THE number of property sale contracts deposited at Land Registries in favour of Cypriots last month increased by 97% compared with January 2011, according to the latest figures published by the Department of Lands and Surveys.
This increase follows a 22% rise in December and may be attributable to the government tax incentives introduced late last year. But some of the increase may result from a last-minute rush to take advantage of the six-month window of opportunity to deposit ‘old’ contracts of sale that had not been deposited, which expired on 29th January.
Sales were up in all districts, with a total of 697 contracts of sale being deposited compared with the 354 deposited in January 2011.
The free areas of Famagusta saw sales rise by 536% in January. Sales in Larnaca were up 300%, followed by Paphos (+162%), Limassol (+79%) and finally Nicosia (+16%).
Overseas property sales
IN SHARP CONTRAST to the increase in domestic sales, property sales to the overseas market continued to decline.
According to Land Registry figures, 106 contracts of sale in favour of foreign buyers were deposited during January compared with 168 contracts deposited in the same month last year; a fall of 37%.
Although Paphos saw sales to foreigners increase by 23%, they fell in the other districts. Nicosia took the biggest hit with sales falling by 77%. Sales in Larnaca fell by 72%, followed by the free areas of Famagusta (-48%), and finally Limassol (-21%).
Although the government of Cyprus has introduced legislation to increase the protection afforded to those buying property on the Island and introduced tax incentives, it seems that it needs to do more to repair the Island’s tarnished reputation and restore investor confidence.
@ Nigel- Yes Nigel of course, Sorry for the dumb questions!! I used to know that until CPSS got the better of me and makes me occasionally lose my short/long term memory etc. CPSS= Cyprus Property Stress Syndrome
@George – If the Title Deed to a property is available, the transfer of ownership can take place on the same day the property is purchased. But due to many problems it’s estimated that some 130,000 properties have yet to be issued with Deeds.
(BTW, I’ll use your word ‘deviloper’ in the future – very apt).
@Nigel
Great explanation. Even I can take it in now!
You are right, I was thinking of the deposit as the 10% paid up front not depositing old contracts.
“Lawyers, forgetting, to deposit their clients contracts”
How typical. One bloke who wanted some land I own told me that he could get the titles transferred within weeks if I remember correctly. But he was/is a fellow who even the lawyers etc don’t mess around. A deviloper. Typical Cyprus.
@George – I think there’s been a misunderstanding over ‘deposit’.
Depositing a contract of sale at the Land Registry provides a buyer with some degree of protection – it prevents the vendor pulling out of the deal or selling the property for a second time to someone else.
Under the old law, buyers had to deposit a contract of sale within 3 months of signing.
This six month opportunity to deposit ‘old’ contracts of sale results from lawyers not doing their job property by ‘forgetting’ to deposit their clients’ contracts.
Buyers may have already paid for their properties in full and the window of opportunity gives them the opportunity to improve their legal protection.
Completion, the transfer of legal title of a property from one person to another, in Cyprus can take many years due to the unacceptable delays in issuing Title Deeds.
@ Nigel- Thanks Nigel.
I am not trying to be difficult but I cannot understand why a buyer would pay a deposit in 2007 at the height of the market and wait 4 years years until the market collapsed (35-50% on average) to complete the sale at the 2007 contract price.
They would surely be better off losing and deposit or buying at 2012 prices. Maybe negotiating a new contract so both parties meet halfway.
@George – A contract is binding on all parties irrespective of when it was signed.
It could be cancelled if all the parties agreed.
@Nigel-Thanks again. Right, so it was probably just a last minute race to the land registry.I suppose we will have to wait till you publish Febs results. A month of agony.
The 2nd point
I appreciate what you say about clauses and provisions in contracts but I think its possibly unfair that a contract signed in 2002 would have to be honoured by the seller? Why should a seller be held captive by a buyer for so many years. But I suppose this is countered by the fact that the seller could return the deposit.
I wonder what the legality would be if the seller used/spent the deposit and couldn’t return it to the buyer. I am sure that must occasionally happen.
@George – Regardless of how long ago the contract was signed, the legislation allowed them to be lodged at the Land Registry. So if the contract was signed in 2002, it could still be lodged for Specific Performance.
As for your final paragraph, I hope that no-one would be foolish enough to enter into a contract without having first obtained a mortgage – or having a clause written into their contract stating the purchase was dependent on them obtaining a mortgage and that all funds paid would be returned in the case they did not.
If people have signed a contract without such provisions and then find they cannot get a mortgage – how are they going to pay? The likelihood is that the developer would sue them for breach of contract.
The 2nd paragraph states. “But some of the increase may result from a last-minute rush to take advantage of the 6 month window of opportunity to deposit old contracts of sale that have not been deposited, which expired on the 29th of January”.
Does this basically mean that buyers signed contracts and paid deposits up to 6 months prior to 29th Jan but didn’t finalize and pay the remaining monies due till the end January 2012?
I wonder how many people pay deposits and lose them when their mortgages don’t materialize. I hope there other factors are boosting the Cyprus property market too.
The tarnished reputation of this island will continue to go downhill until the blatant corruption and negligence against the Brits has stopped.
With more protests planned this year at property fairs, and abused investors letting there feelings known to other possible victims through use of the Internet etc it is only going to get worse.
They flout EU, laws and treat foreign investors as a continuous easy meal ticket. Nobody should be buying over here until they hold there dirty hands up come clean. The banks, lawyers, developers etc are bringing this island to its knees, unfortunately all the locals will suffer when British money stops pouring in. The horror show has started but it’s going to get a whole lot scarier.
There is a big difference between local buyers and those from overseas. Local buyers are circulating old money. Overseas buyers are bringing wealth to the Island. With a new build overseas buyers will need white goods, carpets, beds and other household items. So not only bringing wealth with them but creating jobs and supporting shops outside the building industry. These will contract without the market. The overseas market continues to contract because the word has spread that Cyprus is not the place to buy. The banks builders and Government are dishonest and there is a real possibility that you will lose your home, your sanity and your wealth.
It will be interesting to see if the figures for Feb and March balance this out.