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Controversial rent bill ditched by parliament

Parliament has accepted the President’s decision to reject the law that would have imposed compulsory rent reductions on the grounds that it was unconstitutional and in conflict with EU.

PARLIAMENT yesterday accepted President Anastasiades decision that legislation aimed at regulating rents in the free market was unconstitutional and in conflict with EU, eliciting sour grapes from the bill’s authors, opposition party AKEL.

The law’s withdrawal means rent contracts will continue to be agreed between tenants and landlords, as normal.

The bill, originally passed by parliament in early October, aimed to lower residential and commercial rents for a period of one year. It was intended to apply to all contracts (rents and leases) concluded prior to October 2012.

But President Nicos Anastasiades, invoking his right under the Constitution, had then refused to sign off on the law and returned it to parliament.

The President said the law violated ‘liberty of contract’ as this is enshrined in the Constitution.

Article 26 of the Constitution states: “Every person has the right to enter freely into any contract subject to such conditions, limitations or restrictions as are laid down by the general principles of the law of contract. A law shall provide for the prevention of exploitation by persons who are commanding economic power.”

Anastasiades had argued moreover that the so-called ‘Law of Necessity’ could not be invoked to sidestep that article of the Constitution. The Law of Necessity, he said, was justified only in exceptional circumstances, such as when public order or national security are at risk. He also cited Supreme Court case law, which he said did not justify applying the law of necessity in this case since market forces had been regulating rents anyway, driving them down.

In a second vote yesterday to decide whether parliament should insist on passing the law or else accept the President’s referral and withdraw it, the majority of MPs opted for the latter.

The rent bill had been drafted by AKEL, who wanted to ease pressure on tenants amid the credit squeeze, despite warnings that the market should be left to its own devices.

At the House plenum yesterday, AKEL MP Yiannos Lamaris, accused the ruling party and the government of double standards.

Over the last few months, he argued, the administration and parliament have together churned out a raft of laws that do violate free market rules – cancelling collective agreements, seizing people’s deposits and imposing capital controls.

“It seems that it’s fine for the troika to invoke the law of necessity, but not for us to do the same,” he complained.

Lamaris also pointed to an apparent contradiction in government policy. He noted that back in April the cabinet decided to freeze controlled rents for the next two years in light of the deteriorating economic situation in Cyprus.

Rental market

The rental market in Cyprus can be divided into two broad categories: all buildings, (with the exception of hotels, petrol stations, etc) controlled by the Rent Control Law (1983), and the free market.

The Rent Control Law applies to tenancies of residential or business premises which lie within what the law defines as ‘Controlled Areas’. For a tenant to be deemed a ‘statutory tenant’:

(1) the property must fall within the defined areas (mainly cities).

(2) the building must have been constructed prior to 31 December 2000.

(3) the tenant must have had a lease which has expired and they have remained in occupation.

(4) the tenant must be an EU citizen or a company controlled by EU citizens.

(with amendments)

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