EARLIER today the House of Representatives voted unanimously to abolish or reduce Property Transfer Fees for a period of six months, according to a report in Stockwatch.
- For those who pay VAT on their house purchase, no transfer fees will be payable.
- For those who do not pay VAT on their purchase, property transfer fees are to be reduced by 50%.
The House also approved an amendment to the bill enabling those who submit applications under the provisions of the Town Planning Amnesty to enjoy the same benefit.
The draft law will be effective for six months, until the Island’s Government submits a full proposal to the House.
Property Transfer Fees are based on the Land Registry’s assessment of the market value of a property at its date of purchase. However, using its discretion to reassess the amount of Transfer Fees payable, the Land Registry relies on its own historical data in a way that cancels out any transfer tax benefit of a “bargain-buy”, which can result in double the expected amount being levied.
There have been many reports of the Land Registry bumping up the perceived value of properties in order to extract higher Transfer Fees to help boost state coffers. This practice, which has been labelled “State Sponsored Fleecing” in the media, has done nothing to enhance the reputation of the Island.
The bill applies to cases where a contract of sale has been lodged at the Land Registry but for whatever reason a Title Deed is not issued within six months. It will come into effect when the changes are published and is not retrospective.
Update – 13 November 2011
Although the temporary abolition/suspension of Property Transfer Fees were agreed by MPs ten days ago, nothing has been heard since.
I spoke with a lawyer in the week who is of the opinion that that the amended laws will only apply to the first sale of a property – where the first deposit of a contract of sale occurs within 6 months of the enactment of the amended laws. (If this proves to be correct, it will not benefit those whose contracts have already been deposited at the Land Registry or those buying a resale home).
However, no-one can say with any certainty if and when the changes will be implemented or to which type of sales they will apply until the legal amendments have been published in the Cyprus Government Gazette.
Stay tuned for further information.
Andrew, can I answer your question (with a bit of an extreme example, but bare with me)?
In Nazi Germany, despite MILLIONS of people being thrown onto trains and never coming back, there were very few Jewish uprisings. Senior Jewish community leaders (how I hate that phrase: who decides who should “lead a community”?) even formed a Judenrat to co-operate with the Germans, believing that despite all evidence, the Germans really were just transporting their people to work camps (where “it would be alright in the end”, “good will prevail” etc etc).
Many Jews, right up until the very moment the gas started coming out of the showers, actually believed that they were just getting deloused…
If, at any point, the Nazis had said, “Listen guys, the way we’ve been treating you over the last 7 years, we actually meant it and now we’re going to kill you all, if it’s alright by you”, then the relatively smooth and efficient death march would have been less so (I told you it was a gruesome analogy).
Back to the present situation: irrespective as to what transparent and complete “how may I fleece you, let me count the ways” schemes this country comes up with, THERE WILL ALWAYS BE SOME WHO FALL FOR IT. This whole amnesty is such nonsense it’s untrue. However, even some of the subscribers to this very forum still don’t get it.
I despair, I really do…
I think they are just running out of fingers to stick in the dam.
Next up will be a weekly lottery at €100 a ticket where one lucky person can win their title that they have already paid for.
I know this sounds a bit like Harry Enfield’s Kevin, but this is totally unfair.
Why should people who own properties with planning irregularities be entitled to either zero Transfer Taxes or a 50% reduction in Transfer Taxes when those who own properties with no planning irregularities have to pay 100% of their Transfer Taxes?
I agree with the need to stimulate the property market, but retrospective rules should be fair to everyone.
What’s to stop me building an extension next month which wasn’t on the original plans and claim through the planning amnesty?
It’s an invitation for property owners to do silly things because of the unfair and lopsided rules.
What a joke – again!
@Costas Apacket – This change in the law is not designed to help those who have bought property and who have yet to receive their deeds (unless they cannot get deeds due to planning infringements and have made an application to have these legitimised under the Town Planning Amnesty).
This change, in my opinion, has two objectives:
1. To help stimulate the property market, which is flat on its back.
2. Encourage a better take up of the Town Planning Amnesty.
I suspect that there are quite a number of properties with planning infringements – and even if only a few were built before VAT was introduced, it’s better for the government if it gets 50% of the Property Transfer Fees rather than nothing at all.
My contract of sale was lodged at the land registry in 2005 and I haven’t got my Title Deeds yet which is obviously more than 6 months.
I do not need to use the planning amnesty process because there’s nothing wrong with my property or the development on which it sits.
If I’m reading this right then presumably someone whose contract of sale was lodged with the land registry in 2005, who is still waiting for their Title Deeds and who applies through the planning amnesty process will pay less transfer tax than me?
So there’s less transfer tax to pay on a property that has planning irregularities than on one without any irregularities?
Is this a joke or what?
I have updated the article with information received today. This should answer queries that have been raised.
I doubt it will be retrospective and considering the current Greek/Cypriot way of thinking they will probably rescind the decision anyway.
Why don`t they just come out and say, please please take up our amnesty offer and pay off your developer debts.
@Nigel – Can you also please find out if the 6 months period applies to those applying for the amnesty, or is the period in these cases “until they get to the transfer stage”?
Given the very slow process between applying for the amnesty and getting one’s title deed, it will most certainly take more than 6 months.
@Costas – I hope to have more information tomorrow. I suspect that the offer is being extended to those who apply under the provisions of the Town Planning Amnesty because the government may be trying to encourage more people to apply.
Presumably, if the draft law applies to property owners who submit applications under the planning amnesty then this means those property owners who have already purchased their properties?
i.e. It would be retrospective
I can’t believe that the Cypriot Government would write off the potential income from up to 130,000 Title Deed transfer fees.
hmmm flogging a dead horse or what!…I really don’t understand the too little too late approach in Cyprus….we hear time and time again of the over supply, lack of demand and tightening of lending on sites such as this but never in the local news…..it is as if all is fine and dandy…and problems will just go away….