The Cyprus Banks Association has written to the directors general of the five District Local Government Organisations (DLGOs/EOAs) demanding explanations over the revocation of planning permits, warning that banks risk being left exposed on loans secured against buildings that cannot be legally approved.
The letter, obtained by Phileleftheros, was also copied to the Interior and Finance ministries. The association said its members face credit risk from “the granting of loans secured by a mortgage on a building under construction whose permit is subsequently revoked.”
Banks are particularly concerned that the fast-track licensing process introduced in recent months may produce higher rates of permit revocation. Site inspections have compounded those fears: according to previous Phileleftheros reporting, spot checks carried out by Nicosia DLGO officials between March and August 2025 on 13 issued planning certificates found that only 15% of applications were fully valid.
Some 31% had minor irregularities, while 54% had serious irregularities — including breaches of development coefficients, parking failures, and insufficient distances from plot boundaries — that would make legalisation impossible.
In its letter, the association asked the DLGOs to set out the legal grounds on which permits can be revoked, the stages at which revocation is most likely, and — critically — whether banks holding a mortgage are notified if a permit on a property they have financed is withdrawn.
The association warned that without such notification, lenders would continue disbursing loan instalments against a mortgage that was losing value on a building that could not receive a title deed.
Nicosia DLGO president Constantinos Yiorkadjis said meetings were under way between the relevant services to address gaps identified in the Interior Minister’s decrees on the licensing process, with one goal being a uniform policy across all DLGOs.
The Nicosia DLGO has already submitted a proposal for an independent Technical Dispute Resolution Committee to act as a second-tier body for reviewing permit revocations and other issues arising from the fast-track licensing decrees, according to the organisation.
The fast-track system was initially introduced for Category A developments — projects of up to two residential units — with planning and building permits issued within 40 working days. In March 2025, it was extended to Category B developments, covering projects of up to 12 units in a row and four-storey apartment blocks of up to 20 flats and one basement, with permits to be issued within 80 working days.