Understanding Rent Increases and Types of Tenancies in Cyprus: A Legal Insight
In Cyprus, the legal framework governing tenancies is divided primarily between statutory and contractual tenancies. The distinction between these two types of agreements plays a crucial role in determining a landlord’s right to increase the rent. The principal legislation that comes into play is the Rent Control Law of 1983 (Law 23/1983), commonly referred to as the Rent Control Law, which applies only in certain circumstances. Properties and agreements that fall outside its scope are governed by general principles of contract law under the Civil Wrongs Law and the Contracts Law (Cap. 149).
-
Statutory Tenancy under the Rent Control Law
A statutory tenancy arises when a tenant continues to occupy a property after the expiration of the original contractual lease, provided that both the tenant and the property fall within the scope of the Rent Control Law. This law applies under the following main conditions:
- The property is situated within a “controlled area” (i.e., towns and some urban areas designated by law).
- The property was completed before 31st December 1999.
- The tenant is a statutory tenant, usually meaning they have resided in the property continuously and lawfully.
In these cases, even if the original lease agreement expires, the tenant has a statutory right to remain, and the landlord cannot evict them or increase the rent freely.
Rent Increases under Statutory Tenancy
Under Article 8 of the Rent Control Law, rent increases are strictly regulated. A landlord can only increase the rent every two years, and only by a maximum percentage as determined by the Council of Ministers, based on economic indicators such as inflation. In recent years, the permitted rent increase has been set at 0%, essentially freezing statutory rent increases.
To proceed with a rent increase, the landlord must apply to the Rent Control Court, which assesses whether the proposed increase is justifiable based on factors such as improvements to the property or significant changes in market conditions. Without a court order, any unilateral rent increase is void and unenforceable.
-
Contractual Tenancy
A contractual tenancy is based purely on the terms agreed between the landlord and the tenant, and is governed by contract law rather than the Rent Control Law. This applies when:
- The property is not located in a controlled area, or
- The property was constructed after 31st December 1999, or
- The tenancy is for business use and is explicitly exempted by agreement, or
- The tenant is a legal entity, rather than a physical person.
In such cases, the parties have the freedom to negotiate rent increases in accordance with the lease agreement. If the contract includes clauses for periodic rent review or escalation clauses (e.g., linked to CPI or a fixed percentage), these will govern the rent increase process. If the contract is silent on the issue, the landlord cannot unilaterally increase the rent during the fixed term of the lease. Upon expiration, however, the landlord is free to propose new terms, including a higher rent, and the tenant can choose whether to accept or vacate.
Conclusion
The landlord’s right to increase rent in Cyprus is fundamentally shaped by whether the tenancy falls under the statutory framework of the Rent Control Law or remains within the realm of a contractual agreement. In statutory tenancies, rent control measures heavily favour tenant protection, including tight restrictions on rent hikes. In contrast, contractual tenancies allow for greater flexibility and negotiation, particularly for newly built properties or commercial leases.
Therefore, for landlords and tenants alike, it is essential to understand under which regime their tenancy falls. Legal advice is often prudent before attempting to alter rental terms, especially in cases where statutory protections may apply. A misstep could not only render a rent increase invalid but also open the door to potential legal disputes.
For more information contact us.
The information provided by Michalaki, Pitsillidou & Co LLC is intended solely for general informational purposes and should not be construed as professional or official legal advice. It is recommended that you do not take or refrain from taking any action based on the above information without first seeking legal or other professional guidance.
