THE prospect of a vicious cycle caused by differing property valuations conducted on the same property is a very real one, property valuers have warned.
Recent reports suggest that commercial banks, aiming at minimising the risk of bad-loan write-offs, employ the practice of undervaluing mortgaged properties in order to pressure mortgagees into offering other properties as additional collateral.
Conversely, the same reports indicated that the Lands and Surveys department tends to overvalue properties so that it can collect higher Property Transfer Fees in the event of sale.
Property valuers have been cited in local press as arguing that such practices can only create legal tangles, benefitting lawyers and property valuers themselves, but certainly not the government.
According to the same sources, the government’s troika-imposed decision to update all property valuations – thus far valued at 1980 prices for land registry purposes – to 2013 prices by the end of June for the purposes of taxation on immovable property is bound to cause a bottleneck of appeals and legal challenges.
That is because the revaluation rules stipulate the publication of any revised valuation and its acceptance as fair by the property owner – who may otherwise appeal it within two months of publication, with a further option of seeking legal adjudication if still not acceptable.
As the level of property tax levied will be calculated on the revalued worth of the property, owners will have an implicit incentive to secure as low a revaluation figure as possible, leading to a likely flurry of appeals and legal challenges.
Yet another practice in the property valuation market that is likely to come up in the near future, causing further distortions, is the fact that when the economy showed no signs of a meltdown, many valuers performed valuations based not on objective appraisal criteria but on the amount owners sought to borrow, the same sources said.
Wide discrepancies commonly observed between bank-commissioned property valuations and land-registry ones – on the same property – are indicative of such distortions.
The charges of questionable business practices were deemed groundless and irrational by the Cyprus property valuers’ association, who said they will be setting the record straight in the coming days.
“Banks don’t perform valuations – rather, they commission private valuers to perform them on their behalf,” association board member Stefanos Fintiklis said, explaining that since private valuers do not have a stake in the net worth of a property, they would have no incentive to undervalue – or overvalue, for that matter – properties.
Meanwhile, sources from the land registry suggest that the department is aware of the risk of mass appeals and plans to neutralise it by ensuring that moderate revaluations are performed.
“It’s what I would do,” Fintiklis said.
“Although historically the land registry has been known to overvalue properties, doing it in this case would make little – if any – sense as one can easily predict a storm of appeals by unhappy property owners that would choke the system,” he added.
We are trying to sell our house, fully paid for in 2006, but unfortunately still with out title deeds, and have asked several so called property agents to value it. As we live in the mountains and have no title deeds none of them are prepared even visit let alone to value the property. So where does that leave us???
jjames says: “Does anyone? One honest valuation per property from ONE trusted central body. Why not?”
Can anyone tell me WHO do we trust. My wife and I paid for our bungalow outright but like many others have no title deeds or any vision of getting them soon. Who do we see to get an honest valuation on our property.
Regards,
The only value for Transfer purposes should be the price the buyer paid for the property. End of.
Put your money where your mouth is.
Is it valued at a level that the market supports? Because it’s only worth what someone will pay for it.
The 1980 price for my villa was more than I paid for a 3 bed house on the outskirts of London in 1981. How did they arrive at that figure? A villa situated in a village with no gas and no mains drainage.
They need to get real.
I wonder what their house is valued at? More or less than mine? Can I make an educated guess.
Is there any one in this government who is actually interested in doing anything about the property fiasco?
We keep getting ‘sound bites’, and reports of how bad things are, but it seems that little is actually being done to change practices that can only be regarded at unlawful. There may be things going on behind closed doors, but unless the buyers and ‘owners’ are given full unencumbered title deeds, the sellers are given the true value of the property, IPT and transfer tax calculated in an honest and reliable way, Cyprus property market is never likely to recover.
“Although historically the land registry has been known to overvalue properties, doing it in this case would make little – if any – sense as one can easily predict a storm of appeals by unhappy property owners that would choke the system,†he added.
And so it made sense in the past? Brilliant summing up and admission of the whole premise of the article!
Who is Angelo Anastasiou? Does he have the power, having pointed out the possibility of such practices continuing and the inevitable confusion, to make sure that independence and transparency prevail?
Does anyone? One honest valuation per property from ONE trusted central body. Why not?
“Oh, what a tangled web we weave when first we practice to deceive” – Sir Walter Scott.
I beg to differ regarding “Banks don’t perform valuations – rather, they commission private valuers to perform them on their behalf,†association board member Stefanos Fintiklis said, explaining that since private valuers do not have a stake in the net worth of a property, they would have no incentive to undervalue – or overvalue, for that matter – properties”.
Private valuers do have a vested interest and will err on the side of whoever it is who commission’s them to carry out valuations in order to secure additional future business. We are talking Cyprus here remember with what appears to be no professional ethics body for any profession with any teeth, power or will to police its members.
Question is ‘moderate valuations for who’?
What value do you put on land and property which is encumbered by developer mortgage and also has a sales contract lodged at land registry in the name of the purchaser. The buyer has a claim (many have paid in full) yet the developer retains title. How do you value that fiasco.
Without doubt if the said property was placed on the open market, there would be little or no true value at all. The only interest in the property would come from parasitic speculators. What a way to run a country!