• The Ministry of Finance is pushing forward a support scheme for owners of occupied properties, funded exclusively by a 0.4% fee on property sales.

• To prevent the flat distribution of negligible sums, financial assistance will be granted in a targeted manner based on strict socioeconomic criteria.

• The final formula will factor in the applicant's annual income, the estimated value of the property, and the loss of use.

• Eligible beneficiaries under the scheme are defined as natural and legal persons holding property in the occupied areas or in the Buffer Zone, as well as their heirs.

• The draft proposal will be submitted to Parliament for a vote, while land development entrepreneurs express skepticism regarding the imposition of the fee.

Targeted Distribution replacing Flat Payouts

The preparation of the Special Financial Support Scheme for Owners of Occupied Properties is entering its final stretch, as the Ministry of Finance seeks a fair and sustainable formula to distribute a pot of €20–€25 million collected annually. In this way, it aims to avoid the risk of a flat, horizontal distribution that would reduce support to symbolic amounts of €2 per month for the majority of beneficiaries.

The prolonged delay in implementing the Scheme is mainly due to the vast number of potential beneficiaries, making implementation impossible to date without protective safeguards. If revenues were distributed without screening, it is estimated that 4 out of 10 owners would receive a negligible sum, defeating the purpose of the measure. To prevent this scenario, the Central Agency for Equal Distribution of Burdens (AAEDB) prepared draft regulations shifting the focus from horizontal provisions to targeted assistance.

Self-Sustaining Funding Mechanism

The most important element of the Scheme is that it does not burden the state budget. The Scheme relies on a self-sustaining funding mechanism powered exclusively by the real estate market in the government-controlled areas.

Specifically, a 0.4% fee is imposed on every real estate transfer pursuant to a sale. At the same time, in an effort to close loopholes and prevent tax evasion, the fee is extended to the sale of shares in companies not listed on the Cyprus Stock Exchange, provided those companies directly or indirectly own real estate property.

Key Pillars of the Formula

According to reliable information from INK, technical and economic processing focuses on establishing specific priority filters. The final formula will rest on three core pillars:

1. The estimated value of the occupied or inaccessible property.

2. The introduction of strict socioeconomic criteria to prioritize vulnerable groups and low-income applicants.

3. The calculation of income loss suffered by the owner due to the inability to utilize their property.

Eligible beneficiaries of the Scheme are natural and legal persons with real estate in the occupied areas or the Buffer Zone, as well as their legal heirs. By including heirs, the state seeks to keep the bond between younger displaced generations and their roots alive while offering financial relief.

Income Tiers and Loss of Use Criteria

Once technocratic processing by the Ministry of Finance is complete, the draft will be submitted to Parliament. Intense political debate is expected regarding who ultimately qualifies as "vulnerable."

Legislative approval is the final milestone required for the AAEDB to launch the specialized online application platform, ending years of waiting for thousands of refugees.

Information obtained by INK from the Ministry of Finance indicates that the adoption of a sliding scale based on total net annual household income (similar to other refugee schemes) is under consideration, preventing wealthy property owners from receiving the same amounts as citizens in genuine need.

Additionally, setting maximum annual income caps that increase according to the number of dependent children is being studied to ensure middle-income families with heavy expenses are not cut off.

The "Loss of Use" and income criterion represents the most complex pillar of the Scheme. The formula will calculate the lost revenue suffered by the owner due to the inability to commercially or agriculturally exploit the property over so many years. Properties proven to yield steady income (e.g., tourist land and commercial plots in urban centers) are expected to be treated differently in the calculation algorithm compared to parcels with lower economic yield.

Valuation of Inaccessible Land and Next Legislative Steps

The size and value of the occupied or inaccessible property itself form the basis of the equation, and efforts are underway to account for the property's estimated value (at prices to be determined from official Department of Lands and Surveys databases or adapted Agency formulas).

Special emphasis is placed on properties located within the Buffer Zone (inaccessible land), where owners are deprived of use even though the land lies within government-controlled areas.

Instead of dividing the total amount equally among all registered owners (which would result in "2 euros per month" for 40% of beneficiaries), a formula is introduced where applicants accumulating higher scores (lower income, greater loss of use, and more dependents) will unlock support funds.

Upon completion of the technocratic study by the Ministry of Finance, the draft regulations will be submitted to Parliament for discussion and enactment.

On the developer side, strong skepticism remains regarding the additional burden of the fee, even at 0.4%, arguing that it will add to already inflated construction and borrowing costs.

Source: ink.com