EARLIER this month I was invited to speak to His Excellency The British High Commissioner to Cyprus, Mr Matthew Kidd, about the many problems faced by those who have bought property in Cyprus.
During the course of our discussion we touched on many issues including the problems of hidden mortgages, Title Deeds and the threat of possible repossessions:
Q. Although many British nationals buying property in Cyprus have a relatively trouble-free experience, a significant number run into problems. With regard to the problems reported to the High Commission, how does Cyprus compare with countries such as Spain, Portugal, France and other popular expatriate destinations?
A. In terms of sheer numbers, Cyprus has fewer problems than Spain. But in terms of their background and complexity, our work in Cyprus is as demanding as anywhere else.
Q. I know that you and the staff at the High Commission take a keen interest in these problems and offer advice where possible. But what practical assistance can the High Commission and HMG offer British citizens?
A. We publish information and advice on our web site and a list of lawyers who can offer assistance. British nationals can also contact our Consular Section for advice on to how to deal with specific problems.
Q. I know from earlier conversations that you bring these issues to the attention of the Cyprus government. When ministers hear of these issues how do they react and what actions do you believe they are they taking?
(I ask this question as many have become very cynical about the government’s commitment to resolving these problems, which have been apparent for many years).
A. We have highlighted the systemic problems at our meetings with government ministers and we are continuing to support and offer assistance to the government in their efforts to tackle property issues via the recently established Ministerial Committee.
Something has changed this year and it is helpful that the Troika has identified that Cyprus needs to address problems in its property market.
Cyprus has its own reasons; these problems have been allowed to slide for too long.
Both because of the Troika and their own recognition of the problems, the government has set up a Ministerial Committee, which held its first meeting in October. The Committee is currently gathering data that will be formulated into a programme of work. The subject of property touches on many areas of government including Finance, Commerce, Justice, Labour, Industry, Foreign Affairs and there is no quick solution to the many problems.
Q. The key problem faced by everyone who buys a new home in Cyprus is the long delay in issuing Title Deeds, a process that can take many years and sometimes decades. The troika has set the government an ambitious target to reduce the massive backlog of Title Deeds by the end of next year. Having had first-hand experience of how the system works this target will be impossible to achieve without significant changes to the way the process operates. Is the UK able to offer any assistance to the island’s government on this particularly thorny issue?
A. We have regular meetings and discussions with Ministers and members of the Committee and we have offered to show them how our Land Registry system operates in the UK.
We anticipate that the Committee will put forward proposals in the next few months on how Cyprus can achieve the targets it has agreed with the Troika.
Q. There is a general problem that many people have bought property built on land that their developer had previously mortgaged to the bank. Even though most of these people took what they believed to be independent legal advice, the fact that the land was already mortgaged was not disclosed to them.
A number of development companies have already gone into receivership and liquidators have started proceedings to repossess homes in the hope of selling them to recover the developer’s debts.
A. The government is still grappling with this situation and in particular the extent to which this will be permitted for primary residences. Our impression is that legislation on this subject may come out in the next few months.
Q. Should people lose their homes as a result of liquidations, is HMG able to offer them any assistance?
A. This is really the responsibility of the Cyprus government, which is facing the same problems as Greece regarding repossessions. Unfortunately this also occurs in other countries such as Bulgaria and is not only a Cyprus issue. Financially the UK Government cannot assist however the Republic of Cyprus Government is acutely aware of this problem and we will endeavour to assist where we can with advice and shared learning.
If the Troika targets are to be met the issue of repossessions will have to be resolved.
Q. Regarding the ‘hidden’ mortgage issue, a number of people have complained to the Competition and Consumer Protection Service (CCPS) on the grounds that the practice of failing to disclose ‘hidden’ mortgages breached the law. Others have complained that the banks failed to disclose the risks associated with foreign currency loans.
The CCPS has rejected all claims and as a consequence complainants have taken their cases to the European Court of Human Rights. I understand that the CCPS has received guidance from the European Union on this matter and is using different criteria when assessing new complaints.
Do you know whether the CCPS intends to review those cases that it has already rejected?
A. We have a little evidence that guidance from the European Union is prompting the CCPS to review its working practices. For example, we know that they have reviewed cases that they rejected previously.
Q. In circumstances where the developer is either unable or unwilling to pay his taxes, those buying property are unable to secure its ownership. The only way out of this problem is for the ‘trapped’ buyer to pay the Inland Revenue the tax owed by the developer and then sue the developer to recover the money.
In essence the victim (the buyer) has to pay for the misdemeanours of the culprit (the developer) – and then sue the culprit in the hope of recovering their money!
Although in the eyes of the law this procedure is perfectly correct, I would value your opinion on a victim having to pay for the misdemeanours of the culprit?
A. The payment of taxes etc. will need to be resolved in the context of the Troika agreement.
Q. Trying to find a lawyer who is truly independent is a very difficult task. Many of those who have run into problems with their purchase have found to their cost that the lawyer they engaged failed to protect their interests adequately for various reasons.
What would your advice be to anyone trying to find a truly independent lawyer to act on their behalf?
A. People should ask around for recommendations and to see if others have been happy with the service their lawyer has provided. Our list is a starting point.
Q. Cases brought before the courts can sometimes take many years to be heard. And even when cases get underway there are continual delays and adjournments – and occasionally the judge hearing the case is changed, which adds yet further delays. In one case a British national has flown to Cyprus on more than twenty occasions at his own expense to appear in court.
William Gladstone is attributed as saying “Justice delayed is justice denied” and many are exasperated and frustrated at the length of time it takes justice to be served – and there is also a general concern that the courts favour a Cypriot’s version of events over those of a foreigner.
Due to these perceived issues with the courts and the costs involved in taking cases to court, there is reluctance by British nationals to pursue their complaints.
Do you believe this reluctance is justified?
A. Going to court takes time and is expensive and the courts face an increasing workload. But there are provisions in the European Convention on Human Rights to ensure that cases are dealt with impartially and within a reasonable time.
Is there a systemic bias? A foreigner in any court where the proceedings are not in their language will feel vulnerable and every country has to ensure that its courts are not biased.
In some situations arbitration may be a more appropriate way of resolving disputes rather than expensive litigation proceedings.
Q. If you were to offer a single piece of advice to a British citizen planning to buy a property in Cyprus, what would it be?
A. Research. It is essential that people buying property in Cyprus or anywhere else do their research before buying. They should seek advice from those who have bought here and get their opinions and recommendations.
Website: British High Commission Nicosia
Advice: How to buy property in Cyprus
Lawyers: List of Lawyers
Living in Cyprus: Essential information for British nationals
Facebook: UK in Cyprus – British High Commission Nicosia