ECONOMY

Interim residence protection

interim-residence-protection

The Finance Ministry is working on a support plan for the main residence of households considered financially vulnerable ahead of the resumption of auctions in early June.

The plan provides for the state to subsidize mortgage loans tranches along the lines of the protection that will apply once the state entity for property acquisition starts operating. The aim is to protect the main residence of borrowers from forced action by banks or servicers until the entity is set up.

The property acquisition entity is provided for by the new bankruptcy law on the provision of a second chance; it will acquire the properties of vulnerable households and allow borrowers to remain in them, paying rent that will be subsidized by the state. That subsidy will range between 70 and 120 euros per month.

However, the creation of that entity is expected to be delayed, as estimates put its foundation in early 2022. That would create a gap in primary residence protection, especially for vulnerable households – those with low annual income – with the limit ranging from €7,000 to €21,000 per annum depending on the number of dependent household members.

The need for protection is becoming urgent for this category of borrowers ahead of the full liberalization of auctions for all categories of debtors that gradually started in early May. Main residence protection continues to apply until May 31, and only if the debtors fulfill specific income and property criteria and are proven to have suffered from the pandemic. This is why the ministry is in talks with the banks for the protection of their vulnerable clients through a direct subsidy for those households regardless of the launch of the new entity.

In order to safeguard the payment culture, the government proposal provides for the debtor to cover a share of the monthly tranche, e.g. a third of it.

Meanwhile, the Hellenic Development Bank is activating Entrepreneurship Fund II on Wednesday, through which commercial banks will issue loans for investment purposes to very small, small and medium-sized enterprises. Loans will range from €25,000 to €1.5 million and be issued from 10 banks.