Cyprus Property: New Repossessed Regulations
- Jan 21, 2017
- 2 min read
New regulations allowing the banks to rent and maintain repossessed Cyprus properties on their books and allow them to complete unfinished Cyprus properties are being discussed by the house finance committee.
The Cyprus finance committee began discussing a bill on Monday allowing banks to rent as well as perform maintenance on repossessed Cyprus properties on their books to make them more marketable. The bill would also allow banks to complete unfinished Cyprus properties. The provisions are required in order to harmonise with EU directives.
Under the Business of Credit Institutions Laws, banks are required to dispose of repossessed Cyprus property within 3 years. In addition, international accounting standards mandate that a bank demonstrate that it can sell repo properties within 12 months. Some have expressed concerns that swiftly disposing of the many repossessed Cyprus properties may set back the property price in the short run.
To date, Cyprus banks could request an extension on the 3 year period from the Central Bank of Cyprus. Almost all such requests have been granted, a CBC official said. But the rules have changed, as from now on such requests must also be sanctioned by the European Stability Mechanism. Under the new legal framework a bank can auction a Cyprus property at a reserve price of 80 % of the current market price. If there is no interest, the bank can place the Cyprus property to a new auction with the same price while in a year’s time it can auction the Cyprus property with a new reserve price amounting to 50 % of the current market value.
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