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Land Registry myth exploded

The myth that Cyprus has one of the best Land Registries in the world was exploded yesterday when Parliament heard that it does not have exact ownership details for a quarter of a million properties.

cyprus land registry mythALTHOUGH the Executive Board of the International Monetary Fund Cyprus recently praised Cyprus for the progress it has made in the rescue program agreed with the Troika,  (IMF, EC and ECB), a number of troika officials must be shaking their heads in disbelief on the issue of property taxation.

Yesterday, as parliament continued its discussions on numerous proposals to amend the Immovable Property Tax law, it was revealed that the Land Registry does not have precise ownership details for approximately 250,000 properties, making the collection of Immovable Property Tax on these properties this year impossible. According to the director of the Inland Revenue Department, George Poufos, this was due to old weaknesses in the system.

With a population of less than one million, it beggars belief that there could be a quarter of a million properties on the island for which the Land Registry does not know the true identity of their owners. Even if you allow for (say) 50,000 for properties purchased by non-residents who are lucky enough to have their Title Deeds, that still leaves the ownership of 200,000 properties to be correctly and fully identified – and their owners taxed (plus the many unregistered properties for which no building permits have been issued).

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  • caroline says:

    Good grief this is all so depressing. Why I ever brought in Cyprus I’ll never know – probably because I didn’t realise that banks, solicitors, developers and estate agents were/are in league with each other. There is so much corruption can anyone really think this will ever be sorted? Of course it’s a terrible time to sell but it’s something I have to do even if it means ‘giving’ my place away. I would never recommend to anyone that they buy anything in Cyprus.

  • Mary says:

    This is not at all a shock, in fact I expected worse.

    The Cyprus land registry is lacking a well structured system and customer care!

    The answer to this is that everything must be computerized ASAP.

    They need a high tech system, a good IT team, a call centre and for every single person to be highly trained for CUSTOMER SERVICE!

    People should be able to go online and register, filling in their own personal details, a team at the land registry should be checking and verifying details. There should also be an online payment system, allowing people to pay their taxes, reducing queues, time and workloads.

    In cases where there are issues such as missing details, people can fill them in online and submit to the land registry, they will be notified via their online account that they must visit the land registry and supply proof or other information.This will make it easier for the workers at the land registry as they will be dealing with forms and not people which will reduce time and effectiveness.

    Technology is always they answer and the sooner they do it the better for everyone.

    Properties in Cyprus without deeds are already unattractive and no body wants to even look twice at them. This means that their values are dropping and what does that mean? The banks need to allow people with properties without deeds to sell them and take a hit on the loss and the government simultaneously should issue immediate deeds for the properties. They can deal with the rest of the debt of the developers as a separate matter.

    WE NEED CHANGE AND WE NEED IT NOW!

  • Spiros Spyrou says:

    I have just seen the article that Alpha bank is on the back foot and offering a workout / discount on settlement of loans.

    This is a start of what is needed to cure the title deed issue in Cyprus. Banks have taken excessive risk with loans to developers and must now suffer a loss on the loan rather than trying to recover all the loan balance and interest (profit) at the expense of buyers.

    It will be an uphill battle bit the winds of change have started blowing and will get stronger and stronger over time

  • Spiros Spyrou says:

    Dear Nigel,

    Point taken. The banks do not go after their developer business associates if the are guarantors, but do go after private people.

    The cosy relationship between banks and developers needs to change. They both need to understand in business transactions that they are the risk takers, making a profit or loss, not the buyers of property. Law needs to change to make them see that and the trick is how can this law change be forced.

  • Spirit of Odd Job Bob says:

    Quote from Spiros Spirou,

    “… Cyprus must be made so unattractive to foreigners that the government is forced to ensure that banks and developers suffer”

    Amen to that Brother!!!

    Some of us have been banging that particular drum for quite some time, the more to join our cause, the merrier!

    As for Ivan’s thoughts that the present situation MUST just be some big mistake (due to incompetence etc), it reminds me of that line from Withnail and I: “We’ve gone on holiday by mistake!” (as in, there are some things that CANNOT be done by mistake).

    So, if it looks like a pig, eats like a pig, smells like a pig and goes “Oink”, it is not beyond the realms of possibility that it may indeed, be a pig.

  • @Spiros Spyrou – I know of a number of cases where the developer has gone into liquidation and rather than pursuing the company’s mortgage guarantors, the liquidator (who is acting for the bank) is trying to recover the homes of people that have been built on the mortgaged land to recover the debt.

    Similarly those with home loans who fail to service the loan are also being pursued – see Bank starts action against developers and buyers

    Although the developers are named in the action (because they acted as guarantors) no action was taken against them.

    I know the banks pursue the guarantors if someone borrows money to buy a car and fails to repay the loan – but it doesn’t happen with loans on off-plan property.

  • Spiros Spyrou says:

    Nigel,

    Your comment to Dunn Good that bank will go after him and not the guarantor is not what is happening in practice.

    I know of many Cypriots who have signed guarantees to allow family and friends to take out loans. When servicing of the loan stops the banks in many cases first go after the Guarantors and then the borrower.

    The entire system relating to financing, title deeds and guarantors is a mess here in Cyprus. While things were going well and one could transfer property contracts without title nobody cared and probably preferred it as no property transfer tax has to be paid.

    Now that everything has changed,the chaotic system becomes very apparent.

    There needs to be more action to get laws changed (retrospectively) that will pass all risks onto developers and their financiers and not home buyers.

    It is tough to say it but buying property in Cyprus must be made so unattractive to foreigners that the government is forced to ensure that banks and developers suffer the losses for their poor risk management and business practices, while giving past and future property buyers 100% certainty that once they pay off their contracts and the correct amount of property transfer tax, they will get their title deeds irrespective of any issues between the developer, its financiers, suppliers and tax authorities.

  • @Dunn good – I can assure you that if you fail to maintain your home loan repayments, the Alpha Bank will pursue you – not the developer!

    Banks are under no obligation to pursue loan guarantors.

  • Dunn good says:

    After we paid the Alpha Bank 55% deposit on our property they granted a loan for the balance (not mortgage) as we had no TD. We arrived take delivery only to find the loan had been retracted as HO informed the local branch “holding the sales docs. only was unsafe security” No wonder if they could not find out even if it was registered to us. They then approved a new loan, only if the developer stood guarantor. He had no choice if he wanted the balance of his money. As the loan was in CHF I`ll bet he is `quaking in his boots` should we default.

  • andyp says:

    Ivan- All the property scams are backed by the Cyprus Government.

    “Your contract guarantees you protection” The Interior Minister.

    Streets and Building Regulations never enforced but you can pay for developer’s “mistakes” and sue them later – Planning Amnesty.

    If buying a house pay off the developers mortgage direct to the bank and the balance to the victim (original trusting house buyer).

    What has the Government done to help stop the scams? Nothing. It has only introduced legislation to protect the banks and developers and make the victims pay for their scams.

  • Spiros Spyrou says:

    For me it is clear that nobody should pay any property tax to their developer. The developers will be asked to pay and they cannot afford it, but neither are many able to issue title deeds.

    I see it as a severe violation of human rights to be asked to pay property taxes where one does not have a title deed and no firm guarantee by the state/land registry by when such deed will be issued.

    Also those that are fortunate enough to have been notified by their developers that deeds will be issued, should not pay a cent of immovable property tax to the developer unless;

    1. They see a receipt of the tax office confirming how much the developer paid in tax on the development for the particular year. I would also then check how genuine the receipt is.

    2. The calculation apportioning the tax to the various homes on the development should be checked.

    3. The tax must be based on the 1980 value of the property and one should check on the title deed that the developer holds for the entire property what that 1980 value is. If not on the deed the land registry should be asked to confirm.

    I ask all to withhold the immovable property tax payments unless that have free, separate and fully marketable title with no encumbrances. This is the only way Cyprus will get the needed kick up the backside to sort this mess out.

  • UBoat says:

    Hi Again
    I am reading the comments with sadness in my heart and I am shaking my head at it all in discussed.

    Can we as a group find out which properties they don’t have a record of?

    I like many I suppose, have a certificate from the land registry that tells me I have the plot I purchased registered in my name. Ready for when the title is issued. But how can I and all of us be sure that this is genuine? can we check easily without to much fuss and where? More to the point can we believe what we are told any more? As it all seems to change when they feel like screwing some more money out of any and all purchasers past present and possibly future ?

    Big sigh, what’s next ?

    Cheers

  • Whirlybird Rtd says:

    What would happen to our property if (God forbid) this country was taken over by some other country, where would we stand if we could not prove apart from bank statements that we had paid for our property in full but the government do not have any paperwork as to any person/s who have purchased. Would we forfeit our property as we did our cash in the banks to be given to and ruled by other foreign nationals?

  • Stuart says:

    This will surely be only the first of many myths that are due to explode over the next few months as Cyprus attempts to satisfy the rescue program agreed with the Troika.

    Since by all accounts this is yet another typical example of Cyprus’ woefully inadequate administration, it is difficult to see exactly what the IMF finds so praiseworthy about its progress.

    Once the population starts to withhold tax payments, as suggested by Spiros Spyrou, the IMF may not be so enchanted with the prospect of a bankrupt economy.

  • Ivan says:

    Is it possible to ask the Troika what they think of a tax collection system that forces you to pay your tax to a property developer (if they still have the title deeds), the same developers that owe the banks millions and are part responsible for the ‘bail in’.

    Instead of just writing about it, could this be done on the hope that they would take some action. We desperately need someone to help because The Cyprus Government are refusing to collect the tax based upon rules they created.

    If you queue for a couple of hours to try and pay the tax you are directed toward the land registry to collect your title deeds first. If they won’t or can’t issue them, you have to pay someone that may or may not pay them for you, and may or may not be insolvent. That is the country and the peoples trusted property developer. Possibly the same property developer that has a mortgage outstanding on the land that you thought you owned and upon which stands the property that is being taxed, a mortgage that stops you getting your title deeds that would allow you to pay the tax!

    Your property could also be one of the 250,000 that the land registry don’t know who owns so it can’t be paid. I only hope the property developer is aware of that and doesn’t collect the tax based upon their own calculation to be handed over at a later date for the good of the Country!

    This new tax presents a great opportunity for troubled property developers to ease their cash flow and run another scam at the expense of property buyers, and it appears to be fully backed by the government! The next property scandal could be on the way.
    No doubt someone will come up with the theory that it is a well thought out plan to help property developers out of the financial mess they are in. But that’s ridiculous as it would require some serious thought combined with forward planning to a measure that has never before been demonstrated in Cyprus.

    For the sake of the country and the inhabitants someone needs to start taking responsibility for getting rid of the absolute stupidity that continues to drive Cyprus further into the mire. Any politicians issuing statements should be held accountable for them and not just get a pat on the back for another problem swept under the carpet.

    I for one will not pay one cent to any property developer and it’s very unfortunate that the message seems to be filtering through elsewhere as Cyprus becomes the Worlds weakest housing market.

  • Andrew says:

    WHY?????????????????? would anyone expect anything else from Cyprus. This news has to be what we were all waiting for, please tell me you were not expecting anything else?

  • UBoat says:

    Well …… !
    Looks like no body knows what’s going on as usual. Just shrug the shoulders roll the eyes and stamp a worthless piece of paper. Job DONE !

    Doesn’t every one receive Electricity to their property and water ? May be the government could ask the AIK or the councils who owns what I am sure they know as I for one have been paying the bills to some one for years.

    I agree with one of the first comments, its just another way of smoothing over a difficult situation and covering up the incompetence allowing the developers to get away with it yet again.

    Shame on you CYPRUS SHAME ON YOU !

  • Martyn says:

    Even for Cyprus this must rate as an unbelievably monumental fiasco. Those of us with Title Deeds and up-to-date IPT payments should be given an IPT Holiday until they sort out the Shambles of the other 200,000 PLUS properties. But No, we ex-pats will be seen as ‘low hanging fruit’ and therefore invited to cough up whilst others continue to sit back and drink coffee!

  • Ronny says:

    “Land Registry does not have precise ownership details for approximately 250,000 properties”

    Sorry I forgot to inform the DLO: they are all mine.

    Case solved.

  • Peter says:

    Who in their right minds would want to invest in any property in Cyprus now after the government there helped themselves to people’s money out of there banks. I am glad I sold my property there and took my money back out of Cyprus before it happened to me. I would not even buy a tent now in Cyprus.

  • Spiros Spyrou says:

    Re: land registry does not know who the owners of cyprus property are

    Although a Cypriot, I share much of expat’s views and frustrations about the property laws here in Cyprus and in fact about the government administration in general.

    Honest, hard working citizens have for years being paying this army of useless civil servents and the state administration is as I always expected it to be, in total shambles.

    In order to collect the property tax maybe the government will now have to move forward with plans to issue full and property title deeds for all home owners, collect the necessary property transfer taxes and accept legalisation of all properties for an appropriate fee so as to draw the line on the Chaos of the past. otherwise I can assure you that us honest and law abiding Cypriots (yes there are some of us around) will not pay up on any taxes and this country can go bankrupt for all I care.

  • Richard Hernaman says:

    So if we follow the anti discrimination laws, nobody should pay this tax until all physical properties are attached to owners otherwise the people that followed the law in the first place and registered their properties with the land registry will be unfairly penalised.

  • Costas Apacket says:

    All the bananas have been lost and the monkeys are running the zoo, but what have all the great and good citizens (supposedly Government workers) who have been popping into the DLO’s on a daily basis, to drink coffee and shuffle papers, been doing for all these years for their massive salaries and perks?

    Which highly remunerated ‘top banana’ has been presiding over this shambles and what will become of them?

    Let’s see now…the title… ‘Land Registry’ seems to indicate a primary function that involves some sort of register of ownership of land and property and it’s geographical location, or am I just being a little pedantic?

    I mean after all Cyprus is such a big place isn’t it?

    So how have they collected IPT up to now, and how could they accurately decide what each property owner would pay if they don’t know who they are or where they live?

  • Andrew says:

    One million population with say, an average of four persons per household. Hmmm, so they don’t actually know who owns anything. Now it all begins to make sense.

    If they don’t know who owns the property then it`s probably best if they just forget about all those pesky developer mortgages.

  • Pete says:

    So, Cyprus, the land of myth & legend lives up to it’s name. Yet again.

  • Janner says:

    Don’t panic Mr Mainwaring! I have the solution. Bring in new legislation which forces non-Cypriot (ideally Brits) ‘owners’ of property without title deeds to foot the bill.

    We could pay for an elite team of civil servants to be created with their specific role to be accurately recording the 250,000 ‘lost properties’. This team could be paid massive salaries for only a 7 hour day. Not have to contribute towards their salaries, and ultimately…..not be accountable to anyone! But where will we find such people with the required calibre I hear you cry……who would sign off on such a crazy notion?…… I’m only joking, that would be as crazy as asking ‘owners’ to pay off the debts of the developers non-performing loan to secure their title. Who would ever suggest such a thing!

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