The Council of Ministers of the Republic of Cyprus has issued a new order under the Rent Control Law of 1983 (Law 23/1983) (the “Law”), setting a maximum rent increase cap of 6% for the period from 22 April 2025 to 21 April 2027. This cap applies to properties falling within the scope of the Law.
During this two-year period, landlords may impose rent increases of up to 6%, provided that at least two years have passed since the tenant took possession of the property or since the last rent adjustment. No further justification is required from the landlord to enforce this increase.
Legal Basis and Scope of Application
Under Article 8(4)(a) of the Law, the Council of Ministers has the authority to review and set, every two years, the maximum allowable percentage for rent increases affecting statutory tenancies. This measure aims to protect tenants from abrupt or excessive rent hikes while allowing landlords to obtain a reasonable return on their investments through modest, regulated rent adjustments. This approach also aligns with broader economic and social considerations.
From 2013 to 2023, the Council of Ministers maintained a 0% rent increase cap due to the economic hardship in Cyprus. Nevertheless, as of 13 April 2023, the cap was raised to 6% which will remain in effect through 2027.
Additionally, pursuant to Article 19(2) of the Law, the Council of Ministers confirmed that the same rent increase cap of 6% will apply to shops located in designated disadvantaged areas, ensuring a uniform application of the regulation across residential and certain commercial properties.
For the property to fall within the scope of the Law and qualify for the rent increase cap, it must meet the following criteria:
- Be located within a controlled area as defined by the Law,
- Be completed (i.e., fully constructed) on or before 31 December 1999,
- Have been rented or at least offered for rent before the above date, and
- Be occupied by a statutory tenant; i.e., a tenant who continues to occupy the property after the expiration or lawful termination of the initial lease.
It should be highlighted that certain categories of properties are excluded from these provisions, including agricultural land, petrol stations, parking spaces, furnished leases of less than six months, and hotel establishments.
Conclusion
The implementation of a 6% rent increase cap for the period 2025–2027 demonstrates the government’s intent to stabilise the rental market while allowing for reasonable returns to landlords. Landlords and tenants should assess whether their properties fall within the scope of the Rent Control Law and are encouraged to seek legal guidance to navigate their rights and obligations under the new regime.