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State-sponsored fleecing is island-wide

Abuse by the Land Registry Offices brings the whole system into disrepute and fosters cynicism and distrust of the Cyprus government’s regulations and practices.

IN response to the recent complaints about the Planning Department in Limassol, I can assure you the same fleecing occurs in Paphos.

In February 2003, we bought a Paphos flat with a purchase price of €123,000. The contract was filed by our lawyer in March 2003. In July 2010, the developer advised us our Title Deeds were now available for purchase.

Because we live in Canada, and would not be back in Cyprus until January 2011, we gave our Paphos-based lawyer power of attorney and the necessary funds to complete the land transfer. When he went to Paphos’ Land Registry Office (LRO), he was told the LRO had increased the value of our flat to €185,000 – a 50 per cent increase.

We would now be required to pay property transfer fees amounting to €5,833.64, rather than the €3,690.58 that would have been charged based on our purchase price.

When we questioned this unwarranted increase, our lawyer informed us that the valuation was ultimately at the LRO’s discretion and we could either simply pay the new amount or do so with an objection. The LRO could decline our objection and also set an even higher value for the property.

We sent the additional funds, but with a proviso that an objection be lodged. However, our lawyer signed off on the LRO valuation without filing an objection. His reasoning being that he was presented with information that other flats in our development had been sold in the same time period as our purchase at prices considerably higher, and the valuation placed on our flat was the best he could obtain.

When we arrived in January 2011, we expressed disbelief that we were able to buy our flat for one third less than the price paid by others in the same project and in the same time period. After two unsatisfactory LRO visits, we urged our lawyer to get more clarification on the assessed value. The LRO gave him information specific to nine flats in our project which, according to them, sold at prices per sq. metre which justified their valuation of our flat.

We contacted the owners of three of these nine flats listed by the LRO.

  • Flat no. 17 (126 sq. metres) was purchased for €1,234 per sq. metre. The LRO list showed the price as €1,796 per sq. metre – an increase of 46 per cent.
  • Flat no. 16 (73 sq. metres) was purchased for €1,123 per sq metre. The LRO list showed the price as €1,765 per sq. metre – an increase of 57 per cent.
  • Flat no. 6 (92 sq. metres) was purchased for €1,281 per sq metre. The LRO list showed the price as €1,831 per sq. metre – an increase of 43 per cent.

These three examples demonstrate that the LRO has fabricated information in order to fleece buyers like ourselves. This abuse can only bring the whole system into disrepute, and foster cynicism and distrust of government regulations and practices. It would be interesting to know whether this practice affects only properties purchased by foreign passport holders.

Declan Lane
Paphos

Readers' comments

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  • @dimitri – As far as I am aware, no fines imposed for failing to pay Property Transfer Fees. This is unusual because if you delay paying your income tax, local community tax, immovable property tax etc., you have to pay a penalty.

    Are you trying to give the government some ideas on how it can replenish the state’s coffers? :-)

    But if you do not pay Property Transfer Fees to get the property registered in your name, the person/company from whom you bought could make life ‘difficult’ for you. As the registered owner of the property they will continue to be responsible for paying the various property taxes and you could also lose your right to seek Specific Performance. Also, as the registered owner would remain responsible for anything happening on ‘his’ land, he could prevent you from making any changes to your property and you cannot sell it without his permission.

    (Incidentally, the Specific Performance Law has been repealed and will be replaced by a new law ‘The Sale of Immovables (Specific Performance) Law’ – Law 81(I)/2011. I believe this new law will come into effect in August).

  • dimitri says:

    I would like to know what happens if you do not have the funds available to pay for the deeds? You get no deeds for sure but are fines imposed?

  • andyp says:

    @Alan. Read your article Alan but not sure if any of these crooks can see past the end of their nose.

    Glad to hear from Robert that he has changed his mind about buying in Cyprus and I am sure he is not the only one. Just proves the point that word continues to spread and the Governments lack of action will only make things worse. Although they probably don’t see that. Never mind sensible people do.

  • Alan Waring says:

    For those interested, I have an article all about this entitled ‘Fighting the Chancer Culture’ in today’s Financial Mirror page 6. It can also be viewed on http://dralanwaring-riskconsultants.com/?p=672. Not sure if Nigel will run it as it is not just about property, Title Deeds etc.

  • Richard says:

    Blimey – haven’t seen a quest like this for a ‘golden fleece’ operation since Jason and the Argonauts!

    Let’s see if the ‘investigations’ by the MEP lobby force some sort of transparency out of the Cypriot LRO.

    Long term – in a ‘shoot-out’ between similar environments angling for the investor currency unit – countries that provide this information will bag the investors.

    Those who remain closed and prone to fleecing – won’t.

    Simples.

    Surely that’s obvious? But then – so is having a legal bar association not turning a blind eye to malpractice and a Government not turning the other blind eye to corruption and incompetence.

    Ray Charles probably saw more than this lot!

  • Robert Cairns says:

    After a number of years at looking to buy a property in Paphos, my wife and I have decided to look elsewhere to retire. There seems to be two certainties in life: Death and a good fleecing by a crooked state. Well done Cyprus, you have knocked yet another nail in the coffin of your once buoyant industry in order to protect the selective few who benefit from this corruption.

    Cyprus Real Estate, R.I.P.

  • Alan Waring says:

    I am reliably informed that this practice has been going on against Cypriots for some years. It has probably become apparent among foreigners now because the numbers who are being offered their deeds at long last are growing.

    A Cypriot accountant has told me of one Cypriot client who purchased a property some years ago for €150k who was told by the Land Registry on Title Deed issuance that they had revalued his property at €1m. This was based on averaging of prices of surrounding similar properties – over the boom years but not over the post 2009 recession period! In effect, this amounts to a ‘property speculation tax’. And we all thought it was the UK govt that were masters of ‘stealth taxes’! I must find out how the unfortunate Cypriot gentleman dealt with these bloodsuckers.

  • Brian says:

    Surely this amounts to the land registry effectively accusing you of attempted fraud.

    Since when have they been given the power of judge and jury?

    If they are, by implication, accusing people of fraud then surely someone should be looking at taking the state to court in a libel action.

    Perhaps approaching it from this angle via an MEP may be the way to go.

  • Costas Apacket says:

    Thanks for that Nigel – much appreciated!

  • Costas Apacket says:

    Denis – keep up the great work!

    I see from your linked article that CPAG produced a sample letter to help in limiting the current unjust and random practices of the Land Registries where overcharging is taking place.

    Is this sample letter available on the new CPAG website and is it current or is it being updated?

    A link would be great – Thanks!

  • Andrew says:

    This is yet another example of state sponsored extortion. When the price paid for a property is clearly stated in a sales contract , how can the LRO justify their new assessment. ONLY if they can prove that “other monies” were paid for the property, can they consider doing this.

    The government of Canada and UK , alongside many others are always ready to send troops to protect citizens of other countries of the world. When will they protect their own citizens from this sort of abuse, by using major political intervention.

  • CPAG says:

    As you will see from the following link the Minister of the Interior was informed both in a meeting and follow-up letter (requested by him) of the details of this scam some time ago.

    What does this say about his possible involvement?

    http://www.news.cyprus-property-buyers.com/2010/02/01/cpag-update-on-transfer-taxes-and-ipt/id=003428

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