Cypriot model may replace Katseli law

Cypriot model may replace Katseli law

The banks and the Finance Ministry are examining alternative solutions for the protection of debtors’ main residences after the provisions of the so-called Katseli law expire at the end of this year.

Among the options under consideration is the Cypriot model, which provides for the state to subsidize a third of the monthly installment borrowers pay, on the condition they fulfill certain criteria.

The Cypriot system, known as ESTIA, covers not only vulnerable social groups but also the middle classes, as it provides for the protection of main residences with a commercial value of up to 350,000 euros owned by individuals with an annual income of up to 60,000 euros.

The core of the ESTIA model is the obligation of the bank – or the firm that has bought out the loan – to restructure the debt based on specific criteria such as the interest rate, the payment period and the consistency of each borrower in their repayments.

The system that Greece adopts will not necessarily be exactly the same as the Cypriot one, but the latter could provide a basis for a plan to replace the law named after former economy minister Louka Katseli, unless the application of that legislation is extended into 2019.

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