Memo: Rent Control Law
1 Introduction
Currently in Cyprus there are two types of tenancy: contractual and statutory. Contractual tenancy arises by virtue of a contract between landlord and tenant whereas a statutory tenancy may arise (subject to certain conditions) once a contractual tenancy expires or terminates and the tenant remains in possession of the property.
2 Conditions
2.1 The conditions for establishing a statutory tenancy are that the property (residential or commercial):
2.1.1 must be located within the “control areas” (these areas are determined periodically by the Council of Ministers under the Rent Control Law (23/1983) and its amendments (the “Law”)) – these are generally urban areas of large cities and surrounding towns; and
2.1.2 must have been built before 31 December 1999.
2.2 Tenancies with initial term of less than 6 months are deemed as contractual irrespective if all other conditions for statutory tenancy are met.
3 Benefits of statutory tenancies
3.1 In general, in the case of statutory tenancies all the clauses of the initial tenancy agreement still remain in force, with the exception of the amount of rent payable and period of tenancy.
3.2 A person or legal entity who has statutory tenancy status benefits greatly from the higher level of protection that is provided by the relevant legislation as the eviction and repossession of the property by the landlord can be an extremely difficult process (can only be allowed by the Rent Control Court on specific grounds as defined in relevant legislation).
4 Rent Control Court
4.1 Any claims or disputes in relation to a statutory tenancy in Cyprus are within the jurisdiction of the Rent Control Court and not the District court as they would been otherwise in the case of a contractual tenancy.
5 Rent
5.1 Rent increases are only allowed up to a maximum rate that is defined every two years by the Council of Ministers. This rate which was initially set at 14% has been gradually reduced to 8% and currently sits at 0% effective from 22/04/2013 until 21/04/2019.
5.2 However, although the increase rate is currently 0%, in cases where the amount of rent payable is less than 90% of the average amount of rent in the proximity area of the property (average rent is determined by an expert valuation or court appointed valuer) then the landlord on grounds of fair rent provisions has the right to petition to the Rent Control Court to increase the rent to amount up to 90% of the average rent in the proximity area.
6 Eviction
6.1 As mentioned above, the eviction process is extremely difficult as a much higher degree of protection is provided to statutory tenants (eviction has to be sanctioned by the Rent Control Court which has the exclusive jurisdiction in statutory tenancy cases). According to the Law the main grounds that eviction can be potentially successful against a statutory tenant are:
6.1.1 in cases of rent arrears where the rent has been in arrears for more than 21 days from the day the notice was given and the tenant has failed to pay within 14 days of the date that the claim was made at the relevant Rent Control Court;
6.1.2 in cases where the owner requires the property for his own and his family’s use (the onus is on the owner to provide evidence and prove to the court that he was not able to find other comparable property with reasonable rent for his own use); and
6.1.3 in cases where the owner plans to demolish the property and construct a new building which will lead to the development of such property.
6.2 However, courts are usually open to reasonable requests by the tenant to grant postponement of the eviction date in instances where the tenant requires more time to find and relocate to different premises.
Key Contacts
For further information, please contact:
Pavlos Kaimakliotis
Partner
Tel: +357 24 01 01 01
pavlos.kaimakliotis@kaimakliotis.com
Alex Apostolatos
Legal Advisor
Tel: +357 24 01 01 06
alex.apostolatos@kaimakliotis.com