Latest Headlines

Cypriot developers find new ways to extort money

Nefarious property developers continue to exploit their customers by thinking up new ways of extorting money from them and using the threat of withholding Title Deeds to elicit payment.

LAST YEAR, the Cyprus government introduced a new law, ‘The Sale of Immovable Property (Specific Performance)’,  N81(I)/2011. This put an end to disreputable property developers extorting money from their customers who wished to sell a property they had purchased before its Title Deed had been issued.

Under this new law, ‘Vesting Contracts’ were introduced, which enable a property without a Title Deed to be sold without the cooperation or involvement of the developer.

But faced with a loss of revenue from the downturn in the market, the more disreputable property developers have been busy inventing new ways to extort money from their customers, including:

Administration fees

Some developers are charging what they term ‘administration fees’ to facilitate the transfer of title to the purchaser. This charge is demanded even though it is the developer’s responsibility to progress the issuing of separate Title Deeds and to transfer the property to the purchaser at their expense.

Town planning amnesty charges

Although many developers have submitted applications under the provisions of the ‘Town Planning Amnesty’ at their expense, others are charging their customers. When challenged they respond that the charges are for the architects fees and other work involved in getting the Title Deed issued. Once again responsibility for progressing the issue of separate Title Deeds and the associated costs rests with the developer, not those who have purchased the property.

Communal charges

Communal charges is another area that is exploited by some developers for their personal gain. In one case reported to me recently, the buyers of five town houses each received invoices ranging between €2,000 to more than €4,000 for what the developer termed ‘project insurance’. Other buyers have reported receiving demands for maintenance charges although it is abundantly clear that no services have been provided.

Perhaps a more worrying situation in Paphos is that one developer is charging his foreign customers considerably more than their Cypriot neighbours.

Immovable property tax

The Immovable Property Tax scam seems to be getting worse. I receive frequent emails about property developers issuing demands based on the purchase price of a property rather than its 1980 value. In some cases, developers are adding 9 percent interest on back years’ charges.

When challenged, some of these developers re-issue their demands. But rather than calling them ‘Immovable Property Tax’ they refer to them as ‘Administration Fees’ (see above).

Comment

Whatever steps the government may take in its efforts to protect the interests of those buying property in Cyprus, unscrupulous individuals can easily exploit loopholes in the law or think up new ways of extracting money from their customers.

Regrettably, innocent purchasers often find they have to give in to this extortion as the legal costs involved in seeking justice far outweigh the sums of money being demanded – and their cases could take many years to be decided in the courts.

Readers' comments

Comments on this article are no longer being accepted.

  • Gavin Jones says:

    Thank you andyp.

    Reading between the lines of this legalese, it looks increasingly likely that the Cypriot authorities are being inexorably boxed into a corner from which there’s no escape.

    The state/banks/developers could well be liable for billions of euros with this little lot. The country’s on its knees as it is: this would finish it off.

  • andyp says:

    Nigel, Gavin and Costas.

    re EU comments I copied this which was posted on the Eastern forum earlier today–

    “That being said, the European Commission considers that the lack of pre-contractual information to property buyers about the existence of developers’ mortgages on the Cypriot properties offered for sale is an aspect which can be assessed in the light of Article 7 of the UCPD concerning misleading ommissions”.

    A bit of hope perhaps

  • @everyone – Immovable Property Tax is based on the 1980 value of a property – and owners are required to submit annual returns to the Inland Revenue Department.

    The Inland Revenue issues penalties for late submissions/payments and this is how the interest charges appear on demands for payment buyers receive.

    (Basically, a developer who cannot be bothered to submit a tax return or pay in time tries to recover this penalty from buyers).

    Many developers do things correctly and submit annual IPT returns and supply their customers with the information necessary to apply for a rebate.

    Some years ago the Cyprus Property Action Group obtained legal opinion on this matter that you can read at Immovable property tax & fraudulent practices.

    @Kal – Purchasers may apply to the Inland Revenue to reclaim legitimate over-payments of Immovable Property Tax, providing that the developer supplies them with the information enabling them to do so.

    The maximum buyers can expect to recover is €4.00 for every €1,000 of the property’s assessed 1980 value.

  • Kal says:

    Am I being stupid or is it everyone else? This is how I understand the position on IPT.

    IPT is only payable if the property value Jan 1980 was in excess of €120,000 (new figure). The developer will be charged on his total portfolio and as a result MAY make a proportional charge to purchasers awaiting issue of Title Deeds. He must issue, by law,a receipt and proof of payment.

    Once the purchaser receives the Title Deeds he can claim all this money back if the declared value Jan 1980 is less than €120,000.

  • Peter says:

    Apologies I don’t mean to monopolise the comments But..

    Some of you may be interested that at the final point of handing cash over for your deeds (mine was only €11,086) you (and my wife in our case) both have to sign a declaration that the Government’s valuation of the villa is a ‘fair and just price’… I asked what happens if I didn’t sign? As firstly the price was ridiculously high and secondly as I pointed out I’m not an expert on prices on villa’s in Cyprus in the 1980…I was told in one verse. “No sign, no title deeds”.

    So no pressure and no blackmail then? Our signatures were freely given? And it’s strange how this stamp is in English so you can’t say you didn’t understand what you’re signing.

    I was told 3 weeks delay for your deeds if you pay by cash, 8 weeks if you pay by cheque. I paid by cheque and by the time I had driven home and logged onto on line banking two hours later the money had gone from my account.

    Anyone would think they are desperate?

  • Costas Apacket says:

    Gavin & Nigel,

    To answer your earlier question I have received, today, a letter from the European Commission Justice Directorate in response to a letter I sent to Vice President Reding.

    Within this letter it states that:

    “Following previous exchanges of correspondence, the European Commission has sent a request for information to the Cypriot authorities, enquiring as to the actions carried out at a national level to address the reported practices and to ensure an appropriate protection of EU consumers.”

    “The reply of the Cypriot authorities, received in mid January, is now being thoroughly analysed. Should the information communicated be unsatisfactory, the European Commission will act to ensure its compliance and the protection of EU citizens and consumers as appropriate.”

    Hope this sheds some light on the subject.

  • Peter says:

    @ Frank..

    My developer charged me 10 years IPT in one lump sum, which incidentally included €504 for the month of 2012 (plus 9% interest for late payment) as IPT has now gone up to .08%.

    The developer has no idea what the 1980 value of the house is until the Land Registry tell him, and this is when they give him title deeds. So he was only told at the end of December 2011 what the value of the house was in 1980. So there is no way of him paying prior to this what he owed.

    He passes the bill onto me with interest for late payment as the land registry charge him interest at 9% on a bill they know that he has no way of knowing what to pay. It makes perfect sense to them. In all I paid him over €4k much of it in late payment penalty.

    You either pay your developer or you don’t get your title deeds. The developer has to sign them over to you and will not do that until he has all your money…..so you are over a barrel and mine is costing me €504 + €45 interest for each year I delay in picking them up.

    This is the cost the developer pays in Taxes so I’m throwing €550 away year on year I delay.

  • Andrew says:

    A simple message to anyone who is the victim of this blackmail and extortion is, do not pay the ransom demanded by these pirates.

    A simple message to anyone who is considering buying a home in Cyprus is, do not buy in Cyprus. The Cyprus property market is a bottomless pit for your money.

  • out of the frying pan into the fire says:

    Well I am shocked and I feel I must question the validity of these outrageous statements that I read.

    Developers trying to extort more money from there clients next I will read that lawyers are dishonest bunch of crooks whatever next.

    The same lawyers who made the laws and pointed out the deliberate loopholes to their developer friends so they can extort more money from innocent overseas customers.

    Whatever next.

  • Frank says:

    I recommend that you get evidence that your developer actually DID pay the inflated IPT payments before you even consider reimbursing him. He should be able to show receipts IF he actually paid the government.

  • @Gavin – No news yet.

  • Gavin Jones says:

    Not that we needed it, yet further proof that we live in a rogue, criminal state.

    Nigel Howarth.

    Anything to report on THAT memo from EU Commissioner Reding to the Cyprus government?

  • jon frazer says:

    I think that if this gets much worse, some poor desperate individual may just avail himself of the services of Russian, Bulgarian or Romanian gentlemen who perhaps don’t play cricket!

  • Peter says:

    I have just been to the land registry for my title deeds and told the 1980 value of my house was €63k. In 1981 I bought a 3 bed house with garage just outside London for £31k. That’s equal to €49,500 with there being €1.65 euros to the £1 sterling at the time. Even presuming €1 = £1 in 1980 the price has been serious hiked. But of course the developer pays the bill into the Government coffers which is passed onto me. Are these people seriously telling me a 3 bed villa in Cyprus was worth nearly twice the price of a 3 bed house in London? Are they seriously saying a house in a back of beyond village off Polis was worth £103,950 in 1980? Problem is I have no idea where to appeal, but my IPT was based on the value of this guess work.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

  • Text size

Back to top