Distraught home owners facing financial ruin are about to be thrown a lifeline by the government in Cyprus.
As the Mediterranean island struggles with coming to terms with a bail out of billions of euros and the stuttering economy shows no sign of revival, the government is finally acting after years of ignoring the plight of home owners swindled by developers.
The Ministry of Finance has announced proposals for a rescue scheme for home owners who cannot afford to repay their mortgages.
And the help cannot arrive quickly enough for tens of thousands of beleaguered home owners.
The government wants to offer up to 200,000 euros of financial aid to avoid banks repossessing homes.
Instead, the government will buy the homes and rent them back to their owners for a nominal rent.
The government has also suggested restructuring home loans over a longer repayment period as another option.
The House of Human Rights Committee heard around 6,000 cases are pending repossession before the courts and thousands of other home owners are in financial meltdown.
Many of the victims are British expats who retired to the island and now cannot afford to sell up or leave.
The holiday destination was also popular with second homers from Britain who bought investment property and who now stand to lose substantial sums as their properties are not their main homes.
The problem dates back 50 years when the government at the time agreed banks and developers could keep homes on their balance sheets as assets to set off against debts without telling home owners.
Properties double mortgaged
In recent years, as recession gripped the island and some banks looked like failing, it was revealed many home owners were persuaded to take out mortgages on property already mortgaged by developers, who had first call on the asset.
As the island’s economy worsened, property developers went to the wall, only for thousands of home owners to discover they had no rights over their properties, even if they paid significant amounts in cash to buy them.
The double-dealing on property fuelled a high price bonanza on the island that saw some homes triple in value between 2004 and 2008, when the bubble burst.
The government is stepping in to change the rules to protect home owners and is hoping to have new laws in place in mid-2014.
Currently, thousands of owners do not have the deeds to their properties and the Cyprus land registry has a huge backlog of cases applying for and disputing ownership.
The land registry reportedly wants to reduce the backlog to 2,000 cases over the next few months.