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Cyprus developers ‘strangled by red tape’

PAPHOS property developers are pleading with the government to cut through the tangle of red tape that they say is suffocating their business, causing delays in the issue of building permits and title deeds, in some cases for years.

The president of the Paphos developers, George Mais, was speaking yesterday following a meeting with Interior Minister Neoclis Silikiotis in Nicosia on Monday.

“The main topic of the meeting covered the problems the building industry is facing, caused by government departments,” Mais said.

“Firstly, we spoke of town planning. It takes so long to issue building permits in Paphos, and yet according to the law, it’s only supposed to take three months.

“There has been an increased volume of applications over the years, and the department isn’t able to cope with the issue, within the allotted time frame.”

“We’re always given the excuse that it’s a staffing problem, but this isn’t an issue which the private sector can find a solution for. Somebody else must take responsibility, and stop these excuses. The backlog needs to be cleared.”

Mais added: “The legislation is old, and must be reformed. In addition, the amount of bureaucracy has accumulated over the years. This planning law dates back to 1990. Although amendments have been made, it must be brought up to date. Cyprus is now an EU member state, and we need changes to bring us closer to existing practices in Europe.

“All these procedures need to be overcome. For example,” he said, “the way in which the department collects information from other departments in archaic. This includes the water department, land registry and electricity. The planning office should have a database, and be connected via computer with the other departments. Instead they must write letters and pass files, it’s ludicrous.”

He said all this was adding to the costs. “Instead of two or three months for a building permit, it’s taking two or three years. Inflation rises during that time, as do base materials and administration charges.”

Mais pointed out that business was down on last year, “as most of our clients and second home purchasers are from the UK. As the recession has hit, all European countries are experiencing problems.”

“Also, Cyprus has become expensive. We used to have a great advantage of being reasonably priced, but now we’ve lost that. We’re still comparable with France and Spain, but are losing out to other countries such as, the former eastern block countries, Turkey the Emirates and Egypt. They are all cheaper.

“I don’t see a way we can bring our prices down, but we must stabilise them.”

He suggested a reduction in taxes. “Prior to May 1 2004, there was no VAT on properties. We must decrease taxes on those built after this date, or even withdraw these taxes altogether. This measure will be of great benefit to the buyer.”

He admitted there had been a slight increase in the number of purchases made by Russian buyers, “but they’re a different market”.

“They’re looking for more exclusive and expensive properties, and cannot replace the bread and butter loss of the British market. I’m hopeful the British will come back though. We’ve seen this happen after recession before.”

Mais said the issue of delayed title deeds was often blamed on the developer or builder, “but this shouldn’t be so”. “After the issue of a building permit and other licences, the documentation then goes to the land registry. Unfortunately, the same problems with administration are blighting this department.”

“The basic law of the land registry dates back to 1946, and although there have been some amendments and new laws, and a number of changes have been well executed, we must review all the legislation from the beginning. It needs to be modernised, and all the people involved must change their mentality.”

Mais illustrated the magnitude of the problem: “They have a huge volume of applications, around 15,000-20,000 waiting in Paphos land registry for title deeds, and they process around 1,200-1,500 a year. If it continues at the same pace, it will take decades.

“The manager is trying to increase output, and I believe they will have more staff by the end of the year. But this isn’t enough.

“We suggest giving parts of this procedure to the private sector. This is the only way.”

Copyright © Cyprus Mail 2008

Editors Comment

As you can see from the news item above, the debate over the many issues affecting the Cyprus property market continues. Property developers point the finger of blame at the planning authorities, local authorities and the government, while the government, planning authorities and local authorities point the finger of blame at the property developers.

All of them contribute to the delays and problems, but none of them is prepared to put it’s own house in order.

Like many things in Cyprus, a lot of pontificating, hot air and wagging of accusing fingers, but no action!!

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