Protecting the primary residences of borrowers with non-performing loans depends mainly on finding viable ways to settle their debts, rather than on suspending or blocking foreclosures. Despite repeated political clashes and pre-election pledges to prevent foreclosures, consensual agreements between borrowers and creditors are in practice the only way to tackle the problem without cases necessarily ending in deadlock. The Rent Against Instalment scheme, run by the Cyprus Asset Management Company (KEDIPES), has already offered solutions. Applications closed on 30 September 2026, with more than 4,500 submitted in total. KEDIPES has said it continues to process applications and that 978 homes have already joined the scheme out of 1,307 approved, with the final number expected to exceed 2,000. Participation comes at a cost for banks and credit-acquiring companies, which are compensated with 65% of the property’s value and write off the debt, meaning they take a loss on every case that joins the scheme. Market sources told Politis that the priority is to find solutions for fellow citizens who are truly vulnerable. The scheme is aimed at vulnerable households and its main goal is to prevent the loss of the primary residence. The home is transferred to KEDIPES and the beneficiary continues to live in it as a tenant, with the state paying the rent. It offers a real way out for households with low or no income, for whom bringing the loan back into good standing is not a realistic option.
The solutions
Data published by KEDIPES on the management of the problem loans it holds show that, in practice, recovering debts through auctions is the exception, with a significant part of the effort focused on solutions that allow the debt to be settled. This picture shifts the public debate on non-performing loans, which often focuses on the risk of foreclosure without reflecting the range of settlement mechanisms available. Since it began operating on 1 September 2019, KEDIPES has offered solutions for loans with a nominal value of €5.601 billion, or 76% of the original loan balance of €7.371 billion. Of these, 36.3%, or €2.035 billion, involved loan restructurings, 24.9%, or €1.393 billion, full repayment of the loan, 22.4%, or €1.251 billion, debt-for-asset swaps, and just 6.5%, or €362.8 million, the recovery of properties following auction. In total, recoveries from the loan portfolio amounted to €2.686 billion, or 36.4% of the original nominal value. Of this, €1.908 billion, or 25.9%, came in cash, including state subsidies such as those under the Estia scheme, and €778 million, or 10.6%, in property. Write-offs totalled a further €2.506 billion, or 34.0%, bringing total net deleveraging to 54.2% before interest that has not been recovered or written off.
For borrowers who did not join the Rent Against Instalment scheme, restructuring the debt by swapping property they own in exchange for the debt is the answer in a large number of cases. This differs from a forced sale, as it requires the agreement of the parties involved. Depending on the terms, it can lead to a final settlement of the debt and reduce the need for a long collection process. For the borrower, the option may mean losing the property, but it also offers a clearer settlement of the debt. For the creditor, it allows an asset to be recovered without always having to complete a foreclosure procedure.
What it means for primary residences
KEDIPES data show that solutions reached through negotiation, repayment, restructuring and property swaps play a substantial role in managing the stock of legacy problem loans, held almost exclusively by credit-acquiring companies. This is no theoretical approach, as agreements are concluded every day. The strong response to the Rent Against Instalment scheme and the consensual solutions reached show that losing one’s primary residence is not an inevitable outcome for every non-performing loan. The debate on primary residences should therefore take into account the range of alternative solutions being applied as well as the number of foreclosures, which for homes remains extremely low.
