For years, housing policy in Cyprus and Greece focused on homeownership, through subsidies for first-time buyers, favourable loans and tax relief. More recently, however, housing policy has begun to shift towards a broader goal: increasing housing supply and strengthening the long-term rental market.

Both countries are exploring ways to bring more homes onto the market, not only by making better use of existing properties but also by introducing incentives for new developments designed specifically for long-term rental.

Importantly, this is not simply a technical change. Renting is starting to be treated as an important part of housing policy, not as a temporary solution.

In Cyprus, this change in approach is already reflected in a series of government measures. On September 13, President Nikos Christodoulides announced two new housing schemes for young people and families, including the release of 570 state-owned plots across every district.

As he noted, more than ten housing programmes with a total investment of over €300 million have been rolled out since the government took office, while more than 5,500 new homes have been added to the market. He summed up the government’s direction in three areas: more housing, faster licensing and better use of state land.

To support those objectives, the government has also turned to incentives for private developers. At the heart of this strategy are two incentive schemes introduced by the Ministry of the Interior, the Planning Incentives scheme and the Build-to-Rent scheme.

Under these schemes, eligible developers may qualify for an increase of up to 45 per cent in the permitted floor area ratio (FAR), subject to specific conditions, including requirements to make additional housing units available at affordable sale prices or rents.

There are already signs of interest from the construction sector. Indeed, in March, Interior Minister Konstantinos Ioannou said that applications submitted under the incentives correspond to the gradual construction of more than 2,500 homes over the next two years, of which around 400 will go to the affordable housing market.

The Ioannou described Build-to-Rent as one of the two main schemes that had attracted strong interest from the construction sector. Following an evaluation, the scheme was revised to make it more attractive.

The government is not relying on private-sector incentives alone. At the same time, the state is pushing ahead with its own rental projects: around 500 affordable rental homes on state land, to be built by private developers and managed by the Cyprus Land Development Corporation, with completion expected by 2029.

Greece: tax incentives for homes built only for rent

Across the border, Greece is moving in the same direction, with different tools. On October 24, a package of 11 housing measures was presented, two of which stand out as directly targeting renting.

The first is the “Build and Rent” programme (Kataskevazo-Noikiazo), Greece’s version of Build-to-Rent. Its framework was enacted in the summer and provides an income tax exemption on rental income for companies that build new homes or convert buildings from other uses into housing, provided the homes are let on long-term leases of at least ten years at a pre-set rent.

The focus, however, is not limited to newly built properties. The second targets empty homes. Homeowners whose properties have been vacant for at least three years qualify for an income tax exemption if they rent them out under a lease of at least three years. They will pay no income tax on the rental income for the first 36 months.

Taken together, the two measures illustrate how the emphasis is shifting towards making more properties available for long-term rental. The Greek example shows that organised rental housing is no longer seen as an add-on, but as a pillar of housing policy in its own right.

Why do these incentives matter?

The importance of these measures becomes clearer when looking at how rental developments are financed. An apartment block built for sale pays for itself when the flats are handed over. One built for rent pays for itself gradually, through many years of rental income. That means it needs long-term capital and a stable, predictable framework.

This is where government incentives can make a meaningful difference. Planning incentives in Cyprus and tax exemptions in Greece can improve the financial viability of long-term rental developments, making Build-to-Rent a more attractive alternative to traditional build-to-sell projects.

Such measures can also encourage greater participation from professional developers, institutional investors and property management companies focused on the long-term operation of residential properties.

Furthermore, Cyprus and Greece are not alone in exploring the potential of this model. In several European markets, Build-to-Rent has already gained significant momentum, establishing itself as an increasingly important part of the residential housing sector.

Research by Cushman & Wakefield highlights growing interest in professionally managed rental housing, reflecting the potential of the model to support long-term residential development and expand housing supply.