PROPERTY evaluations in relation to bank loans and the new property tax have caused a whirlwind of reaction from MPs who yesterday claimed that banks and the Land Registry both manipulate the value of real estate to serve their own interests.
According to MPs, banks underestimate the value of real estate used as loan collateral in order to pressure owners into mortgaging additional property, while the Land Registry overestimates the value so as to collect increased transfer fees.
Expert appraisers have pointed out that the situation may cause a vicious circle as banks and private evaluators use different approaches to estimate the same property, while the matter will result in benefiting lawyers and appraisers and not the state.
According to the appraisers, owners are expected to react to the new property tax in order to reduce the fee, as practice states that re-assessed values must be publicised and owners have the right to object within two months.
In case the objection is rejected, affected parties can resort to justice, but it is unknown whether the entire process can be completed in time for the Land Registry to re-evaluate all properties based on 2013 values by June 30, in accordance with the terms of the bailout agreement.
Appraisers have further stressed that during times of financial stability, some of their colleagues would not assess property based only on its value but also according to the amount of an applicant’s loan, resulting in fictitious values.
They also noted that in the past there had been significant discrepancies between Land Registry and private appraisals of the same property.
Do we, for one minute, believe that they have only just become aware of these long-term scams?
Property valuations rigged? surely not, not in Cyprus surely!
It’s good to see that MPs are only some 60 years behind the general public and what is common belief. At this rate of growing awareness we may just be in line for title deeds to be issued at the time of sale in early 2074 but I would not bet on it.
Well, well well! Some MPs have finally woken up and admitted that the entire Property system in Cyprus is rotten to the core. Landings based on collateral, not ability (or willingness!) to repay. And Surprise, Surprise the main beneficiaries of all this continue to be the lawyers and appraisers. Shambolic!
Nigel, I fully agree that a Cypriot Zoopla would be very useful for consumers to see what property rentals and sale values were, but would it really influence the valuation decisions of the masters of Dark Arts at the LRO?
@Costas Apacket – what we need here is a Zoopla.
The only way to deal with this is for a fully transparent valuation system with crystal clear rules that made public.
All property valuations should be readily available to property owners so that they can check that the valuation of their property is fair and comparable with other similar properties in their neighborhood.
I believe that this move alone would reduce the LRO valuations for many properties and make the system fairer and indiscriminate.