Cypriot authorities plan to submit an official request to the European Commission in June, for the implementation of a mortgage-to-rent scheme, aiming to address non-performing loans (NPLs) held by banks and credit acquiring companies, which are collateralised by primary residences and mainly SME business premises with an estimated contractual value of €3bn.

Sources told the Cyprus News Agency (CNA) that consultations between Cyprus and the Commission’s Directorate-General for Competition are well underway aiming to expedite the process that would enable the transformation of the state-owned Asset Management Company (KEDIPES) to a nationwide AMG, which will in turn launch the mortgage-to-rent scheme.

The scheme will cover non-performing loans collateralised by primary residences and mainly SME business premises with a value up to €350,000.

When the scheme is approved, KEDIPES will launch a call for banks and credit acquiring companies aiming to acquire these properties and will then implement the mortgage-to-rent scheme.

According to the report, the scheme will entail a 15-year payment duration, while borrowers could submit a proposal to acquire the property after five years. Furthermore, the annual rent is envisaged to amount to around 3% of the property value.