More than €100 million was allocated in 2025 to address Cyprus’s housing problem, according to the Ministry of Interior, whose housing policy is built on two main pillars, increasing housing supply and strengthening citizens’ purchasing power. The ministry identifies the key driver of the crisis as the imbalance between supply and demand.
The housing issue, which affects Cyprus as well as other European countries, has intensified in recent years. According to Eurostat, Cyprus ranks among the EU member states with a comparatively smaller housing problem, though authorities stress that a serious and tangible challenge nonetheless exists.
The ministry attributes the widening gap primarily to rising construction costs, driven by inflation, the Covid-19 pandemic and geopolitical developments, including the war in Ukraine and instability in the Middle East. These factors slowed construction activity, reducing available housing stock, while demand has remained high, pushing up rents and purchase prices and making access to affordable housing increasingly difficult.
National housing policy framework
Housing schemes and measures focus on addressing the problem mainly in urban and peri-urban areas, where pressure is strongest, while also supporting rural and mountainous regions.
Pillar A: Increasing housing supply
Planning incentives and build-to-rent schemes
Developers are offered additional building coefficients of up to 45 percent, on condition that part or all of the extra housing units are made available at affordable rents or sale prices. Developers may alternatively buy out the additional coefficient, with proceeds paid into the Cyprus Land Development Corporation’s affordable housing fund. Based on current interest, more than 2,000 housing units are expected to be created over the next two years, with over 300 designated as affordable housing. Buy-outs are expected to generate more than €11 million for the fund.
Renovate and Rent scheme
Owners of vacant or underused homes can receive grants of between €15,000 and €35,000, depending on the type of unit, to renovate properties and rent them at affordable rates for four years. The scheme targets municipal areas and aims to quickly utilise existing housing stock. Despite relatively high grants, interest has been lower than anticipated, with 63 applications submitted so far. The Interior Ministry, in cooperation with the Cyprus Scientific and Technical Chamber, is preparing revisions to the scheme.
Cyprus Land Development Corporation
After a period of limited activity due to lack of funding, the government has reactivated the corporation as the main implementing body of state housing policy. Funding has been secured through state contributions and compensatory payments from other schemes. €16 million has been allocated for the first phase of an affordable rental project in Ayios Nikolaos, Limassol, and an additional €12 million for 54 units in Strovolos. Construction began on 181 units in 2025, with a further 258 units expected to follow in 2026.
Pillar B: Strengthening purchasing power
Schemes for rural, mountainous and disadvantaged areas
Revised housing support schemes provide grants ranging from €20,000 to €95,000, depending on location, income and family composition. During the 2024–2025 period, 458 applications were approved, with €18 million allocated, while additional applications remain under review.
Housing support for young people under 41
A scheme aimed at supporting young individuals and families to purchase a primary residence in municipal areas offered grants of €20,000 to €50,000. The programme concluded in November 2025, with 1,033 applications submitted and 295 approved to date. Authorities are seeking additional resources to support more applicants.
Support schemes for displaced persons
Housing assistance for displaced persons and victims provides grants of €20,000 to €40,000, based on income and family criteria. The schemes were simplified in 2025, with expanded eligibility and higher income thresholds. In 2025 alone, 2,197 applications were approved, with €56.4 million allocated.
New housing schemes announced
In December 2025, the government announced two new initiatives:
Collective accommodation units scheme
Aimed at supporting commerce, industry and tourism, the scheme provides housing solutions for workers in these sectors. It allows for the construction of specialised housing units with reduced floor space, parking and communal areas, applicable to new or existing residential, mixed-use, commercial or tourism developments under specific conditions.
Affordable housing on state land
Approximately 500 housing units will be built on state-owned land in Nicosia, Limassol, Larnaca and Paphos. Construction will be carried out by the private sector under a design-and-build model, while allocation and management will be handled by the Cyprus Land Development Corporation, based on existing eligibility criteria.