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Troika turns up the heat on Title Deeds

Cyprus will not receive the next tranche of the bailout loan from the troika until it enacts legislation to protect those home buyers who have paid for their properties but have not received Title Deeds.

Troika turns up the heat on Title DeedsTHE SALE of loans to third parties and the issue of Title Deeds were among the prior actions Cyprus had to take before the next tranche of financial assistance was released, reports said on Wednesday.

According to the Cyprus News Agency (CNA), to receive some €500mln Cyprus must enact legislation allowing the sale or transfer of loans to third parties and approve a bill designed to protect those home buyers who have paid for their properties but have received no Title Deeds.

In January, MPs passed an amendment to the Banking Law (1997 to 2013), inserting a clause by which banks licensed in Cyprus may not sell a loan portfolio to credit institutions – such as hedge funds – operating here but licensed elsewhere.

This was in fear that defaulting mortgages, and in effect large swathes of property, could fall into foreign hands, with political implications.

Enactment of the Title Deeds bill, meanwhile, has been delayed due to the summer holidays, but it is expected to be discussed on September 3 by the House plenum.

The island’s lenders, known as the Troika, are currently carrying out their seventh evaluation of the bailout adjustment programme.

They discussed Cyprus’ progress during a closed-door meeting of the House finance committee.

“The Troika’s position is that the programme has succeeded, it is yielding results, and should continue,” committee chairman and opposition DIKO leader Nicolas Papadopoulos said afterwards. “After many years, Cyprus is looking at the prospect of positive growth.”

Papadopoulos said his party agreed that the programme has achieved some objectives but has failed in others.

One of the failures was the return of living standards to the time before the March 2013 bailout, which saw a seizure of bank deposits for the first time in the history of the Eurozone.

“This goal has not been achieved yet,” he said.

Papadopoulos admitted that Cyprus was in a better position than two years ago, but unemployment remained high, the economy has contracted, and important reforms like the national health scheme were delayed.

“Even worse, we have not managed to date to attract substantial foreign investment due to the uncertainty in relation with Cypriot banks,” he said.

Apart from the NHS, Cyprus must also reform the public sector, and privatise semi-state organisations, an uphill struggle considering fierce opposition of the unions.

Ruling DISY MP Prodromos Prodromou said the important thing was that the conditions were there to have a new path of growth for the economy.

What has been achieved, thanks to the people’s efforts, the correct government policies, but also the vote of opposition parties, was to restore the Cypriot economy’s credibility internationally he said.

“This is the ticket for a new course towards growth,” he said.

AKEL MP Stavros Evagorou, whose party is widely held responsible for the island’s economic woes, said the Troika ignored the fact that the economy was at a standstill.

“According to the Troika, unemployment has stabilised, but they ignore that it has stabilised at 16 per cent,” Evagorou said.

Evagorou said banks did not give loans to businesses or individuals and reiterated his party’s position that austerity was a dead end.

“What the economy needs are state investments and when expenditure is restricted to 30 per cent, growth will not come,” he said.

Readers' comments

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  • houlou says:

    RIK radio today quoted Hasikos as saying the banks can “cut their own throats-it was OK when they were lending without making checks” lets hope the vote the bill as law….make it simple and fast for those trapped to get their deeds

  • houlou says:

    @aggis, yes I agree alot of them were farmers corner shop owners etc but look up the MPs and there is wide ranging field of expertise from civil engineers to lawyers, not sure that’s relevant…

    Its the lack of response….the sense of superiority and NON accountability of many in the civil service that frustrates…

    Lets see if the TROIKA indeed withhold the next tranche of wonga? and also see if MPs totally re-vamp the property bill in such a way that doesn’t help trapped buyers but instead shares developer burdens for example ….

  • Aggis Demetriou says:

    @Houlou – Well done for sending emails, but all these guys get well paid and good business status for doing very little, you have to understand all these guys were farmers 40 years ago.

    Most or 98% are pure ignorant, you cannot highlight anything to them as they know everything.

    We need street demo’s if you really mean business but who can organize such an event?

  • houlou says:

    @aggis, I emailed the president and his rep via official cy gov website, wrote letters to all the finance committee members who delayed voting of the bill, sent letters to their alternative addresses they have other than that of the house of rep. None have replied….the only feedback I had was from Mario Mavrides who replied to an email I sent-initially to all……do they care?

    I like to believe that some of these people do have a sense of telling what is right from wrong….Mr Mavrides sounded sympathetic…but I guess they will be arguing they have bigger fish to fry like potentially the settling of property issue IF a solution the Cyprus problem comes to fruition…having said that no reason why the current system is refreshed in a fair way…so as to make future property transactions easier and clearer and faster.

  • houlou says:

    @Nigel, Pippa, yup I am pretty sure many people have the same issue, Cyprus has to wake and see it is not a case of re-inventing the wheel that’s needed…..Nigel has mentioned it so many times, that at time of sale transfer of unencumbered deeds is performed as well…..(OK this does not address issue of off plan properties yet to have separate deeds but there are simple steps for these cases also)

  • @Andy Georgiou on 2015/07/27 at 9:19 am – There is another group of people who need to be protected – those who bought property with a loan and subsequently discovered their developer had mortgaged the land on which it was built. Many of these people stopped making their loan repayments as they knew the bank would have first call on the property and felt they throwing good money after bad.

  • Aggis Demetriou says:

    @Nigel Howarth – Your open letter to Hasikos will never be replied to, don’t hold your breath.

    Whenever I write to him I sms him on his mobile, that way I know he has read it, paper writing may not even get under his nose.

  • Andy Georgiou says:

    The sale of bad loans to third parties should not include Swiss Franc mortgages which have been miss-sold to thousands of normal mortgagees. Many banks have now acknowledged this but are reluctant to FULLY compensate borrowers. The government may need to step in and issue a decree accordingly.

  • sue says:

    Seems to me, Cyprus has it’s feet planted firmly in the mud of their land and do not want to change, I recall a Cypriot shop owner saying, the first months of being in the EU, we are Cypriots and we will not change for anyone !!! famous last words ?? I think so.

  • @Pippa on 2015/07/26 at 4:15 pm – Proposals for a new and simpler building amnesty are being developed; it’s generally accepted that the previous amnesty was too complex and impracticable.

    I can’t comment further at the moment, but as soon as I have any news I will publish an article.

    The last MoU (dated 18.6.2015) required Cyprus to “By end-June 2015, the Cypriot authorities will submit for consultation with programme partners a report detailing the main obstacles for the title deeds issuance and recommendations on ways how to streamline these procedures during 2015, including a catalogue of tolerated deviations from building and planning permits. A further comprehensive streamlining of building, planning and title deed procedures will be proposed by the authorities following the completion of the in-depth analysis in progress.”

    One of the main obstacles to getting deeds issued are planning infringements and incomplete developments.

  • Pippa says:

    When will the problem of incomplete developments be addressed? This is a problem for many of us, the developer has no money to compete the project so no road or pavement, and in our case two houses never built. We have applied to have our property divided but four years on nothing has happened. I assume this isn’t an isolated problem and is holding up many title deeds?

  • @houlou on 2015/07/25 at 2:33 pm – A number of staff from the Department of Lands and Surveys undertook a study trip to the UK Land Registry Head Office – last year according to the UK Land Registry Blog.

    In my open letter to Socratis Hasikos (I still haven’t received a reply) I suggested “What is needed now is a total review of the planning and Title Deed issuance processes and procedures by those with no interest in maintaining the status quo.” and that “This review would be followed by redesigning and then re-engineering the processes involved to meet best business practices with the over-riding objective of ensuring that unencumbered title is available for transfer on delivery of a property to its purchaser.”

    The June 2015 Memorandum of Understanding included “By end-June 2015, the Cypriot authorities will submit for consultation with programme partners a report detailing the main obstacles for the title deeds issuance and recommendations on ways how to streamline these procedures during 2015, including a catalogue of tolerated deviations from building and planning permits. A further comprehensive streamlining of building, planning and title deed procedures will be proposed by the authorities following the completion of the in-depth analysis in progress.

    It is in the interest of Cyprus to ensure the bill is fair as it will help the island’s property market to recover – and help to resolve the Title Deed-cum-fraud mess that affects so many people (both Cypriot and foreigners.) If the bill is unfair the island’s property market will never recover and Cyprus reputation will continue to be tarnished.

  • houlou says:

    @Mike, I think (@nigel correct me if I am wrong please) troika have suggested in the past a streamlining and simplification of the whole process from step 1 planning permit though to the completion and transfer of deeds….I fail to see how ambiguous they can make the bill and law, all it needs to encompass is the simple principal:

    If you have paid in full or are still paying towards the purchase cost of your property then nothing should be allowed to come in the way of you being transferred the deeds for something you paid for (or are paying for and will receive deeds at a later date)

    If your developer just so happens to be in the proverbial and owes the bank and state as he has mortgaged the plot your home sits on, and gone bust or not paid his dues, or not paid HIS tax obligations, then its an issue between the bank and developer and state and developer-how on earth can anyone argue the above should get in the way of a purchasers rights to their unencumbered deeds?

    This is where the “old heads” in Cyprus come in, and annoy me, “but that’s the way it is they say”, well I am sorry its absurd and you need to stop being so spineless and finally speak up for what is right and wrong I say to them. All govt so far have turned a blind eye to this joke of a system, Hasikos has finally brought proposals that address issue.

    Lets hope troika stick to their guns and insist on voting of the bill, as to what type of bill, in all honesty I don’t think they care about fair or not fair, as long as the sums add up they don’t care…..I wouldn’t put it past MPs to vote in a bill that would say developers obligations to the state are just that and they should not trap buyers, BUT developers obligations to a bank = buyers obligations too! or buyer asked to share some of the burden to release deeds…..call me paranoid but I wouldn’t put it past them.

  • Mike says:

    Let’s hope the troika are vigilant enough to see through the smoke and mirrors excuses that I’m sure will be in the making as I type. The ambiguity that will form part and parcel of any draftbill will help perpetuate the status quo for as long as it can be got away with.

  • @houlou on 2015/07/24 at 12:33 pm – The Hasikos bill is set to be to the vote at a special session of parliament on 3rd September.

    The (draft) law makes no mention of of developers who are insolvent, so the bill will include properties that are in the hands of the liquidator – and those where the developer has failed to pay his company taxes.

    A year ago there were 39,490 Title Deeds waiting to be transferred – and from the seminar I organised last December more than 90% of those who attended couldn’t get their deeds dues to their developer’s mortgage and/or unpaid taxes.

    There is also a new (and simpler) planning amnesty on the way, which should help to get more deeds issued.

    And there’s the 50% reduction in Property Transfer Fees – this should come into effect at the end of the month, but I do not have the finer details.

  • houlou says:

    Nigel,Hi, is the Hasikos bill still on the table for sept vote? As this bill is the one that lifts the weight of both developer mortgages and debt to state off buyers shoulders rightly so. Based on your article are we now saying the bill will be amended to only cover trapped buyers in case the developer has gone under?

    Also are we to take this ” issuance of title deeds of exposed borrowers” if you are not a borrower and bought without a loan you are stuffed?

  • Cyprus News Agency report:

    Troika sets 4 prior actions for next Cyprus bailout aid

     

    Loan sales and loan securitization, the civil service reform, the corporization of the state-owned company as an initial state to its privatization and the issuance of title deeds of exposed borrowers are the four prior actions for the next disbursement of Cyprus financial assistance package amounting to €0.5 billion.

    A Troika (EC, IMF, ECB) delegation, currently on the island to conduct its 7th assessment of Cyprus` economic adjustment programme, will hold a meeting today with the members of the House Committee on Finances. Sources told CNA that the lenders, the European Commission, the ECB and the IMF, collectively called as the Troika, have sent a draft updated memorandum containing the reforms to be undertaken as prior actions, The updated MoU, which will be discussed tomorrow during a meeting with Cyprus Minister of Finance Harris Georgiades and the heads of the Troika is expected to be finalised by Friday.

    In the financial sector, sources told CNA that the Troika requests that the bills on the sale of loans to non banking institutions and loan securitizations should be approved by the Council of Ministers and by the House of Representatives prior to the next programme disbursement. The two bills have been drafted by the Central Bank of Cyprus and the bills have been submitted to the Cyprus` Law Office for legal vetting.

    Prior to the next disbursement, the House of Representatives should approve a law that ensures that property buyers who have paid the purchase price in full, will have their title deeds transferred within 6 months after their issuance. The latter aims at alleviating the problem of borrowers who cannot be issued with title deed because the land developer who sold the property is insolvent.

    The Parliament`s Finance Committee announced that the bill will be approved by the Plenary on September 3.

    Concerning privatizations, the lenders say that prior to the next disbursement, the Council of Ministers should endorse a law for the transformation of Cyta, the state-owned telecommunications company to be privatised by early 2016, into a limited liability company.

    Furthermore, Troika request that the Council of Ministers should approve the proposal for the reform in the civil service prior to the next disbursement. Last week Undersecretary to the President Constantinos Petrides announced that the government and the island`s main public sector employees Trade Union, PASIDY, reached an agreement over labour mobility and the appraisal and promotion system in the public service.

    The same sources told CNA that the law on the establishment, functioning and regulation of the state owned enterprises, which should have been approved by the parliament by end June, has been given new extension.

    With regard to the insolvency framework, the lenders have reportedly noted any necessary adjustments to the insolvency and foreclosure frameworks should be submitted to the Council of Ministers by end October whereas the authorities will conduct a comprehensive review of the private sector debt restructuring legal framework by early 2016, with an action plan of modifications to the framework to correct any deficiencies.

    In March 2013 Cyprus, in a bid to avert the collapse of its banking sector, concluded with its international lenders an agreement on a €10 billion financial assistance package that featured an unprecedented haircut on uninsured banking deposits.

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