Seems some new regulations will require buildings to meet energy efficiency standards and failing to do so will be punished by:
Inability to mortgage the building
Inability to transfer ownership

Comes into play in 2028.

Not going to lie this sounds like amazingly good news and will hopefully reign in the absolutely insanely over inflated prices in Cyprus. Especially Limassol. Since it basically creates a sell by date for a good portion of housing.

I just wanted to share the good news with everyone. Because this has made my day. Maybe even week.

Maybe that plus the recent pool stuff will make prices humane. But who knows, probably not.

7 comments

  1. That will create a medium term pressure in the property prices, but right after the beginning of the legislation the homeowners will pay the difference, or more. Nothing to be excited about.

  2. This will not bring housing prices down. It’ll make building costs higher.

    >Se some new regulations will require buildings to meet energy
    efficiency standards and failing to do so will be punished by: Inability
    to mortgage the building Inability to transfer ownership

    Upgrading the energy efficiency of larger apartment buildings will be costly. The response to this will come in two types:

    1. Those who can
    2. Those who can’t and won’t

    The second type will have the following options according to the snippet above.

    1. Sell
    2. Rent only
    3. Close it.

    If they sell they’ll have to sell to someone who can afford to upgrade i.e. a property investment company, the church etc. These organizations will have an oligopsony on a particularly large section of the market.

    If they continue to own and want to make an income from the properties passed 2028, they must rent only. Renters won’t see any benefits from this rule change and where the building is improved, the speculative value will have an immense effect on their rents.

    Close it and leave the building uninhabited and declare a tax loss on it. Can’t afford to upgrade it, can’t sell it, and if I can’t afford the upkeep I can’t rent it. At best they become giant single family homes.

    Whose to know what the effect of all of this will be on the insurance landscape.

    Let it be understood, this will concentrate market power into fewer hands who will control a larger proportion of a smaller pie. Increased costs will make home ownership a higher income prospect and renters squeezed into different categories. Many properties may stay fallow.

    Now the directive may be more thought out than what you describe, but based on what you said this is what I expect. Blanket rules have unintended consequences. Lower rents will not be one of them.

  3. this will not help new constructions to get cheaper. The prices of older houses could get cheaper. There are already incentives to make your house more energy efficient though.

  4. What happens to a house that has a mortgage that needs to be renewed but the house is old and doesnt meet standards and the owner can’t afford to upgrade?

    Likely this will only apply to new builds in which case this just increases the price of housing.

    Energy costs should decrease if new builds are more efficient but that’s an after purchase effect. It won’t help you buy the house upfront.

    Things that would help are heavily taxing vacant properties including and especially those owned by Banks (from repos), 3rd party sellers I.e. REMU/AltaMira, and the Church. Increasing rental income tax on a sliding scale (the more properties an entity rents out the higher their tax percentage).

    Reigning in speculative vehicles like REITs would help too but that could also be solved with a higher capital gains tax.

    Fact is the people in power are the land owning elite and they zero interest in making ANYTHING more affordable. Governments and CBs will, and are, inflating away the ability for regular folks to own or afford anything.

  5. Uh,

    So what happens to house prices if you suddenly remove all the old homes? (They will go through the roof)

    also the bit about not being able to rent unless up to date is going to cause a blood bath.

  6. So another policy to screw over poor people? I bought an old, stone house. Partially because I loved it and partially because it was one of the only houses in my budget. Its energy effiency is crap and trying to upgrade it will cost a fortune. So I guess if I ever need to sell it I’m out of luck…

  7. I’m trying to get my head around this because this is gonna create a lot of weird dynamics.

    So if you live in an old building that objectively needs renovating (after 2028), who is going to foot the bill? It will be impossible to get everyone in the building to agree to it. Which is going to cause a lot of conflict, because unless the building is renovated, individual apartments within the building will not be able to be sold because the transfer of title deeds is blocked until the building is renovated. Imagine there are 50 of you in a building, 49 want to renovate, but you can’t because of that 1 asshole.

    Eventually then you might get a situation then where a company offers to buy up all the individual apartments for pennies on the dollar because:

    a) The building will have deteriorated to such a bad way that no one wants to live thereb) No one is going to foot the bill for the renovation

    So although they won’t have the deeds they know that once they refurbish it they will have them, and will then be able to sell on for a profit. So the only one here who benefits is the developer.

    Edit: I wonder what this also means for listed buildings. I may be wrong but I don’t think it’s even possible to make some of the old traditional houses energy efficient.

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