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September 19, 2021

Central Bank’s Radulescu: 4,000 apply to surrender home under debt discharge law

As many as 4,000 home owners applied to have their debts settled under the debt discharge Law by surrendering ownership of their home, head of the National Bank of Romania’s Financial Stability Directorate Eugen Radulescu told a specialist conference on Wednesday.
‘Since 2013 we have returned to a positive trend as regards the real estate and net financial assets, but I’m afraid that 2016 will not be the same. My expectation for the second half of the year, provided that the debt discharge Law stays in effect, is for the value of real estate assets to fall. The market will be depressed, it will enter a compression process which will send the value of all real estate assets down. Not all of us want to sell our home now, but there’s a psychological factor that counts and which regrettably will further manifest, as we’ll see that we are more thinly padded because the apartments and all the buildings we own are no longer worth what they were. This won’t be a large-size compression. We anticipate that it will stop between 5-10 percent, but think that this means quite a lot compared to the total value of real estate assets. So far the number of applicants to surrender their home under the debt discharge Law is about 4,000. It’s 4,000 versus 10 million real estate owners. This is the great achievement of this law,’ said Radulescu.
According to him no other EU country has a debt discharge Law in place.
‘This legislative initiative will cost us all very dearly. There will probably be some electoral gains on its account, admitting that people won’t sober up until election and don’t find that in fact they only stand to lose,’ the BNR official also said.
The debt discharge Law on offering property against debt relief was published in the Official Journal on April 28 and came in force on May.

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