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SHOULD THE STATE OFFER HOUSING?

Published on 27th December 2018


Due to the fact that citizens are having a tough time finding affordable housing, either to rent or buy, there is an ongoing debate about what the role of the state should be in resolving this problem.

The answer is clear-cut. The state’s involvement should be kept at an absolute minimum.

Many politicians, aiming to lure in the votes, are calling for the state to offer cheap housing either for rent or for sale.

Joining forces

This is where all others hoping to cash in on such a move, organisations’ officials, municipalities, etc seize the opportunity and join in.

The issue is neither simple nor just financial.

The proposed solution that the state should build suitable accommodation will create social problems by gathering low income families in low budget buildings of inferior construction, much in the nature of refugee estates. Is the solution to create ghettos for these people?

Who will bear the cost of this solution? The Cypriot tax-payer of course.

Furthermore the state will be called to monitor the construction and the procedure of giving these dwellings away to the rightful owners.

Management and maintenance

The state will also have to manage and maintain these buildings.

Past experience shows that when the state undertakes such a role one can only expect a waste of funds, delays and corruption, the result being that the tax-payer has to pay twice or three times the real cost.

The example of the refugee estates is a good example why this has to be avoided at all costs.

The solution we propose is quite simple. When the Finance Ministry decides on the lump sum to be availed for this cause, each eligible family should be notified of the funds available to them.

A single child couple may for example be entitled to a €400/month for a 2-bedroom flat rental or a financial contribution of €50.000 to buy the same flat.

Procedure

When the couple knows the financial help they will get they will find the suitable two-bedroom flat and enter into an agreement with the owner of the property. Let us suppose that they sign an annual rental agreement for €600/month. The state will contribute €400/month directly to the owner. The tax authorities will also be notified to handle the necessary deductions.

It is also important for the tenant to choose the area of the rental property as well as the rental price as the tenant will have to pay the €200 difference.

In the case of a sale, the amount the buyer is entitled to, will be paid by the state to the owner at the time of the property transfer.

All documents related to the property, (rental agreement, sales documents, title deeds), will have to be approved by the state.

The proposed solution will have a low management cost and can be implemented in a short time, as well as not creating ghetto areas. It should be handled through EEE a system that already exists which is able to provide credibility to the process. Having the state as the paying agent will also serve as an incentive to the private sector to build new dwellings, with all the consequent benefits to the economy.

 

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