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Tuesday 22nd June 2021
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HomeProperty ArticlesRevised Memorandum of Understanding full text

Revised Memorandum of Understanding full text

Memorandum of Understanding (Cyprus)CYPRUS and its international lenders have agreed an updated 42 page Memorandum of Understanding (MoU) following the troika’s fourth assessment of the island’s economic adjustment programme.

A summary of the key points relating to property are as follows:

The authorities established a Task Force to prepare a study assessing the magnitude of registered, but untitled, land sales contracts and underlying mortgages and to develop recommendations by end-June.

The legal framework in relation to foreclosures and the forced sales of mortgaged property will be amended in consultation with the EC and the IMF and informing the ECB and the ESM, and adopted by end-June, with immediate effect for all mortgaged properties except primary residences (for which provisions will enter into effect by end-December, in line with the adoption of the insolvency legislation), to allow for private auctions to be conducted by mortgage creditors, without interference from government agencies.

Immovable property tax reform

The Cypriot authorities will reform the immovable property tax with the objective to improve the fairness of the tax burden and to increase the efficiency of the tax administration.

To this end, the authorities will:

  • implement a General Valuation (GV) for all immovable properties. The new values of immovable properties shall be determined on the basis of tangible building- and plot related characteristics by Q2-2014;
  • implement the recurrent immovable property tax based on the updated valuations for the tax year 2015, at the latest. The design of the immovable property tax shall ensure progressivity and proceeds consistent with measure I.27 of Annex 1.

Necessary legislative changes should be adopted by the House of Representatives by early July 2014, following consultation with programme partners. Legislation specifying the frequency of the mandatory update of the values in line with international best practices should be enacted by Q1-2015, following consultation with programme partners.

In order to ensure a smooth and timely implementation of the new immovable property tax and to minimise the operational risks, the authorities will present to the programme partners by end-June 2014:

  • a communication strategy aiming at informing of the goals of the property tax reform, the implications for citizens and the procedures of the new reform;
  • a comprehensive objections’ management strategy to effectively and timely deal with possible valuation complaints.

The strategies need to be clear and practical, explicitly defining the required steps and resources, and the envisaged timelines.

In addition, the authorities will:

  • by Q4-2014, conduct an assessment of the relevance of the parameters used in the Computer Assisted Mass Appraisal (CAMA) model for the GV and identify possible missing parameters. Refine, if needed, the CAMA in light of this assessment by Q2- 2015;
  • conduct an assessment of the variance between GV assessed values and market price by Q4-2014; and
  • implement by Q2-2015 the recommendations of a study on the scope for consolidating the collection and administration of the municipal recurrent property tax and sewage tax. The study will also review existing exemptions and derogations from property taxation. It will also report on the scope for shifting revenues from transaction fees and taxes to recurrent taxation. The study will also provide an initial review of the tax regulations relevant for the foreclosure process, with a view to minimising the cost of foreclosure and subsequent sale of foreclosed property by Q2-2014.

Housing market and immovable property regulation

Action is required to ensure property market clearing, efficient seizure of collateral, and restoring demand. A particular risk arises from legal disputes, which may be due to incomplete documentation of ownership and property rights and the slow pace of judicial procedures.

The Cypriot authorities will:

  • define binding administrative deadlines for the issuance of title deeds upon receipt of the certificate of final approval by Q2-2014. Moreover to ensure the enforcement of the deadlines for issuance of certificates of completion by the supervisor engineers, an amending bill concerning the Street and Building Permit Law will be submitted to the House of Representatives by Q3-2014, after consultation with the programme partners;
  • prepare a joint action plan to streamline the processes within the DLS and between the DLS, the Local and District Authorities and the Ministry of Interior Technical Services by Q2-2014; This plan should detail the resources required across authorities, streamlined processes if needed, set clear deadlines for any consultations required for issuing a certificate of final approval, as well as means to enforce those deadlines;
  • ensure that the title deed issuance backlog drops to less than 2,000 cases of immovable property units with title deed issuance pending for more than one year by Q4-2014 (backlog refers to (i) applications, (ii) units that are eligible for the “ex-officio” issuance of title deeds, required certificates and permits). The ex-officio cases will automatically be counted in the backlog from the date the certificate of final approval is being issued by the respective Local or District Authority. To that end, by mid-July, provide to programme partners granular data on the stock of backlogs of permits, deeds, and certificates and a strategy identifying ways to reduce this backlog and continue publishing the quarterly progress reviews, starting in Q3-2014;
  • implement electronic access to the registries of title deeds, mortgages, sales contracts and cadastre for the monetary financial institutions and for all government services by Q4-2014; and
  • improve the pace of court case handling, in order to eliminate court backlogs by Q1-2016. To that end, provide detailed statistics on court backlogs and duration of court proceedings to programme partners on a quarterly basis starting in Q4-2014, submit a draft action plan for the elimination of court backlogs, including the electronic filing of new documents by end-October 2014, and enact legislation to establish an Administrative Court by Q4-2014.

Further reading

Memorandum of Understanding on Specific Economic Policy Conditionality (May 2014)


  1. @Jill. The fact that as soon as your property becomes worth anything the bank will repossess just says it all. That is one of the main reasons I don’t pay my housing loan. I know that one day they will look at the amount of loan left and compare it against the value of the property and if they can make some money they will take it from me. I have asked the bank repeatedly to put in writing to my solicitor that they will never do this but they never respond to my request. Their silence speaks volumes doesn’t it? I have told them I will restart my payments if they promise this but, again, they never respond. If I never had a loan or paid all or most if it off I would be in a more vulnerable position. At the moment I have some cards to play. They want my money but I want to own the property. The precedent is set and the writing is on the wall.

  2. So, in fact, the Troika is pushing for people’s homes to be taken from them then. Which is exactly what this government intended doing anyway.

    When you had your meeting, did you not point out that this is what the Troika are encouraging?

    It seems to me that everybody thinks this is a perfectly acceptable outcome. The developers sit with their big houses, stash of cash laughing their heads off, while people who bought in good faith are forced out of their homes. Or forced to pay all the developers mortgages, taxes, etc., which would be impossible anyway!!!!

    And the ECHR are not interested – and they wonder why so many of us want to get out of Europe…..

  3. @Jill – A development will be owned by a company, whereas a primary residence will be owned by an individual or individuals (I’m not sure about trusts).

    So it is possible that a developer who has outstanding mortgages on a development will keep his own home, whilst all the properties on the sites his company has paid no mortgages back for, will be seized.

    Also a company isn’t necessarily an individual – it will have a number of shareholders who each own a share in the company. I suppose it may be possible for the bank to approach the shareholders to repay the company’s debt – but you’ll need to speak to a lawyer to see what may be possible.

  4. @Andrew – When individual Title Deeds for a development are issued, title remains in the name of the developer.

    Any mortgages (and I believe other charges) are apportioned across all the properties and lodged against the individual titles.

    But the transfer of ownership from the developer to the purchaser cannot occur until these charges have been removed. In a few cases this may be achieved my moving the charge to an unsold property.

  5. @John Butt – The registered owner of a property is required to pay an annual Sewerage Tax, which is calculated on the market value of the property at 1st January 1980 (this is shown on the Title Deed).

    The rate varies, but is typically in the order of 0.3% to 0.35% and the charges are payable to the local sewerage board. (In my area the tax is collected by the Community Office and passed to the Limassol sewerage board).

    Sewerage Tax includes a charge for surface water drainage.

    In some areas, where sewerage systems are being planned/under construction, a further charge is levied. As an example, see Sewerage Board of Limassol – Amathus.

  6. I still cannot understand ‘forced sales of mortgaged properties except for primary residence’…Does this mean that a developer who has outstanding mortgages on a development will keep his own home (palace actually), whilst all the properties on the sites he has paid no mortgages back for, will be forceably taken from those who have bought them? This is what it sounds like to me.

  7. @Nigel. If title deeds are issued but not transferred then where do they remain. Is it the banks the developer or land registry who hold the title deeds. Clearly if the home buyer does not receive title deeds then whole process is simply done to enable repossession and satisfy the troika.

  8. Hi

    I need clarification on Sewerage charges following a public meeting I attended with our local councillor in Peyia and the latest memo of understanding I have just read on your website.

    To explain that there was concern at this meeting I attended following the receipt of the first bill issued by SAPA (for last year based on 1980 property valuation), with another expected in July (based on 2013 valuation) and a further bill expected in January 2015, for a non existent service.

    Not surprisingly there was a mixed reaction as to whether to pay or not to pay until someone could explain when a sewerage system would be put in place and whether there would be additional costs to the resident for connection charges etc.

    My concern at the moment is that for the first time in the latest Memo of Understanding they are calling it a “Sewerage Tax”. Does this mean we are compelled to pay for a service that we will probable not see in our lifetime?

    I am interested to see if, by the 19th June, the government put this particular tax in the category of “if not paid becomes a criminal offence”.

    Your comments most welcome.


  9. @Pippa – Your developer has to make an application to the Planning Authority requesting a Certificate of Approval.

    This isn’t done automatically.

  10. Nigel,
    Our architect has submitted a revived plan which was approved 2 years ago, yet there is still evidence that the relevant government department are actually putting down their coffee, extinguishing their fags and doing a final inspection!!

  11. I would like to see the number of votes that the politicians (pro Europe) will get in the next Cyprus
    elections; Mind you I believe the next elections will be in my opinion between pro and against Europe
    parties; No doubt the mess they created in the handling of the Cyprus economic problem will give them worst results than the latest European parliamentary elections.

  12. @Mike – What usually happens if a property deviates from its original plans is that the architect submits ‘as built’ plans. Providing these do not breach the planning regs, a certificate will be issued.

    And the Town Planning Amnesty is still running, but I’ve heard nothing on its progress since early last year.

  13. @Whirlybird Rtd – The Land Registry now instigates the process of issuing Title Deeds once the planning authority issues the certificate of completion.

    Memos, mortgages and other charges do not prevent the issue of deeds, but they cannot be transferred.

    As for the 1980 valuation – the Inland Revenue will have assessed this from the IPT return submitted by your developer. If he hasn’t submitted any returns I expect the revaluing exercise will pick it up.

  14. “@Pippa – The process of issuing Title Deeds has changed so that once a Certificate of Completion has been issued, the Land Registry can start the process of issuing the Title Deed.

    Previously the Land Registry had to be requested to issue the deeds.

    ‘One small step for a man – a giant leap for Cyprus’.”

    Nigel, Who instigates the Land Registry to start the process to issue title deeds. Our developer has a memo on his sites, he says he has no money. HA! HA!HA! Do we have to get a private valuation if we want to know the value of our property, so as to get an estimate of our IPT.

  15. I fear that the devil is in the detail. Reference is made to certificates of final completion. My limited experience is such that I guesstimate that very few homes are constructed in line with original plans for which permission was given. As a consequence a certificate will not be issued and therefore title deeds cannot be issued and in fact in those terms are not outstanding. So the reality is that probably there are very few homes for which title deeds are outstanding if that criteria is used. A get out clause that I am sure the authorities will fall back on at some stage.

  16. As the months and years roll on, revised memoranda continue to be published by the Troika. We are now on Rev.4 of the the original MoU following the fourth assessment of the island’s adjustment programme which now takes it into Q1-2016.

    At this relaxed pace the Troika could sustain its assessments well into the 21st century, thereby giving the distinct impression that it might actually be on a job creation scheme which includes many pleasant trips to Cyprus at this time of year.

    Perhaps Nigel can tell us how many of the Rev.4 recommendations above derive from his personal meeting with this illustrious body.

  17. @Pippa – The process of issuing Title Deeds has changed so that once a Certificate of Completion has bee issued, the Land Registry can start the process of issuing the Title Deed.

    Previously the Land Registry had to be requested to issue the deeds.

    ‘One small step for a man – a giant leap for Cyprus’.

  18. Well Now. This seems to be a FIRST. An actual mention of the Bogey-Man ie (Title Deeds) does sound GOOD. So I will say it again “TITLE DEEDS” the issuance of!! Cripes ! Must not jump the Gun. The Cypriot Departments haven’t Digested all of this yet, SO we must wait for the next Instalment. Hope it`s better than this one, The actual collection of the Title Deeds, There I`ve said it again, sounds like a song Title, we all wait with baited breath.

  19. Does this mean that we will actually get a final inspection, and hopefully the final inspection certificate and then eventually the title deeds? After all the house has only been built for 6 years, or will the government find more excuses for doing nothing?

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