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A new dawn for the Cyprus property market?

Next year could see the dawning of a new era in the Island’s property market following the introduction of the proposed changes to the property laws; Andreas D. Symeon explains.

A new dawn SOME legal and political events are expected to influence the developments in the beleaguered Cyprus property market in the coming year.

Planning amnesty

It is anticipated that the four proposed amending Laws on «planning Amnesty» which are before the House of Representatives will soon be passed into Law. They propose to amend the Town and Country Planning Law, 90/1972, the Streets and Buildings Regulation Law, Cap. 96, the Immovable Property (Tenure, Registration and Valuation) Law, Cap 224 and the Sale of Land (Specific Performance) Law, Cap. 232.

The Amending Laws are intended to cure the Title Deed problem for existing projects and those under construction – and are designed to ensure that such problems will not arise in the future.

Some of the proposed amendments are:

  1. the trade-off and legalization of existing illegalities or irregularities by the payment of an administrative penalty or by other means;
  2. the speeding up of the whole procedure by the concurrent issue of both the Building Permit and the Division Permit;
  3. the assigning to the engineer responsible for the building works of more responsibilities, such as issuing Certificates describing the level and the stage of the work being performed. This will ease the work of the relevant Authority whose role will be limited to sample inspections;
  4. the facilitating of the issue of a Certificate of Approval by the appropriate Authority either voluntarily or after a request by the buyer;
  5. the possibility of issuing Title Deeds for units with irregularities on condition that such violations are shown on the Title Deed;
  6. the enabling of the issuing of Title Deeds for only part of a project, and;
  7. providing that any sale agreements for immovable property:
  1. must be in writing and be deposited in the Lands and Surveys Department;
  2. must specify in full detail the unit being sold;
  3. will not be acceptable for deposit unless the property is free from any encumbrances, (e.g. a Mortgage).

It remains to be seen if the new Laws will manage to cure, or at least alleviate the Title Deed Problem.

Urban consolidation

Another important proposed Law is the one on Urban Consolidation. The idea for this Law emanated from the resounding success of rural consolidation in Cyprus, during the last forty years.

By the proposed Law, which is pending before the House of Representatives for its passing into Law, a Council of Consolidation, Management and Reallocation of Immovable Properties will be established aiming, inter alia, to:

  1. the availability of developmental land and the securing of the necessary infrastructure;
  2. the readjustment of ownerships within development zones and;
  3. the rational location of large scale uses within the scheme area.

The new law is expected to have a considerable effect on the property market, as a large number of plots in rural areas which are now impossible to develop because of lack of access and/or the necessary infrastructure will be unlocked.

Intercommunal talks

Last, but not least, political events, most importantly the possible positive outcome of the intercommunal talks, will have overwhelming effects on all sectors of the economy, including the property market.

The so called «affected properties» i.e. GC properties in the north and TC properties in the south will gradually be returned to the market one way or another. These properties amount to almost 40% of the total private ownership of Cyprus. Increased supply will affect property values.

On the other hand, demand is expected to rise as well, as a result of the normalization of the political environment, the withdrawal of foreign troops and the application of the European acquis in the whole island.

The property market in the Turkish Cypriot Constituent state will probably benefit more from the reunification of the island, as the present situation of illegal transactions in the «TRNC» will cease and land prices in the two parts of the island will tend to converge.

There is no doubt that, for a number of years, the property market will be unstable and fluctuating, but in the long run it will stabilize and we will evidence a new run of property market flourishing.

Readers' comments

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  • Andrew says:

    A new dawn! A light at the end of the tunnel! or just some fool waving a torch?

    Let us all live in hope that no-one will lose their home because their lawyer failed to properly represent them or because their developer goes bust.

  • Peter says:

    The main problem is that in 99% of contracts the sale of the land is tied to the building of a house.

    This means if there is a defect in planning permission or a defect in the build, the sale is suspended and does not go through. It just hangs in limbo.

    What the Government needs to do is split the two. Ownership of the land should pass to the buyer at the time the contract is lodged at Land Registry. No ifs or buts. The system should be computerised.

    At this point land which already has a mortgage registered against it will be flagged and the new buyer informed of the defect, before money changes hands. Payment only being allowed at the point of ownership passing from buyer to seller.

    The defects or lack of planning permission or lack of permits for the dwelling should be dealt with as a separate issue and not connected with ownership of the land.

    In some cases the transfer of title deeds has even been held up because the developer cannot produce an up to date taxation form to show his business has paid all outstanding taxes. What has this got to do with a buyer?

    This system is simple and would work. But of course there would not be an opportunity for extra payments and for dishonest people to make a living where money passes under the table.

  • Oh Dear says:

    A New Dawn…more like ‘Just Another Day’

    This report is Baloney!

    First part of the report; This will just confuse the local authorities who will simply resort to same old tactics…favours for friends and family and the odd back hander.

    Second part; Sounds like developers looking for new and cheaper land to build on…farm land which is outside village boundaries.

    Last part; What the hell is he on about! This is a subject way out of his depth. The North South divide will continue for years. The giving back of land and houses on both sides is way too complicated. As for foreign troops moving out, Turkish & UK troops on both sides…..err, I think not.

    Same old big talk from small islanders.

    When the monies gone….it’s gone !!

  • Denton Mackrell says:

    @Terry, Gandolph and all. Cypriots think they live in a separate higher universe, a small goldfish bowl that they imagine to be at the centre of the lower Universe that the rest of us inhabit. In the main, they are in total denial that the TD problem is as huge as it is and do not recognize the long-term damage to their economy and to that vital trust and confidence of the outside world, especially among buyers and investors.

    Even intelligent professionals who normally do recognize the scale of their problem and its Cypriot sources have suddenly gone into reverse with the announcement that the new laws are close. They have gone into nationalistic overdrive, praising the Archbishop for his anti-foreigner rhetoric and blaming the TD/fraud problems on buyers who should have been more careful!! I have been unable to persuade some of them that while the new laws might be of benefit in the FUTURE (even as sticking plaster over a deep wound) it will not fix the CURRENT 130,000 TD backlog and hence regenerate confidence for NEW foreign buyers. They really do believe that the problem has been solved!!

    They don’t seem to understand the damage they do to the national reputation of Cyprus and the willingness of foreigners to buy property here (or come here at all) as a result of such tribalism.

  • Gandolph says:

    How come we can see what’s needed and the powers that be remain blind to the problem, or should I say, the answer? The whole world now knows the Cyprus property scandal and avoid it like the plague and the same goes for the tourism market. So why is it the government do nothing, or very little in the way of dealing with the situations?

    Could it be too many vested interests by influential people? Or that to re-think the whole buying process would admit defeat thereby losing face?

    I confess to not knowing the answers but at least realise a radical shake up is long overdue and for the life of me don’t understand why it’s been prevented from happening.

    What I do know is that until it happens, the property market and hence the knock on effect for the Cyprus economy is going nowhere except down the pan.

  • Peter says:

    The banks are over exposed to developers, making up 40% of their debtors, owing €7b in toxic debt. There is no hope for the future of banking in Cyprus. As for the property market word is out that if you buy in Cyprus you do not get ownership, and your home will be used as collateral by a developer. Further there is little doubt Cyprus will again be downgraded in the markets.

    Times are hard and about to get harder. The tourists have found cheaper and better places to go. The houses are not selling. Any amnesty will cost the buyer more, to put right the problems caused by a developer cutting corners.

    The rules will not be enforced against developers in a 3rd World Country.

    I liken it to a new car, where everyone is arguing about the the colour, unaware the brakes are missing and the steering is defective.

    But look on the good side there are still 72 people (6% of voters) willing to buy the 130,000 homes without title deeds.

  • Paul says:

    New dawn? False dawn more likely! The Cyprus property market is going down the pan…end of!

  • Terry says:

    At last! It appears that the legislators appreciate the problem of the Immovable Property fiasco that currently exists in Cyprus – and the long term impact that their nepotistic practices have brought.

    It is a welcome development for anxious house owners in Cyprus – or should that be house tenants since without deeds they cannot sell – but we shall wait for the details to emerge. Maybe by the time some of these new laws are passed it will be possible to sell a property at something near the original price paid.

    What is certain however, is that a change in the law will mean very little to new buyers – certainly from N/W Europe anyhow – since they and their money have all but migrated to safe havens where they feel financially secure.

    Cyprus must pass laws such as these if they are to ever recover from the near terminal damage that has been wreaked over the last 20 years.

  • Steve says:

    The risk with every new dawn is that it can bring bad weather as well as good. If these laws go through, some property owners will benefit, but for a lot of hopefuls the new dawn will herald a nightmare. Amendments 5 and 7 iii) above are a good example. On May 8, 2010, Nigel himself (“Changes to Cyprus Title Deed laws revealed”) wrote the following:

    “Where projects do not conform to the permits issued for their construction (i.e. they have constructional irregularities), a Certificate of Approval can be issued together with a notification of those irregularities.

    Where construction irregularities are ‘significant’, a certificate of unauthorised works is issued. This will result in a prohibition being placed on the Title that will prevent the affected property being sold, transferred, mortgaged, etc.”

    I know personally many owners in Cyprus who are in this position. It is envisaged that a Commission will set a fee for this “encumbrance” to be removed; payable, of course, by the title deed holder, not the developer. Some owners may decide not to pay or may not have the money to pay, until it is pointed out that their beneficiaries will not be able to inherit if they don’t pay up. Now the question is, what happens if the estate does not have enough surplus cash to pay the “fee” and the house cannot be sold because the title does not permit it? Simple, I suppose, the estate can go to a bank and borrow the money, except no mortgage on the property is allowed, as noted above. What happens if it is an apartment block or other jointly-owned development and someone won’t or can’t pay their share?

    This is another Cypriot free lunch.

  • Of Little Faith says:

    While they are sorting out the final wording it would be nice to see them issue an unambiguous statement declaring:

    No person will lose their home if it has already been paid for. No lender shall withhold Title to a property because a developer has failed to repay his debt. The issuing of outstanding Title Deeds will be retrospectively covered by and receive full benefit from any new legislation.

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

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