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Limassol rents skyrocket

Demand for rental properties in Limassol has grown in recent years as local buyers have difficulty in obtaining home loans due to the banks’ stringent loan conditions and because it attracts plenty of foreign businessmen.

Limassol rents skyrocket

Limassol Marina

LIMASSOL’S status as a lively cosmopolitan seaside business centre which is home to a large, mostly wealthy expat community is having a huge impact on rents and pricing locals out of the market.

Property experts say rents in Limassol far surpass those in any other city across Cyprus.

An unremarkable average two-bedroom flat can rent for between €800 to €900 and more per month if close to the beach. Further away from the coast, rents may be between €500 to €600, according to property valuer and consultant Antonis Loizou.

By contrast in Nicosia, the same kind of flat, even in areas with high student populations such as Engomi and Makedonitisa that push up rents might cost somewhere between €450 to €550, chairman of the Cyprus property valuers’ association, Kyriacos Talatinis, told the Sunday Mail.

The discrepancy is infuriating Limassolians desperate to rent.

“I think the heat here in Limassol has gotten to everyone’s brain. Please explain to me how the hell in Paphos and Larnaca you can find brand new apartments for €350 up to €500 for two bedrooms and in Limassol, one bedroom from €750 to €1,000,” one commentator wrote on a Facebook group advertising houses and flats for rent.

“Some people have families… how are they supposed to buy other things for the house and support their children. I don’t know if my voice will be heard but it’s about time someone spoke their mind.”

According to Talatinis, Limassol’s high proportion of Russians is a major factor in rental prices.

“Limassol has a special category comprised of Russian businesspersons that can afford to pay high rent,” he said.

Limassol is also unique, Loizou said, because it attracts plenty of foreigners for businesses. Although Paphos and Protaras are also popular rental spots, this is primarily in the summer months due to the tourist season, whereas the demand in Limassol is all-year round. This contributes to the cosmopolitan feel of the city that makes it so attractive to Russians who can afford more than the average locals.

Limassol has also been the recipient of many beneficial projects such as the marina and the upcoming casino while the old town has been given a huge facelift.

Although Limassol is a special case, the demand for rental properties in general has grown in recent years.

After the 2013 financial crisis “demand for rent increased because the capability of local buyers was limited due to difficulty obtaining loans for instance and thus they turned to renting,” Loizou told the Sunday Mail.

“As a result, there is less supply.”

The spike really began in 2015 and has continued through to 2017.

The changing structure of society is also part of the demand for rental properties. Although Cypriots began to turn to flats as housing loans became harder to obtain, another contributing factor is that young couples largely choose to move in together before taking any more permanent steps in their personal life.

“The ways of life we saw in the West decades ago are quickly becoming the norm in Cyprus,” Talatinis said.

Nowadays, couples will try out renting a flat together before opting to get married – if they even choose to at all – a model drastically different from the traditional scenario when two people would get married and buy or build a house, he added.

“All of these factors contribute to an increasing demand for apartments, which in turn push prices up.”

But Loizou suggests that this increased demand could in turn encourage young people to go back to buying property.

“If they have a salary of about €2,000 per month and their rent is €700 (plus expenses) they might prefer to get a loan and pay €1,000 per month but own the property.”

Another effect in Limassol will be that people on lower budgets will look to places further away from the beach where rent costs are lower, Talatinis said, or alternatively seek out older properties.

Limassol residents Eleana Gregoriou and her boyfriend, both in their 20s, have been searching for a place to rent for months now.

“We’re not in a terrible rush as we’re both comfortable living with our parents, but we really want to start a life together and it’s hard because the rent prices are really off-putting.”

Gregoriou works two jobs, as does her partner.

“We were really considering one that was €500 with two bedrooms near the central police station. I was near my job as well but it was such an old flat. I didn’t want the roof to collapse over our heads!”

A quick search online shows a growing resentment over rental costs in Limassol. A Facebook group posting an advert for a newly built two-bedroom flat in Zakaki and asking for €850 per month, quickly got responses along the lines of “what the f**k. We’re looking to rent, not buy.”

It has also seen the creation of groups exclusively advertising flats rented out for less than €500.

One commentator said they often observed an apartment being advertised for €500 for instance but then within a few days would be advertised for €730 “because too many people want it and they can make the price as they want.”

Swearing seems to be common underneath various advertorials, with one posted about two weeks ago asking for €1,000 per month for a two-bedroom house in Nikou Patichi soliciting a response of “are you f**king joking?

“€1000 for two bedrooms with furniture dated from the Middle Ages? And in Nikou Patichi? Wake up for f**k’s sake.”

Salaries often crop up in discussion. One commentator said that perhaps the wrong question was being asked. Instead of asking why rent prices were high, the question should be “why are the salaries in such a good city so low? They forgot to increase the salaries!”

Some tenants are still protected by the rent control law. In Limassol, properties for rent that fall under the responsibility of local municipalities or are in Platres, Kakopetria or Lefkara and were built before December 31, 1999 can fall under this law which aims to protect tenants that have already signed a contract with a landlord.

According to Talatinis, every two years, Cabinet sets a percentage by which owners have a right to increase the rents for an existing contract, valid for the following 24 months.

Since 2015, the increase has been set at zero, which means existing rental contracts, if renewed, cannot contain a price increase.

If the current tenant is not interested in renewing a contract, a landlord can then charge a new tenant whatever price they want to begin with.

Prior to 2011, the ceiling had been set at 14 per cent increase and reduced to 8 per cent between 2011 – 2013.

The law however applies only to Cypriot and EU nationals – meaning Russian residents are exempt from the protection the law offers.

Nevertheless, tenants who feel they have been wronged by their landlords can take the case to a rent control court, Loizou said.

“With the speed of courts in Cyprus, however, that’s another story.”

Editor’s comment

A friend of mine and his wife have around 15 properties in the Limassol area that they rent long term (at reasonable prices). He tells me that a further problem is that there are very few properties for rent in the Limassol area and that pushes up prices. He knows of one couple who have been looking since January to find something suitable to rent.

None of his tenants has moved in the last three years and one asked him for a five-year rental agreement – unheard of in the past.

A further problem is that developers are building very expensive high-rise apartment blocks in efforts to attract foreign investors (which have now brought in some €6 billion into the island’s economy). However there are very little new homes being built that ‘ordinary’ people can afford.

What the government needs to do is encourage the building of new homes for ‘ordinary’ people. One way it could do this would be to insist that for every 12, 15 or 20 ‘luxury’ houses and apartments being built is that developers build one affordable home for the local community to purchase with a caveat that prevents them from renting.

Readers' comments

Comments on this article are no longer being accepted.

  • Akis says:

    Government regulation such as the one proposed usually backfires in line with ‘ the road to hell is paved with good intentions’. Forcing developers to build low priced flats will mean lower profits, more bad loans, lower employment and lower taxes for the Government. Remember the Crisis of 2013? Good intentions and naivety were also at its root.

    The market will correct itself: higher rentals will mean that they will equalise or exceed the loan instalment of a loan to buy and, hence, will lead to higher sales, lower demand for rental and increased supply of the housing stock.

    A growing economy, low unemployment and increasing incomes are the only viable remedy. These take time as it takes time to change things in the property market where decisions take 2-3 years to yield results by which time things can change drastically making the original decision bad in hindsight.

    A good way to get quick results would be to ban rentals of residential flats to tourists on a short term basis. This is so since the supply of rental accommodation is curtailed further through the above practice. Can we chose to earn lesser income from tourism though?

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