Cyprus: Scheme For Protection Of The Primary Residence

Last Updated: 19 August 2019
Article by Antonis Karitzis
Most Read Contributor in Cyprus, August 2019

On the 12th of July 2019 the Council of Ministers decided and approved the Scheme for Protection of the Primary Residence (''Estia Scheme'') and authorised the Minister of Finance and the Minister of Labour, Welfare and Social Insurance to negotiate and sign with all the licensed Credit Institutions and the Credit Acquiring Companies (''the Credit Institution'') that wish to participate in the Scheme.

The Competent Body for application and implementation of the Scheme has been appointed by the Ministry of Labour, Welfare and Social Insurances.

A. Beneficiaries

The right to participation and accession to the Scheme is available for all borrowers which satisfy specific income and property criteria and which have received Credit Facilities (which satisfy the criteria of the Scheme) from Credit Institutions of Cyprus which have signed the proposed Memorandum of Understanding with the Government.

B. Basic Criteria and Conditions for Accession to the Scheme

  1. The Scheme concerns Credit Facilities which had been rendered Non-Performing on or prior to the 30th of September 2017.
  2. The Open Market Value of the Primary Residence does not exceed the amount of €350.000.

Important Notes

  • The date of submission of the application constitutes the crucial time for evaluation in order to determine the open market value of the Primary Residence.
  • The valuation is carried out by independent evaluators which are recognised by the Technical Chamber of Cyprus (TCC) and appointed by the Applicant and the Credit Institution separately.
  • The Applicant may forgo his right to appoint an Evaluator.
  • The Scheme includes a detailed mechanism for fair and just evaluation of the open market value of the Primary Residence between the Applicant and the Credit Institution.
  1. The total Family Income, namely the total annual gross income of all the members of the Applicants Family, irrespectively of the source of the income, must not exceed per each calendar year of 2017 and 2018 the following maximum amounts:
    1. €60.000 for families with 4 dependant children or more;
    2. €55.000 for families with 3 dependant children;
    3. €50.000 for families with 2 dependant children;
    4. €45.000 for families with 1 dependant child;
    5. €35.000 for families without dependant children;
    6. €20.000 for solitary households;


  • Members of the ''Applicants Family'', for the purposes of the Scheme, are constituted by the Applicants spouse, the Applicants partner (by virtue of the Civil Partnership Law) and the Applicants dependant children, given that they inhabited the Primary Residence until the 30th of September 2017.
  • ''Dependant Children'' for the purposes of the Scheme, means children (legitimate, out of wedlock and adopted) which have not completed the eighteenth (18) year of age.
  1. The Remaining Unencumbered Family Property of the Applicant per each of the calendar years 2016, 2017 and 2018, must not exceed in open market prices, 80% of the Primary Residence and by no means shall it exceed the amount of two hundred and fifty thousand euros (€250.000).


  • The ''Remaining Net Property of the Applicant'' is interpreted for the purposes of the Scheme, as any immovable property, moveable property or financial assets of the Applicants' Family, excluding the Primary Residence and deducting current Credit Facilities (excluding however the Credit Facilities which are secured by the Primary Residence).
  1. The Applicant must be a Citizen of the European Union (''EU'') with legitimate and constant residence within the EU from 2013 and thence.

C. Other Main Criteria and Conditions of Eligibility for the Scheme

  1. Participation in the Scheme is subject to approval by the Credit Institution which maintains the right to examine and decide whether the Restructuring solution which is provided by the Scheme is Viable or not.
  2. Any cash or deposits exceeding the amount of €10,000 or exceeding 20% of the Applicants' Remaining Net Family Property (taking into account the one which is the largest), must be paid against the Non-Performing Credit Facilities before the process of restructuring.
  3. The Applicant ought to give written consent for access of the Competent Body to data which the Applicant has submitted to credit institutions in the context of restructuring or else, whilst also any additional data demanded by the Competent Body for purposes of the Scheme.
  4. The Applicant shall also be required to provide security in the form of first mortgage or assignment of sale agreement or leasing contract in relation to the Primary Residence.

D. Process of Accession to the Estia Scheme and Timelines

  1. The Applicant must complete and submit to the Credit Institution the application and all the necessary supporting documents and information as presented in the Memorandum of Understanding, within the period of application submission, namely as of 2nd of September until the 15th of November 2019.
  2. The Credit Institution, after examining the application and all the submitted supporting documents and information and after evaluating the viability of the offered restructuring solution, it notifies the results and the eligibility of the Application to the Competent Body within a time period commencing on the 2nd of September 2019 until November 2019.
  3. The Competent Body, after proceeding to independent examination and evaluation of the Application, shall inform the Applicant with regards to the eligibility of his Application until the 31st of March 2019.

E. Process of Restructuring- Main Conditions

  1. The Competent Body undertakes to repay directly to the Credit Institution one third (1/3) of the monthly instalments of the Restructured Loan (''Fiscal Funding''), given that the Applicant complies with his obligation to repay the two thirds (2/3) of each monthly instalment. The Fiscal Funding shall be paid to the Credit Institution at the end of each year, under the condition of receiving written approval by the Credit Institution that the Applicant is fulfilling his obligations to the fullest.
  2. If for any reason the Competent Body seizes at any time to provide the Fiscal Funding, the Applicant shall be obliged henceforth to repay the full amount of the remaining monthly instalments.
  3. The maximum repayment period of a Restructured Loan of Primary Residence is twenty-five (25) years. The respective repayment period for each Restructured Loan is dependant upon the age of the Applicant, as specifically defined in the Scheme.
  4. The repayment interest rate of the Restructured Loan shall be floating. During the first seven (7) years, the interest rate shall be calculated based on Euribor six (6) months, plus a margin of two and a half percent (2,5%). The total percentage for the aforementioned period of seven (7) years shall not exceed three and a half percent (3,5%) annually. For the remaining repayment period of the Restructured Loan, the interest rate shall be calculated based on Euribor six (6) months, plus margin of two (2) percent (2,0%) without the application of maximum price, as will be applied during the first seven (7) years.
  5. The maximum sum owed as a Restructured Loan shall be equal to the least between (a) the total remaining Non-Performing Credit Facilities at the date of the Restructuring and (b) the Open Market Value of the Primary Residence. It is given that the Credit Institution may, for the purposes of and in the context of the Restructuring, grant further discount and accept payment of the lowest of the two aforementioned amounts, for repayment of the loan which is to be restructured.
  6. The Applicant shall have the right to premature repayment of the ratio of the Restructured Loan which is allocated to him, namely the two thirds (2/3) of the loan, in which case the Competent Body shall continue to pay the remaining one-third (1/3) according to the Scheme.
  7. In case of default on behalf of the Applicant of his Restructured Obligations, the payment of the Fiscal Funding is terminated forthwith, the Applicant shall be burdened with the obligation to return to the Competent Body the total of the Fiscal Funding which had been paid to the Credit Institution and the Credit Institution will be able to rightfully proceed with legal measures against the Applicant, including foreclosure of the Primary Residence or other mortgaged assets, in accordance to the provisions of the Immovable Property Transfer and Mortgage Law.

F. Other Important Provisions of the Scheme

  1. The Scheme shall be in force commencing on the 2nd of September 2019.
  2. The Credit Institution shall not take any legal measures for Credit Facilities which are secured by the Primary Residence, for which they have before them a pending application for accession to the Scheme.
  3. The Applicant has the right to file an objection regarding the decision of the Competent Body to reject his application.
  4. The Scheme also provides for the conditions or the way of handling the following procedures, cases or matters:
    1. Calculation of the value of the Immovable Property other than the Primary Residence, the Moveable Property and the Financial Assets;
    2. Distribution of proceeds from the foreclosure of the Primary Residence;
    3. Cases where the Borrower is a different person from the Owner of the Primary Residence;
    4. Divorced couples;
    5. Problems with regards to title of deeds of the Primary Residence;
    6. Cases where the Applicant is in a state of unrestored insolvency;
    7. Amendment of existing agreements;
    8. Handling guarantees and other securities;
    9. Means of handling cases where the loan which is to be restructured, is not secured by additional securities aside from the Primary Residence, but also in the case that the loan is not entirely covered by these.

G. Important Footnotes

  1. Hereunder is a relevant link which directs to the Decision of the Council of Ministers, giving the reader the ability to achieve access and read, if he wishes to do so, the whole text of the Scheme.
  2. The present article includes only the main provision of the Scheme summarily and in a more simplified form. On particular points, the Scheme is quite detailed and for one to able to derive full information, we urge the reader to read and study the entire text of the Scheme or search for full details from a lawyer or other specialised advisor.
  3. Any terms or phrases written in the present article, in capital letters, have special interpretation in the current Scheme. The interpretation of some of those terms or phrases have been cited in the present article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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