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It is no secret that the pandemic has proved to be a nightmare for most people for many different reasons. This includes both landlord and tenant of private property who are desperately looking for answers to their questions related to their rights and responsibilities during these unprecedented times. Our responsibility at AGP Law Firm is to inform current and prospective clients of their general obligations as well as their rights according to the latest temporary orders and amendments to the Law related to Private Rent in Cyprus offering security and protection during these challenging times.
The Tenant – Household Rent
Imagine the scenario where a tenant has lost their main source of income as a result of the global pandemic. The Government of Cyprus has provided partial support for people in industries facing difficulties during the pandemic, but will this be enough for the tenant not to worry about rent payment and also be able to support themselves? The life of a person is affected even when their income decreases by the smallest percentage. 5 % can be enough to cause a tenant extreme difficulty and be forced to end their tenancy agreement, this is caused mainly by the prolonged dormancy of the economy through the government’s restrictive measures on the citizens of Cyprus.
There are still numerous questions to be answered for the tenant to be able to handle every difficulty:
- What must the tenant do?
- Where can he/she refer to?
- Who will be able to help?
Paying rent during the pandemic
Undoubtedly, the principle ‘pacta sunt servanda’, meaning ‘agreements/promises must be kept’ should be honoured. Tenants should at all times pay rent as usual and abide by all of the clauses of their tenancy contract if they are reasonably capable of doing so.
A tenant who does not have the ability of meeting their tenancy clauses should always consider discussing their financial inability with their landlord as soon as reasonably possible. The discussion may be more effective if the tenant is able to provide evidence of their income reduction. This will of course always depend on the personality of the landlord. Keeping a line of communication with landlords to make sure they feel comfortable discussing any problems or complications will be useful especially in circumstances such as the ones we are all currently going through.
According to the Cyprus Income Tax Law of 2002 as amended in 2020 (Law No 58(I)/2020), a landlord may have agreed with a tenant to a rent reduction for up to three months of an amount between 30% to 50%. The landlord should then, at the end of the year 2020, have received a tax credit for 50% of the rent reduction. The Law of 2020 has not yet been amended to give a further incentive for homeowners to further reduce rents and receive tax credit in 2021.
However, the tenant must remember that the reduction is always voluntary and that in case the landlord agrees to any percentage of reduction, the reduction needs to be evidenced by written agreement between the two parties. Although, the government has not amended Article 9E of the Law and therefore the tax credit incentive does not apply for the year ending 2021, it is worth discussing the possibility of rent reduction with the homeowner.
If the tenant is still unable to handle their finances due to the rent being still high in price in relation to the income, they may be forced to end their tenancy.
The Tenant – Commercial Property Rent
In terms of business property rents the possibility of a 30% to 50% rent reduction for up to 3 months also held up to the year 2020 with once again the landlords being eligible for a tax credit of 50% of the value of the rent reduction. Though, once again, these do not apply for the year 2021.
On the positive side, measures have been introduced in 2021 for businesses who in fact were severely affected and had to close down as per the new lockdown and government regulations that were imposed at the end of 2020. For such cases, if their landlord is a private individual, renting businesses are eligible for a 70% temporary rent reduction for the months of January and February 2021. If on the other hand the landlord is the state itself, then tenants are eligible for a full rent suspension for the first two months of 2021. Additionally, for commercial tenants that have already made their rent payments for the month of January, the above will hold for the months of February and March.
Nevertheless, these are not exemptions and therefore the amount of temporary discounts or full rent suspensions will have to be repaid before February 2022.
Termination of the tenancy agreement
When considering ending the tenancy agreement, a tenant should always consider what the terms are of the contract relating to termination and the notice required to give to the landlord.
To date, the Cyprus Government has not announced any measures and neither has urged for landlords to be more flexible with regards to a tenant’s notice to terminate the agreement. An example of such government measure could be allowing tenants to end the tenancy by giving a reduced period notice compared to the one allowed for in their tenancy agreement. A landlord may demand a certain payment/fee (which may be keeping a percentage of the tenant’s deposit) from a tenant in the case that the tenant requests to terminate the tenancy earlier than the contract provides. The amount charged cannot exceed the damage suffered by the homeowner.
Is the tenant’s deposit affected?
In Cyprus, a rent deposit will be governed mainly by the terms of the tenancy agreement. Consequently, the tenant’s deposit is not protected if the tenancy agreement states that the landlord is allowed to keep the deposit in order to secure unpaid rent.
Is the tenant worried about being evicted as a result of Covid-19?
The most recent amendments to the Cyprus Rent Control Act 1983 (Amendment Law No 3(1)/2020) make it a lot easier and quicker for landlords to evict tenants who do not abide by the terms of their tenancy agreement. Although landlords were banned from evicting tenants who have become financially and socially vulnerable due to the ongoing crisis caused by the Covid-19 pandemic until the 30th of September 2020, a tenant who has not been paying their rent can now be easily evicted from the rented property.
Measures in relation to the notice of seeking possession
Article 11(1) (2) of Law No. 3(1)/2020 makes it legal, where the tenant has not satisfied his contractual obligation to pay the rent within twenty-one (21) days or more, for the landlord to seek possession of the property by filing an eviction application to the Court. However, the landlord must give notice of at least one month to the tenant of his intention to take possession of the property. The notice should make clear that the landlord will demand possession of his property and of course, what actions are required to be taken by the tenant before possession is taken.
It is important to note that the tenant’s defense when replying to the landlord’s eviction claim will only be accepted if it is accompanied by evidence of payment of the unclaimed rents in question.
Both the tenant and the landlord should be wise enough to examine the possibility of the rental agreement being either frustrated or affected by the force majeure clause possibly included into their agreement. This should be the first step when considering the alteration of each party’s rights and responsibilities in case of unforeseen and out of control events or in times of crisis.
As it has been made abundantly clear, these are extremely difficult times both for tenants and landlords and even though measures have been put in place to ease the economic burden tenants and landlords are forced to face, they are not enough to resolve every tenancy complication that arises in these unprecedented times. Therefore, it is now where communication between the parties but also solid professional advice, are crucial in order to ensure that reasonable settlements are made that will be to the benefit of both parties. Our legal representatives at A.G. Paphitis & Co. LLC are able to assist both in the negotiation and settlement process of rental issues but also in any litigation process that a tenant or landlord may be involved in.
The information provided by AGP Law Firm is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.
Should you have any questions please contact us.