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Cyprus bombshell rocks their Lordships

The Cyprus Government was ‘economical with the truth’ when it assured the UK Government that it intended to introduce a Bill to address the Title Deed issue affecting thousands of Brits who have invested in property on the island.

The Chamber of the House of Lords at Westminster

The Chamber of the House of Lords at Westminster

EARLIER today, their Lordships in Westminster were sent reeling by the news that the long-awaited bill being prepared by the Cyprus Government will not help those who have been conned into buying mortgaged property by rogue developers.

In answer to a question tabled by Lord Jones of Cheltenham in the House of Lords last December, Lord Malloch-Brown advised their Lordships that:

“Our High Commissioner in Cyprus recently raised the issue of title deeds not being supplied to purchasers on completion of a property purchase in Cyprus with the Republic of Cyprus Ministry of the Interior, and received assurances that the Cypriot Government intend to introduce a Bill to address this issue.”

However, the Cyprus Government omitted one vital fact – that the proposed bill will only benefit future property buyers; those who have already been ‘scammed’ will receive no help.

The truth was revealed in an answer to a further question tabled by Lord Jones who was seeking a progress report on the matter:

“Our High Commissioner in Cyprus discussed the question of title deeds with the Minister of Interior of the Republic of Cyprus on 27 April 2009. The Minister was fully aware of the problem of obtaining title deeds, an issue which also affects a large number of Cypriots. The Cyprus Government will introduce legislation to speed up the issuing of title deeds, but this legislation will only apply to future cases. The Minister expressed a willingness to meet representatives of interest groups about this issue.”

(You can read the full text of the question and answer by clicking here).

Rumour and speculation

FOR more than five months the much anticipated Title Deed bill has been the subject of much rumour and speculation.

At the recent Title Deed seminar in Paphos organised by the Cyprus Property Action Group Andreas Symeou, a senior official from the Land Registry, said that the only legislation being drafted was an amnesty for developers who had infringed various planning laws along with some minor adjustments to existing legislation to protect future buyers.

Last month, when speaking at the annual general meeting of the Land and Building Developers Association, Interior Minister Neoclis Sylikiotis said that that legislation was in process that would bring an end to the problem affecting the 100,000 properties bought by Cypriots and around 30,000 foreigners, most of whom are British.

It is now clear that the Interior Minister’s statement was no more than hot air; he has now confirmed that the legislation will not “bring an end to the problem affecting 100,000 properties”.

What is the Title Deed problem?

Looking at the problem another way, developers sell properties twice; first to the bank and then, for a second, time to the homebuyer.

THE key problem delaying the transfer of Title Deeds to some 100,000 properties is the fact that property developers have mortgaged the land on which they have built to the tune of €4 billion.

Even though people have bought and paid for homes built on that land, the bank’s claim to the money takes precedence over their claims to ownership and they are at risk of losing their homes. Looking at the Title Deed problem another way, properties are sold twice; first to the bank and then, for a second, time to the homebuyer.

The problem is compounded by lawyers alleging to work on behalf of buyers (but who in fact look after the interests of developers). They do not advise buyers about developer’s mortgages when they conveyance the property; many of them don’t even bother to check with the Land Registry to see if the property is mortgaged!

Unless buyers are lucky enough to find an ‘honest’ lawyer, they remain completely oblivious of the fact that a developer has mortgaged ‘their’ property – until they come to sell it – or the bank comes knocking on the door for its money.

Why be economical with the truth?

WITH the island’s reputation already tarnished by the bad publicity surrounding the deceitful and fraudulent practices of those involved in the property business, what motivated the Cyprus government to be economical with the truth? Why did it not say that the new legislation would only apply to future cases?

It has been rumoured that property developers and lawyers are so strongly connected with the Corridors of Power in Nicosia that any attempt to rectify the problems with Title Deeds or introduce a consumer protection system to deal effectively with these matters would be pointless.

What next?

WILL the government allow Cyprus to remain as MEP Nigel Farage put it “a rogue-state beyond the fringes of civilisation” and “a bandit-stronghold“, or will it act decisively to put an end to the problems blighting its property industry?

The EU has warned Cyprus that it will take the “necessary measures” if any infringement of EU law has occurred.

The European Commission has asked the Cyprus government to provide it with details of the legal provisions and practices regulating and operating in the property sector, warning that it will take the “necessary measures” if any infringement of EU law has occurred.

But as Cyprus has already demonstrated that it is prepared to be ‘economical with the truth’ when dealing with the UK government, what guarantee is there that it will not leave out important facts when answering questions put to it by the European Commission?

The EU Parliament has agreed to freeze hundreds of millions of Euros in EU payments to Spain as a result of illegal practices perpetrated against property buyers in that country, what are the prospects for the EU implementing similar sanctions against Cyprus?

Even before this latest bombshell had reached the ears of the EU Parliament its Vice President, Edward Macmillan-Scott, had stated publically that he was “appalled” and “enraged” by what was happening in Cyprus. No doubt after receiving this latest news, any statement he makes will be unprintable!

What future for Cyprus’ property industry?

Britain and other EU member states must take assertive action to protect their citizens.

ALREADY hard hit by the global financial crisis and the bad publicity surrounding its property industry, news that the Cyprus government has been ‘economical with the truth’ with the UK Government as well as its own citizens could have far reaching consequences for the future of its property industry and the economic well-being of the island.

In light of these developments we hope that the British and other governments whose citizens have been conned into buying mortgaged property will take assertive action to prevent any more of them falling into this and similar traps.

But let us not forget the many thousands of people of all nationalities affected by the deceitful practices of the property developers and their lawyers. These are the ones who need Britain and the EU to come to their rescue urgently.

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