A Landlord’s Right to a Rent Increase
One of the ways a Landlord is entitled to a rent increase is by agreement with the Tenant. In Cyprus, of course, the Rent law of 1983 N (23/1983 (the “Law”) applies and one of the factors that must be taken into account is whether the Tenant is a Statutory Tenant.
When a Tenant is a Statutory Tenant, there are specific rules that specify how the Landlord can request a rent increase.
When is a Tenant considered a Statutory Tenant?
The rental agreement specifies the Landlord’s obligation to provide the Tenant with a property for a predetermined period of time, in return for a specified price (“the Rental Agreement”).
In general, where the Rental Agreement has expired or has been terminated and the premises where the Tenant resides have been completed before December 31, 1999, then the Rental Agreement may under specific conditions be considered statutory.
In such cases, the Law steps in the relationship of the Landlord and Tenant (regardless of the will of the parties) and determines the Parties obligations. Among other things, the Law regulates the way in which the Landlord may request a rent increase.
Permissible Rent Increase in Cases of Statutory Tenancy
In order for the Landlord to be able to apply for a rent increase in court, they should check whether the restrictions of the rent increase ceiling are met.
A Landlord is only able to apply for a rent increase in court in compliance with the official Rent Increase Regulations, which are set by the Council of Ministers in a Decree which is published biannually.
Between April 2013 and the 21st of August 2023, the regulation has imposed a mandatory zero increase, a figure reflecting the adverse economic conditions prevalent in tenants.
However, the Law states that if the determination of the fair rent based on the decree of the Council of Ministers, leads to a rent of less than 90% of the respective average rents of the small area, then a rent equal to this percentage can be claimed by the Landlord. In general, the small area is considered to be the neighborhood, the building block, the adjacent and opposite buildings, or properties on the same road. A small area cannot be demarcated in a specific area; its scope depends each time on the circumstances of each case.
Therefore, in such cases, when the Landlord considers that the rent charged is less than those in comparable premises within the area of the property, they may apply for a rent increase at the Court.
Example: A monthly rent of 500 euro has been charged for premises A from the year 2013 until present, and the Landlord has never applied for a rent increase. The current decree of the Council of Ministers specifies that the Landlord cannot request an increase. However, if the Landlord is able to present a comparative study for neighboring premises (e.g. premises B and C) through a property appraiser, showing that the prevailing monthly rent charged in the area is 1000 euro, then the Owner is allowed to submit an application to the Court for the rent to be set at 90% of the average rents in his area (i.e. Premises A, B and C).
In calculating the fair rent, the Court considers the average rental price of the small area and the current/running market rent and determines the amount of the fair rent by calculating 90% of their average. In its consideration, the Court will also take into account the determination made by the Appraisal Officer, who who will have to carry out an evaluation and prepare a written report, which, in most cases, concerns a comparative study of the rents paid in the area in relation to the one at issue. The comparisons taken into account are those for which a rental (either contractual or statutory) applies at the time of the submission of the application for a change in rent. It should also be noted that the premises at issue must be included in the comparative study, as it must be taken into account in the calculation of the average rents of the small area.
Date that the Fair Rent is Imposed:
Fair rent is determined on the date of filing the Landlord’s application for an increase in rent and therefore, at the stage of the issuance of the decision, the increase is retroactive.
It is noted that no application may be filed before the lapse of two years from the date on which the Tenant took possession of the property or from the date of the last increase or decrease of the rent. Also, the increase to 90% of the average of the small area can only be made once.
This article is given for information purposes only and it does not constitute legal advice. For further information and advice please contact Mr. Anastasis Anastasiou at email@example.com.