In recent years, confusion has prevailed regarding rent increases. As a consequence, baseless disagreements arise, and tenancy agreements come to an inglorious end something that brings only negative consequences, namely cost and hassle. The purpose of this article is to answer questions such as: When is a rent increase allowed and if it is allowed, what increase is permissible?
Legal framework and the two classes of rented property
The rules governing leases are not the same for every rented immovable property located on the island of Cyprus. It is therefore essential to understand the division of rented properties into two categories:
1. Properties that fall under the jurisdiction of Rent Control
2. Properties that do not fall under Rent Control
Rent‑Control jurisdiction
The basic statute that establishes the special Rent Control Court and, in general, constitutes the source of law for this category is the Rent Control Law of 1983 (Law 23/1983).
For a property to fall within this category, all of the following conditions must be satisfied:
- The property must lie within the limits of an area designated as controlled under the law that is, an area so declared by an Order of the Council of Ministers (see Cyprus Gazette Notice 154/77). It is worth noting that this administrative act covers the overwhelming majority of properties.
- The property must have been completed by 31 December 1999 (the commencement date of Law 20(I)/2001).
- There must exist a lease, tenancy, or other form of possession that gives rise to an owner–tenant relationship.
- The tenant must be statutory.
A leading first‑instance decision on the matter is K. Pochgelian & Sons Ltd v. Nat Jango Fashion Ltd, Application E53/08.
Under the interpretative provision of the Law (Article 2), a statutory tenant means a tenant who, at the expiry or termination of the initial tenancy, continues to occupy the property.
In Petrolina Ltd v. Athinodoros Vassiliades, the court held that even if the tenancy agreement is void, the tenancy cannot be ignored; it exists and produces legal effects because the tenant possesses the property. Thus, a month‑to‑month or year‑to‑year contractual obligation is deemed created, depending on the method of payment and the landlord’s unconditional acceptance of rent (e.g., if rent is paid monthly, the agreement is considered monthly).
If the above conditions apply, rent increases are set every two years by a notice of the Ministry of Justice and Public Order. In recent biennia because of economic turbulence no rent increase has been allowed, so any tenant meeting the above criteria could legitimately refuse a proposed increase. The current permissible increase, in Cyprus Gazette Notice 88/17, is 0 %, valid until 21 April 2019.
Other cases
If the property does not fall under the first category, then the issue of rent increase is governed by the wording of the signed agreement.
In other words, the contracting parties are free to determine the increase through a specific clause within the body of the agreement.
If there is no such agreement, the landlord is free to impose the increase they desire, although even if something was agreed verbally, it will be difficult to prove in court.
The Latin phrase “verba volant, scripta manent”, meaning “spoken words fly away, written words remain,” is particularly relevant.
Contract Law, with its special aspects regarding rental agreements, belongs to the realm of Private Law, meaning that its provisions take effect only when there is a dispute between the parties. Therefore, if negotiation yields a positive result, there is no problem.
However, if negotiation fails, the landlord may apply to the Court requesting vacant possession of the property.
Conclusion
For properties in the first category, the operative Cyprus Gazette notice is crucial; for properties in the second, whatever the parties have agreed governs. Many issues can arise during a tenancy, so before signing any lease agreement it is advisable to obtain information on the applicable law from a lawyer thereby avoiding a psychologically draining, costly, and protracted court process.
This article is for informational purposes only and should not be considered legal advice.
Panayiotis G. Kyprianou
Lawyer / Legal Consultant
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