New legal framework for property foreclosures and borrower protection in Cyprus

Effective June 1, 2025, a new legislative framework governs property foreclosures and borrower protection in Cyprus, introducing a comprehensive enforcement system combining administrative and judicial tools. The legislation enhances the powers of the Financial Ombudsman, making decisions binding for disputes up to €20,000 and allowing for court challenges and administrative fines for non-compliance. Borrowers now gain improved rights to seek legal recourse and may request suspension of property foreclosures for up to one year. The framework strengthens insolvency protocols and mandates safeguards regarding the valuation of mortgaged properties. Statistical data shows a significant increase in requests for foreclosure suspensions, rising from 230 in 2024 to 437 in 2025. Most of these requests, 89% in 2025 and 85% in 2024, involved credit acquisition companies rather than traditional banks. This trend follows the transfer of non-performing loan portfolios to these companies and the resumption of foreclosure procedures in September 2024 after previous legislative suspensions. The Financial Ombudsman continues to play a role in mediating humanitarian cases to facilitate mutually acceptable solutions.