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Why should any foreigner buy property?

In an open letter to President Anastasiades, a foreign resident suggests two measures designed to help rejuvenate the island’s beleaguered property market and restore its tarnished image.

THE ADVANTAGES which Cyprus has are evident to all – friendly and hospitable people, beautiful countryside and many others too numerous to mention.

The disadvantage which Cyprus has is the Internet – not the speed or reliability of the data transfer, but the fact that anyone who is contemplating buying a property in Cyprus will use the internet for their research. After only a few minutes searching, they will surely come across those websites aimed at expatriates which contain countless horror stories relating to Title Deeds and the sharing of communal expenses, and will rapidly come to the conclusion that their property purchase should be made in another country.

I would like to propose two measures which would help to overcome these problems which could help rejuvenate the Cypriot property industry and encourage more foreigners to buy property and spend money in Cyprus.

The first relates to Title Deeds. Any foreigner thinking of buying a property will not proceed if they think there will be any problem with obtaining their Title Deeds. In most major countries, every single property – whether pre owned or a new build – will have its own individual Title Deeds available before the property is put on the market. I believe that it will be in Cyprus’ best interests if it adopts the same procedure. I realise that this will be a major change in the way it has been done for years but sometimes one does have to change in order to progress.

Developers should be taken to court if they start a development without the appropriate planning permission. During the construction phase, there should be regular inspections of the development to ensure it is being built in accordance with the building permit. A final permit should be issued only on completion and a developer who permits buyers to occupy the property before being in receipt of the final permit should be fined. You could ask your representatives in major western countries to research the purchase procedures for a new build property in the countries in which they are serving and for Cyprus to adopt a “best practice” after reviewing the various alternatives.

The preceding will take time to implement. In the meantime, prospective buyers will be following the Title Deeds fiasco for those who have been waiting years for them. Although measures have recently been introduced to expedite the issuance, the problem is that many developers will not be able to finish complexes (“no money”) or obtain the final permit nor be able to pay off their outstanding tax liabilities. The result is that many innocent buyers will not (probably never) obtain their Title Deeds. This will become evident very quickly and will put off prospective buyers.

It is quite unreasonable that innocent buyers should be held hostage by the failure of developers to find the funds to pay off loans, tax obligations or even to finish the complexes. I believe that previous administrations must bear some responsibility for – can I be blunt, this mess – but you have an opportunity to revitalise the property industry by introducing both the measures I am suggesting.

In regards to Title Deeds, I would propose a proper Amnesty, not aimed at developers over minor issues, but aimed at the innocent buyers who have been caught up in a mess which is not of their making. I would propose that Title Deeds be issued to all those who are waiting for them and are in occupation of the property whether the complex has been fully finished or not and for these Title Deeds to be issued by the 31st of December 2014. It would then be the responsibility of the various government departments/banks to sue the developers for not having complied with their obligations – loans, tax, failure to comply with the building permit etc. etc. – and not hold the innocent buyers hostage to failings of other parties.

My second measure relates to the handling of those owners who refuse to contribute to the communal expenses in a complex. There are many threads on the internet where a prospective purchaser will quickly learn that it may be possible to take non payers to court but it will take many years with several lawyers advising that it will not be worth it until the arrears amount to several thousand Euros. Non-payment causes much anguish and stress and complexes which have non payers quickly become run down. Indeed, any visitor to Cyprus cannot fail to notice the many tatty blocks of flats which can only impart on the visitor a feeling that they have entered a third world country.

I would propose that non-payment of communal charges should become a police matter. A complaint from an authorised residents’ committee to the police should result in that complaint being investigated within a matter of days and, if the complaint is deemed to be justified, the non-payer should be given 28 days in which to start making payments acceptable to the residents’ committee or else the police should be able to impose an “on the spot” fine with further fines to be imposed every 28 days until the miscreant starts to make his payments.

In conclusion, the question on which your administration should focus is this:

Why on earth should any foreigner buy a property in Cyprus which will undoubtedly result in lots of stress with the likelihood of owning a property in a complex which will become more and more run down and with the prospect of not even holding the Title Deeds?

I believe that you now have an opportunity to transform the property industry in Cyprus which will result in satisfied buyers, more income for Cyprus and more Cypriots employed spending more money. The alternative is for the property market to remain moribund with fewer and fewer buyers and more and more empty and partly finished developments with even the occupied developments becoming more and more run down.

Yours sincerely,

A foreign Cyprus resident. Name and address supplied

Why on earth should any foreigner buy a property in Cyprus

Readers' comments

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  • Maxwell Raymond Hannah says:

    Hi All,

    I agree with the above letter, and this view is probably shared by 99% of the People who own a Property in Cyprus, wish I had done research online before I bought here, but did not know much about computers then( know a lot more now ,alas too late). we all hope the new President will sort it all out for us ???? but I also think Richard has a point when he says,Quote ” Only if Anastasiades has been raised in a cocoon away from the corruption and skulduggery of the typical ways of doing things does he stand any chance of righting any wrongs. If he was that sort of person – would they have let him come to power in the first place?

    Of course not – he’s a Republic of Cyprus politician. He will have known EXACTLY what was going on – and in time – we will all know to what extent. ” UNQUOTE. So time will tell and we shall see what we shall see, to use a few well known sayings. How does one join CPAG anyway.

    Regards
    Maxwell

  • Spirit of Odd Job Bob says:

    Hi Nigel,

    Sorry it’s taken me a while to respond.

    It’s good that there is some initiative re: restructuring the public sector, but I feel that even if sufficient political will existed (and this is not just another exercise in obfuscation and buying time), to dramatically change the name-day-sticky-buns-and-coffee culture will take generations. I have friends in the exiles’ outpost of Northern Famagusta (i.e. Green Lanes in North London) who hold massive Cypriot exile parties whenever it’s announced one of their relatives has secured a government job back in Cyprus!

    OK, that’s a lie, but you know where I’m going with this.

    Another wheeze they’re doing is, since deposits under €100,000 in Cyprus (per PERSON and NOT per bank account as I initially thought) are “protected”, they are ringing up all their relatives and getting them to become joint account holders…

    The culture is “whatever rules exist, let’s just put them to one side for one moment and do what’s best for me and my clan/tribe”.

    My reason for this is that the island has been invaded and occupied so many times, I believe the Cypriots think that whatever rules the occupiers (you, me, the EU) try to impose, they only need to pay lip service to them as the invaders will all eventually leave in the end.

  • andyp says:

    Surely, as referred to in another thread, the latest tactics by a Receiver suggesting properties were being repossessed to pay off a developers debt (without a court order) just highlights how low some people can go and that nothing really changes but rather more scams are being thought up.

    OK so far it has only been one Receiver, as far as I know, but I would not be surprised if more try it on.

    Will Cyprus change and set the wrongs right? Not in my lifetime. They are too busy looking for the next victim for another scam.

  • @Spirit of Odd Job Bob – an ‘interesting’ piece of news came my way this morning.

    A bilateral agreement between Cyprus and the United Kingdom has been signed to conduct a study into the modernization and reform of the island’s public service sector.

  • Denton Mackrell says:

    @Basura. Fair dinkum, cobber! I’m pretty sure you’re my friend from up the road who managed, as you said, to escape with your capital intact about 4 years ago to Aus. Your phrase ’employed just to run around with coffee and sticky cakes all day’ is one of your well-known and astutely observed signature jibes about this fair country.

    Regrettably, plus ca change since your departure. It will take generations, if ever, for honesty, integrity, transparency and overall good governance to replace the current rot in Cyprus. I do not see the current property scandal abating soon or the victims being properly compensated or the perpetrators being made accountable and being punished. But hey, what do I know? I’ve just seen another moufflon flying over the Troodos so anything is possible!

  • Spirit of Odd Job Bob says:

    The problem with Richard’s view of the situation – with which I wholeheartedly agree – is that not many other people do. Hopefully neither I nor our dear departed OJB are being accused of sneering loftily from the sidelines (but if the cap fits…) but if one’s interpretation of the Cyprus property situation is the normal one, as expressed in what I consider to be the most frighteningly NAIVE open letter I’ve read for quite some time, then as far as us all mucking in together to sort this all out, we got ourselves a problem.

    If all that’s required is a politician with sufficient will to:

    1) knock heads together at land registry

    2) amend the practices of the banks and prosecute the wrongdoers

    3) prosecute the developers who’ve either broken the law or whose companies have defaulted on their loans and go after their personal assets

    4) and force them to correct any building anomalies that do not conform to planning permission standard

    5) reform the legal system so that lawyers aren’t crooked, don’t have conflicts of interest, don’t commit fraud and withhold VITAL information, aren’t above the lawyer so can be struck off, don’t let cases drag on and on squeezing every penny out of their clients they can

    6) make the court process efficient and transparent and ensure that existing laws are actually effected

    7) find sufficient money from somewhere to clear all encumbrances from non-titled property so deeds can be transferred

    8) and oh, finally effect all those transfers without inventing new and ever-increasing transfer costs

    and if this politician needs extra clout, we have an effective and committed European Union which will enforce EU law and protect its citizens, THEN the route of using actually rather good and well-intentioned organisations like CPAG and chasing the Cyprus “system” through the highest courts available is DEFINITELY the thing to do. Yay to all the EU politicians and protesters and firms of solicitors queuing up to take our cash in up-front fees!

    However, if your view is similar to Richard’s (and others on this forum), you’ll realise that none of this will work. I consider it a bit like the slow walk towards the MASSED RANKS OF ENEMY MACHINE GUNS (Cyprus legal system, where all cases will eventually HAVE to end up) as demonstrated on the first morning of the Battle of the Somme.

    I don’t even believe that WE, Mr and Mrs Cretinous (strong word there Rich) Expat Property Purchaser were the intended victims of this rather tremendous scam (if anyone has figures available for “Amount of Money Raised in Property Sales” compared to “Amount of Money Borrowed allegedly to Build Property”, please let me know?) I’m sure you’ll find the latter as being WAY in excess of the former. We are simply caught in the crossfire, what the Americans call collateral damage.

    My VERY STRONG BELIEF (based on all the evidence I’ve been able to gather and I assure you, it’s quite considerable) is that the real aim of the Cypriot Conoscenti was to borrow as much from the EU (by way of their banks) as possible, knowing full well that the EU can’t afford for any nation, including tiny old Cyprus, to default (and cause the really big French and German lenders to go into a tailspin).

    The regime that invented this scam will not give it up lightly and, if they don’t have to (if Medgas kicks in in time), they won’t.

    Is all thus doom and gloom? Actually, I don’t think so. There IS a solution out there. You’re just not gonna like it though…

  • Basura says:

    All very good suggestions but the missing requirement is how to eradicate the endemic corruption that is the very part of the local populations DNA. So the final result will be the same old same old. If all the corrupt were brought to justice and put in the slammer, Cyprus would in effect need the whole island to be an Alcatraz look alike.

    Thank God I was lucky enough to escape with my capital intact and move to a country not governed but corrupt clowns and a public administration that spends more of their time doing their job efficiently and not being employed just to run around with coffee and sticky cakes all day.

  • andyp says:

    Maybe so Nigel but unfortunately there are very few Cypriots that speak up. It is after all Cypriots and those able to vote that can make the changes and quickly if they so wish.

    Perhaps this will change when the banks come knocking on their door looking for their money, and they will.

    To be politically incorrect for a moment I am fed up hearing about the good guys being in the majority. If that was true why has nothing changed? They have had plenty of time to speak up and help.

    So why are foreigners so upset and speak out? Because they were lied to and essentially robbed. Did 66% of buyers get special treatment? I think not. It just has not hit “home”, yet.

  • @Ioannis – You make a very good point and one that is often overlooked by many of those who post comments here.

    Overseas buyers of all nationalities account for around a third of property sales and many more Cypriots have issues with their properties than foreigners.

  • joe johnston says:

    I further suggest to help ensure the various planning and registration offices remain focused on the problem that no, new property planning applications are accepted commercial or domestic until the back log of properties without deeds is reduced to two years.

    Yes that means a building moratorium for at least six months.

  • St Nicolas says:

    Cyprus = a sea of sharks come to mind!, my advice to anyone considering buying DON’T DO IT!

  • whirlybird Rtd says:

    What a well written letter, expressed well and right to the point. I hope it reaches the right people for it to take effect.

    Regards.

  • Ioannis Leontiades says:

    I couldn’t agree more with the above letter. I have to add however that Cyprus now loses now not only foreign but also Cypriots who are fed up with these problems and choose to invest in other countries.

    The title deeds problem is a big problem. The fact that some people in a block of flats may just decide that they will stop paying common expenses or not pay their fair share for the maintenance of the building and not really face consequences is an even bigger problem.

    I can understand that the problem with the title deeds is somewhat complicated and takes a little longer to be sorted, but the problem regarding the non payment of common expenses and maintenance is simple, straight forward and should have been dealt with years ago.

    It is time to do something about these problems so Cypriots gain back their pride and phrases like “unfortunately we live in Cyprus” vanish.

  • Happy Ex-Resident says:

    No need to add comments re Title Deeds etc. as the issues are glaringly obvious, but the ‘maintenance charges’ issues don’t receive enough attention, IMHO. It is difficult to escape the ineptitude, injustice, fraud, and so on even if you’ve done the ‘smart thing’ by renting not buying.

    I rented apartments in CY 2005-2010, mainly in the same Paphos complex. The communal service was poor to say the least and on more than one occasion the ‘communal’ electricity was off for several days meaning that lifts, lights, etc., didn’t operate. More importantly, the pumps for the communal pool were off, leading to a green mosquito breeding pit that took a week to clear.

    The ‘maintenance’ was contracted to a private (Cypriot) company. When I finally managed – with some difficulty – to get the annual accounts it became clear that all was not well.

    1. The annual charge was about double what it should have been. It seems that the company reckoned that only about 50% of residents would pay the charge, so they doubled the gross amount.

    2. The ‘pool cleaning charge’ was about €450 per month, plus VAT (about two or three times the going rate). As it turned out, the pool cleaner (CY) was a resident and cleaned the pool for free in return for paying no communal maintenance charge.

    3. It was common and documented knowledge that many owners/residents had NEVER paid their maintenance fees. Legal remedies seemed ineffective.

    My point is that the whole system in CY, whether you rent or buy, is broken.

    I was lucky, I think, because I could walk away. Others are not so lucky.

  • Diane says:

    Richard I agree with Robert go with C.P.A.G l have and they are the best and would welcome yours and others support, Diane

  • Robert Briggs says:

    @ Richard, the only relatively cohesive & effective body in this matter is The Cyprus Property Action Group ( C.P.A.G.) + the MEP’s who are campaigning against these property scandals.
    So they would welcome the peoples support. R.B.

  • Richard says:

    The author of the letter has composed this in such a way as he (or she) believes the problems being faced by foreign property owners in Cyprus are the result of genuine negligence and oversight.

    I’m afraid I don’t share that opinion. My belief is the whole property bubble was architected by the unscrupulous – to catch out the unwary – from day one.

    Increasing evidence from actions against the banks, coupled with the rise of the ‘developers’ and increasing revenue streams made by dodgy lawyers who put € before client interests screams out to me (and many others) that this was a cynical plan to relieve citizen’s (of a country with tighter regulation and standards) money off them & absorb it into the wealthy of the Republic.

    Only if Anastasiades has been raised in a cocoon away from the corruption and skullduggery of the typical ways of doing things does he stand any chance of righting any wrongs. If he was that sort of person – would they have let him come to power in the first place?

    Of course not – he’s a Republic of Cyprus politician. He will have known EXACTLY what was going on – and in time – we will all know to what extent.

    Right now – everybody from the UK with vested property interests (deeds or dodgy loans) need to become a united, cohesive lobbying voice for justice and recompense – like the Croatians did.

    That’s going to be a challenge for the UK – as we seem to prefer in-fighting, one-up manship (or womanship), cowardly hiding out in the shadows ‘waiting to see how others get on’ and division. Clever people who could help in these situations prefer to sneer loftily from the sidelines (some of them on this forum) about what useless cretins we’ve all been – and how they told us so – instead of pitching in help.

    I’m up for the challenge – Cyprus has deceived and robbed me – and I’m angry about it and determined to fight for a decent outcome.

    Anyone else?

  • Andrew says:

    Martyn “I agree that in Cyprus there is no governance. Not in government, not in semi-governmental organisations, not in co-operative bodies, not anywhere. There is a culture that is not compatible with governance,” Poullis said.

    This sums up Cyprus perfectly. So only a third party, ‘Troika’ can solve the problems and bring some governance to Cyprus. We hope!

  • Richard Hernaman says:

    Although the above article addresses the fundamental issues, there is an easier method available that would resolve this problem at a stroke.

    Buyers should not even consider entering into any contract if title deeds are not available at point of sale — this underpinned in the contract.

    This would force any seller to ensure that all legislation is adhered to prior to offering property for sale and fully protect to buyer in every case.

  • andyp says:

    We live in hope but history and only recent history at that tells us that Cyprus will do nothing until it hits rock bottom.

  • Martyn says:

    I do hope the President – or even one of his senior Ministers, IF he/she feeds back to him – takes the time to read this long, challenging but very relevant ‘open’ letter which so accurately describes the Mess that has been created, (by several governments over recent decades) and puts forward detailed proposals as to how a start can be made on ‘remedials’.

    Interestingly, this Open Letter was published on the very day that a Report on the enquiry into the collapse of the almost entire Cyprus banking system contained the following statement:

    “I agree that in Cyprus there is no governance. Not in government, not in semi-governmental organisations, not in co-operative bodies, not anywhere. There is a culture that is not compatible with governance,” Poullis said.

    former senior CBC official Costas Poullis official
    Cyprus Mail 7th Aug, 2013

    Thus, clear Insights here into the sheer size of the Cyprus problems and the ‘mountains that will need to be climbed, conquered’ if any REAL progress is to be made!

    The anonymous writer’s final paragraph nicely crystallises the severe impacts on the RoC’s dire position and shows how things could, and likely will, easily spiral further downwards unless prompt, realistic, radical Actions are taken.

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