- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Focus of the Cyprus town planning bills was wrong

INTERIOR MINISTER Neoclis Sylikiotis fired a broadside against the legislature, earlier this week, for delaying passing the five bills relating to the town planning amnesty. Sylikiotis had been angered by the postponement of discussion of the bills at committee level and what he saw as the deliberate delay in deputies making a decision.

He did not mince his words, accusing deputies of employing delaying tactics, “in a co-ordinated and methodical way, constantly coming up with new suggestions or proposals, many of which aimed to change or weaken every innovative proposal put forward by the bills”. The President of House was also targeted by the minister, for having gone back on his promise to arrange the approval of three of the five bills 10 days ago.

While the minister’s anger was understandable, these are complex bills which need to be carefully evaluated. The practice of House committees to ask for the views of all parties affected by a law proposal does not contribute to speedy decision-making, and sometimes it gives rise to irrational decisions. In the case of the town planning bills, after inviting developers, estate agents and an array of government officials, deputies remembered that representatives of the banks had not been invited to give their views, so another meeting was arranged.

Banks objected to provisions

Banks, which are part of the Title Deeds problem, expressed objections to certain provisions, causing deputies to look for new compromise solutions. However the chairman of the Legal Affairs Committee Ionas Nicolaou gave assurances that all five bills would be approved before the House broke up for the May elections. Whether the bills will be approved in their original form or will be changed by deputies to satisfy interested parties remains to be seen.

Bills do not strike a balance

Nicolaou’s claim, a couple of months ago, that “we aim to strike a balance between the rights of the buyer and the seller, but also guarantee the rights of the mortgagee”, was not likely to inspire much confidence. What balance needed to be struck? Surely after the property fiasco which has left around 100,000 foreign home owners without Title Deeds and wrecked Cyprus’ reputation abroad, the legislators should have one objective: to guarantee the legal right of a buyer to be handed a Title Deed as soon as he pays for a property. How is allowing a seller to carry on using a property he has sold, as security for his bank loans, a case of striking a balance?

The government, to its credit, has tried to address the problem with its bills, by stipulating big fines for delays, omissions or fraudulent information in documentation required for obtaining a Title Deed, but has it gone far enough in protecting the buyer? We mention this because legally protecting the buyer is of critical importance to gradually restoring Cyprus’ tarnished reputation and kick-starting the stagnant property market.

Hundreds of holiday homes remain unsold, despite prices being slashed, because potential, foreign buyers have been made aware of the Title Deeds fiasco. A sound legal framework, ensuring the immediate issuing of Title Deeds, combined with attractive prices could re-kindle foreign interest and put in motion a small property market recovery that would benefit the economy.

Government aimed to collect revenue

Unfortunately, this was not what the government set out to achieve in drafting the bills. Its main objective was to collect funds through the town planning amnesty, because revenue from property transactions had hit rock-bottom. Under these provisions, people, who had not secured final approval for their flats or houses because of building permit violations, would be entitled to pay a fine to the state and secure the approval necessary for the issuing of Title Deeds. When the deed was issued transfer taxes would be paid to the state.

Securing Title Deeds will be expensive

But will people take advantage of the amnesty to secure Title Deeds, which will be a costly exercise? Many Cypriots, especially those not planning on selling their property, would most probably prefer to wait a few more years for a Title Deed rather than pay thousands of Euros in fines and taxes to have one issued, at a time of economic uncertainty and tight money. This may also explain why deputies are not in a big hurry to approve the town planning bills – there is no public pressure apart from the agitating by the impatient minister.

The irony is that the big problem faced by the people who have been pressuring the government for action – the 100,000 foreign property-buyers without Title Deeds – would not be solved by the eventual passing of the bills. There is no obvious or easy solution to that problem, which is why the government has focused on formulating bills that would raise state revenue.