ACCORDING to the Memorandum of Agreement (MoU) between Cyprus and the troika, the Cypriot authorities are obliged to “provide for mandatory registration of sales contracts for immovable property by Q2-2013”.
In an effort to fulfil this obligation, the authorities intend to impose a fine on those buying property who fail to deposit their contract of sale at the Land Registry within six months from its date of signing.
This fine will amount to a 10% increase in the Property Transfer Fees payable at legal completion.
Notes
Property Transfer Fees are a government tax based on the market value of a property at its date of sale; they are the Cypriot equivalent of the UK’s Stamp Duty Land Tax (SDLT) which are payable on the purchase or transfer of property or land in the UK.
On paying the Property Transfer Fees, title (ownership) of the property is transferred from the transferor (vendor) to the transferee (purchaser).
Legal completion is the time at which the Title Deed becomes available for transfer and the purchaser pays the Property Transfer Fees to secure ownership of the property.
Ah. Homer the author of “IIiad”, “The Odyssey” & now “the leeches, lenders, lawyers & developers”. Still the greatest Greek poet & I agree with every word.
The game is up for all the leeches (lenders, lawyers and developers) involved in the Cyprus property rip-off. It is scandalous that having paid fully for a property, title does still not belong the owner. Now that the world knows this is the “Cyprus System” why would anyone want to buy here? Until it is possible to buy a new property and get the title deeds on final payment the housing industry is dead!
There is only one way to breathe any life into it and that is change the law so that title passes at the instant of payment completion (as in UK). If the law was changed now, to detach any developer-lender funding issues from properties and owners who have fully paid for their properties, (either by cash or mortgage)the government could instantly receive millions from owners who have been waiting for years for their title deeds. It has to happen eventually why not sooner rather than later?
@Michael Thomaides – Thanks for your comments and I agree that strict and clear legislation will help in stabilizing the property market. (Enforcing the existing laws would also help).
Title Deeds should be available on delivery of a property – any delay is unacceptable.
Property Transfer Fees should be included as part of the purchase price – so that those buying property would know precisely what it will cost them. At the moment Property Transfer Fees are a lottery depending how much the Land Registry believes it can extract from people’s wallets.
The current systems, processes and laws need to be completely re-engineered – they are well past their sell by date.
Deeds should be issued in 1 year max and should be transferred immediately to purchasers.
I have clients who have not transferred from 2006. All their taxes come to me. I have sent them 10s of emails requesting them to transfer their properties to their names.
There should also be legislation in place to send them the taxes for their properties & penalty to them if they do not transfer within a time fixed time period when the deeds are ready.
Strict and clear legislation will help in stabilizing the property market.
Generally, the property scandal in Cyprus is characterized by the imposition and transfer of costs to the weaker parties in the property chain and is seen by those who hold economic power as the right thing to do. On the one hand it is about those who hold power making money and on the other making other people spend it. What is morally right, proper and just is not a consideration. Buying property in Cyprus or trusting anyone in the legal, banking and property businesses comes with very significant financial and other (‘soft’) risks.
I write from experience and would strongly recommend anyone reading this not to buy property in Cyprus. Rent if you must, but buy at your peril. There are other countries / jurisdictions where the risks will be minimal and where one would be treated with dignity and honesty when purchasing a property one could call home. KD.
Maybe there should also be a penalty clause for the delay in providing the transfer fees/ title deeds.
My goodness if we had a 10% penalty for the delay then I would actually pay nothing and indeed would be in credit!
Isn’t it the Cypriot authorities who should be fined or penalised for failing to fulfil this obligation by Q2-2013? Maybe a forfeit of 10% of the next portion of bailout funding would be a suitable penalty/incentive. It will be interesting to see which other obligations fail to get accomplished by their due dates in 2013 and 2014.
They’ve got a bloody cheek!
All well and good but the government are still a long way off collecting this PTF. First of all if this was a site of lets say 10 properties then the whole site must be completed before an application for a completion certificate can be made. The land must then be separated into individual plots. All taxes and loans incurred by the developer against the site must be cleared and at that point temporary title deeds will be issued. Full title will be issued some years later. At what point does the PTF become payable by the purchaser.
The only way to speed up the collection of this tax would be to cut the length of time between the deposit of the sales contract and the issue of title which in some cases can take 15-20 years. At this stage I would forget the PTF and concentrate on the other points.
I trust that this will be paid by the lawyers who fail to register the sale !
The purchaser does not control this.
Fair play to the Cypriot government, they’ll charge everyone for breathing if they had the chance.