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Demolition and black-listing threat in Cyprus

The Overseas Property Professional has reported on recent developments in Cyprus with ETEK calling for the demolition of illegal building and MEP Daniel Hannan calling on the European Commission to send a fact-finding mission to Cyprus.

OVERSEAS property investors in Cyprus face a double hammer blow from the Cyprus Scientific and Technical Chamber (ETEK) which is demanding that the government there should demolish illegally-built properties that are unlikely to be approved under the new planning amnesty and also set up a black-list of property developers who sell off-plan before full permission is granted.

In an effort to sort out the long-standing problems in Cyprus over Title Deeds and illegal development schemes, the government has established a new system to regularise and officially recognise unauthorised projects. Wherever possible the developments in question will be made official.

But ETEK (which is the statutory technical advisor to the state) is not happy with this approach and wants the government to send out a clear signal that illegal property developments will not be tolerated. ETEK argues that demolition will not just be a penalty for those who have broken the law but also serve as a warning to those who may consider breaking the law in the future.

ETEK is angry and is lobbying for a black list of property developers who sell apartments off-plan without first having secured the necessary permissions and who then make false claims regarding completion and withhold the Title Deeds. It is also angry with developers who, having been refused a loan, remortgage property for which no Title Deed has been issued in order to fund the development of their next illegal project.

Spokesman Costantinos Constantis said various companies were destroying Cyprus’ international reputation and the authorities should reject applications made by land developers who were known to have broken the law.

There is still considerable doubt in Cyprus that the measures currently being adopted with solve the problems faces by tens of thousands of property buyers who don’t have Title Deeds and who may face having their properties demolished.

There is also concern about how long it is taking to put the new bill into action. It also claimed that some of the provisions in the proposed legislation being proposed will lead to stagnation in the construction industry.

Meanwhile European Parliament MP Daniel Hannan has called on the European Commission to send a fact finding mission to Cyprus to investigate the Title Deed problems. He is concerned that the new legislation will not address the main problems especially those relating to buyers whose properties have second developer mortgages on them and therefore they do not have Title Deeds.

In a written question to the parliament he has also asked for specific official figures on the number of property sales contracts that are encumbered with developer mortgages, the current balance of the total mortgage debt of Cypriot developers and the year-on-year percentage increase of that debt over the last three years.

Editor’s Comment

The proposed legislation allegedly designed to speed up the issue of Title Deeds to some 130,000 properties that currently do not has them have yet to be approved by Parliament.  An attempt was made to get the legislation approved during the last parliamentary session failed and discussions are planned to continue after the summer recess.

Regular readers will be aware that the proposed legislation has been widely condemned by various groups and organisations including the Cyprus Bar Association.

Readers' comments

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  • Tom says:

    ETEK. Another toothless Cypriot organisation who will do nothing to sort out the scandal that is the Cyprus property scam.

  • L Stansfield says:

    It is very laudable that the ETEK spokesman (after the horse has bolted) now wishes to demolish illegal buildings and reject planning application from developers who have broken the law, however there is no mention of sympathy or compensation to the victims of this fraud.

    Well Mr Constantis all developers break the law aided and abetted by your members – architects, surveyors, engineers, et al. For instance, if the law covering the Certificate of Final Completion had been adhered to none of these victims would have even been allowed to move into these illegal buildings. Yet this criminal law is simply ignored by all – including ETEK members.

    It is also interesting to consider what is legal and illegal. The Council of Ministers Zoning regulations specify maximum heights and number of accommodation floors for geographical areas and if a developer builds an extra accomodation floor that is quite naturally illegal and not covered by the amnesty. The Town Planning Offices (ETEK members?)have no discretion to exceed these limits and are clearly there to protect the integrity of the national planning system and any existing nearby properties.

    However, the Ombudsman has gone on record in saying that the Town Planning Departments are acting illegally themselves in granting some permits. For example, take planning permits for favoured developers with double the number of accommodation floors e.g. 4 where the maximum allowed is 2.

    Of course the developer cannot start building by law (another joke)until he receives a building permit for this legal/illegal development from the local District Office or Municipality (more ETEK members?).

    For example, in Peyia one leading developer has two huge developments which have 4 accommodation floors where the maximum permitted by law is 2. Obviously this will have detrimentally affected the area and the existing nearby properties.

    So Mr Constantis may I suggest you first put your own house in order, so to speak, and weed out the many culpable ETEK members – or do you take the same blinkered view as the Cyprus Bar which as we all know is brim full of rotten apples!

  • Colin Brightwell says:

    An aspect of this problem that is rarely mentioned is the banks’ willingness to grant loans secured on land already sold.

    If banks weren’t allowed to do this, this particular problem would eventually melt away.

    If Cyprus wants to regain the respect of other members of the EU, it must deal with this problem immediately.

    Confidence in the banks is vital (as the world has recently been reminded) and you can be sure that there will be other hidden problems in addition to this problem, which is as visible as running a flag up a flagpole.

    Cyprus has demonstrated its inability or unwillingness (or both) to not only resolve existing problems but just as importantly, deal with the causes. As a result some ‘tough love’ is needed and one option would be for the EU Central Bank to step in and carry out an in depth review of bank supervision in Cyprus.

    Only when such a review has been carried out and recommendations implimented to the satisfaction of the Central Bank, will Cyprus be regarded as a safe place to invest.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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