- 8% of the building stock is vacant – Incentives and disincentives for putting it on the market
- Imposition of reduced VAT for renovations/extensions of existing buildings among the measures proposed by the Chamber
A package of measures to deal with the housing problem was prepared by ETEK, after a thorough study of the whole matter. The measures are already in the hands of the government and according to the Chamber they can provide relief solutions in the short, medium and long term.
Finding affordable housing is one of the main problems facing Cypriot society, with ETEK calls on the government to succumb to the problem, immediately proceeding with the implementation of targeted measures.
The measures proposed by ETEK focus on three pillars:
1. Strengthening the supply of housing products aimed at the average household, with an emphasis on the utilization of existing housing stock
2. Targeted, economic strengthening of demand (after serious efforts to strengthen supply)
3. Reduction of construction costs
“The state housing policy needs to be modernized through an integrated strategy that responds to today's needs and conditions. The creation of a Unified Housing Policy Agency that will plan, coordinate and control the issues related to the state housing policy, is now an urgent need. Especially today, with interest rate increases, the inclusion of tools to access financing for the purpose of acquiring a home, under the umbrella of this Agency, is deemed necessary,” said the President of ETEK, Mr. Konstantinos Constantis. He added that in the first phase the Agency in question should collect and process data regarding the issue.
Measures
1. Strengthening the residential product offer
The main “culprit” for the current situation, as it has developed, is the reduced supply of housing units, which, in conjunction with high demand, which shows evidence of inelasticity, is driving up purchase and rental prices. The example of Limassol is indicative, mainly in terms of rents. According to ETEK, the strengthening of the offer can be achieved by:
A. Utilization of the existing building stock
Therefore ETEK proposes the following measures:
· Inclusion of vacant and unused housing units in the market. The Chamber studied the specific issue in depth and with the contribution of the EAC, the units with zero or minimal electricity consumption were identified. It was found that around 35,000 units, which correspond to 8% of the housing stock, most of which are in residential zones, are closed. ETEK proposes the imposition of incentives as well as disincentives for the disposal of closed units on the market. It is noted that the inclusion of vacant residential units on the market through taxation is implemented in several European countries.
· Imposition of reduced VAT for renovations/extensions of existing buildings
· Providing targeted incentives for changing the use of commercial buildings in residential units
; Revitalization of refugee settlements
; Utilization of t/c properties
The phenomenon of the mismatch of the characteristics of a large number of residential units, in comparison with the needs of the users, to be treated as an opportunity – due to demographics and the aging of the population, there is now the phenomenon of large houses with single or two-member retired households.
B. Inclusion of new residential units in the market
; Incentives/disincentives for activating idle land
· Intensification of the activity of KOG and Local Self-Government
· Establishment of an urban planning upgrade fee
· Promotion of social housing – Encouragement or even removal of obstacles for the construction of a housing product by institutional investors which is built from scratch with for the purpose of renting
; Providing incentives (urban planning, tax, etc.) for offering only affordable housing
; Exploiting state land, without this implying its alienation
2. Targeted financial support of demand
The economic reinforcement of demand is of great importance, however ETEK underlines that it must be done in a targeted manner (to the low-paid and the disadvantaged) and with special care, otherwise a vicious cycle of maintenance of high prices may be created. In the package of measures submitted by ETEK, it is emphasized that actions to strengthen supply should precede the implementation of measures aimed at demand. In this regard, the Chamber recommends:
· Modernization of state subsidy schemes to meet today's conditions
· Rent/interest subsidy
· Provision of subsidies for buying/building a roof
; Facilitating access to financing
3. Reduction of construction costs
It is a fact that one of the important factors of the increase in the price of real estate is the increase in the price of construction materials. Therefore, ETEK proposes the following:
· Evaluation of technical requirements in order to remove or modify unnecessary building requirements
; Use of alternative materials to reduce costs, such as standardization, repetition or modern technologies (prefabricated or 3d printing)
· State subsidy of tenders or studies to reduce construction costs
· Further study of standardization, repetition and reuse of materials in collaboration with Polytechnic Schools
· Further simplification and acceleration licensing procedures
“The issue of affordable housing is multidimensional and is one of the most important problems plaguing Cypriot society. Sure, it can't be magically resolved. However, measures need to be taken immediately. Otherwise, with the forecasts not bringing the situation to change in the immediate future, the problem will swell further and the basic human need, the roof, will be an elusive dream”, said the President of ETEK, calling on the government to raise the issue in the its priorities.
