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Cyprus – on the commission trail, buyer beware!

Just as anyone in Cyprus can become a property developer overnight without any requirement for qualifications, regulation or financial standing, there are even more permutations at the selling end of the current Klondike-like rush for gold. Space inhibits the complete range of occupations involved in this national sport. However, some of the potential players could […]

Just as anyone in Cyprus can become a property developer overnight without any requirement for qualifications, regulation or financial standing, there are even more permutations at the selling end of the current Klondike-like rush for gold.

Space inhibits the complete range of occupations involved in this national sport. However, some of the potential players could be taxi drivers, barmen, waiters, bank employees, hotel managers, receptionists, car rental agents, holiday reps and property marketing agents in addition to the ones prospective buyers would normally recognise.

Myth – Legal System similar to the UK

With this simple statement most foreign buyers, especially British buyers who are used to buying in the UK, are put off-guard and left wide open to manipulation.

The Cyprus Property Action Group (CPAG) considers some of the information provided in the brochures and magazines produced by developers and estate agents to be very misleading, especially in certain key areas.

In fact, modern Cyprus law has its origins in a variety of different legal systems including those of Greece, Turkey, France, Germany, England and even the USA. For example, Property law is based on Turkish Ottoman Land law.

Using Registered Estate Agents – The Only Safe Option?

In theory, the requirement for agents to be registered and have indemnity insurance of at least CYP 100,000 is a potential advantage: however consider these CPAG reported examples, using registered agents.

Around 70 buyers were sold properties by Peter Stephenson Properties (PSP) on behalf of J&I Estates, a company owned by Brit Ian Beaumont. According to clients, CYP 3.5 million was paid into PSP’s UK account for payment to Beaumont who has now left Cyprus, as has the Manager of PSP’s Paphos branch Andrew Nolan (at the time banned for 15 years by the UK courts for serious financial wrongdoings). Stage payments were being demanded by PSP when in fact very little was happening on the building sites. Now left trying to pick up the pieces, victims say that they are horrified by the lack of protection afforded to buyers in Cyprus.

Many clients of Superior Homes have been contacting CPAG. Their brochure under “Unique Investment Opportunities” gives an example where investors “only have to invest 30% of the selling price, then the property is put back on the market before the next 60% is due and the property is sold at retail price.” It is thought that around 1,500 apartments have been sold to date. With this scheme investors are predicted by Superior to make 78.3% return in 9-12 months!

Unfortunately, buyers find that the apartments cannot be resold and then have to take out mortgages to pay the full price. Some who have had to risk their UK homes on the mortgage are being financially distressed; some are in default and being taken to court. Often these apartments are not completed – or even started.

The Way Forward?

What is becoming self evident is that for the first time groups of buyers, using CPAG facilities can become quickly organised. Clearly, if their calls for redress go unanswered they have the potential to cause havoc in the foreign press and at property exhibitions, which is not in the interests of the industry or Cyprus.

Agents are considered a profession and regulated by the Board for the Registration of Real Estate Agents. In 2004, a new Estate Agents law was even enacted in order to protect buyers from rogues and conmen, but has proved to be ineffective.

CPAG advocates a tightening up of the industry regulation surrounding this whole area of property selling and will work with any authority or body to achieve the protection this will afford to buyers.

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