EUR 16.2 mln in taxes.

The revelation was made by Finance Minister Constantinos Petrides, who said the state intends to collect due taxes.

He said the 275 cases were identified following proof collected from on-site checks earlier this year.

Since the beginning of October, the Tax Department has been conducting on-thespot inspections at homes and apartments to establish whether owners were actually living there or renting them out.

He said that checks discovered that 275 homeowners were found to be ineligible for the reduced 5% and, therefore, should be charged with a 19% VAT.

More than 1,700 on-the-spot checks have been carried out in less than two months.

Petrides expressed satisfaction with the results of the checks noting the money owed will be collected.

“However, this also demonstrates an abuse of the 5% VAT scheme”.

“Mainly foreign investors who bought an apartment or house took advantage of the legislation for a reduced rate of 5% VAT but live permanently abroad and rent the property through the Airbnb platform.

“Also, Cypriots who live in Nicosia or another city bought a country house in a coastal town declaring it as their main residence, but which they rent to third parties,” said Petrides.

He pledged the checks would continue,