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Title Deed backlog costing millions

The Cyprus government stands to gain millions from the transfer of 39,490 Title Deeds sitting at the Land Registry according to the latest annual report issued by the island’s Audit Office.

tax-cutBETWEEN June 2009 and May 2014 the Land Registry issued a total of 62,672 Title Deeds of which a mere 23,182 (37%) have been transferred, while the remaining 39,490 are pending.

The news report, which was published in the Cyprus Weekly, did not reveal how many any of these remaining 39,490 deeds cannot be transferred due to unpaid mortgages, taxes and other debts of the transferor (the developer/vendor).

According to Land Registry figures, between 2012 and May 2014 the Government collected €73.6 million from Title Deed transfers across the island:

In 2012 the state collected:

  • Nicosia – €11 million
  • Limassol – €8.61 million
  • Paphos – €7.11 million
  • Larnaca – €5.77 million
  • Famagusta – €1.55 million

In 2013 transfer fee collections amounted to:

  • Limassol – €8.61 million
  • Paphos – €8.06 million
  • Nicosia – €7.35 million
  • Larnaca – €4.88 million
  • Famagusta – €1.56 million

And during the first five months of 2014, the government collected:

  • Paphos – €3.26 million
  • Nicosia – €3.12 million
  • Limassol – €2.52 million
  • Larnaca – €1.53 million
  • Famagusta – €0.39 million

The annual report from the Audit Office concludes: “Taking into consideration the large number of cases where for various reasons the issuance of title deeds is pending, it is obvious that if they are finalised, the state’s revenue will come to millions of euros from transfer fees.”

The Audit Office has suggested that a system be implemented to monitor the licensing of developments in relation to the issuance of Title Deeds.

It is generally accepted that recent statements made by the island’s Interior Minister, Socrates Hasikos, concerning a possible 50% reduction in Property Transfer Fees may be delaying purchasers from paying until the government reaches a decision.

Readers' comments

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  • Sue James says:

    As everybody knew what the property transfers fees were when they entered into an agreement to buy a house, I fail to see why these fees should be reduced for anybody.

    Hasikos is an idiot for even implying that the fees may be reduced. No wonder non-owners of deeds are holding back.

    It is in everybody’s interest to acquire their title deeds and it is not a pernicious little tax – it is the cost of transferring title.

    What happens to the people who have paid and kept to the agreed terms at the point of purchase? If the fees are reduced, is everybody getting a refund? Of course not – so there should be no further talks about a discount for those who have yet to pay.

    The government needs the cash – so put up or shut up.

  • @andyp on 2014/07/15 at 11:59 am – The lack of enforcement is a major issue. There are plenty of laws and regulations, but no-one appears to have the will/ability/authority to enforce them. And even when they do (speaking of your case specifically andyp) the sanctions imposed on the perpetrators are a joke.

  • andyp says:

    Whirlybird’s predicament just proves how insane things have become notwithstanding the fact that it is illegal under Cyprus law for a developer to allow occupation of a property without a completion certificate.

    Successive Cyprus governments have allowed this situation to exist rather than enforcing the law.

  • @Whirlybird Rtd – on 2014/07/14 at 2:34 pm – Unfortunately some of these developers do not have the business acumen to operate a sandwich van – let alone a multi-million Euro property development company.

    Pleading poverty? Pleading incompetence would be more appropriate.

  • Whirlybird Rtd says:

    “Nigel Howarth says:

    July 14, 2014 at 9:47 am

    @kufrahdog on 2014/07/14 at 8:22 am – The problem is that the Land Registry has no knowledge that a property exists until it has been issued with a Certificate of Final Approval. The inspection of a property is carried out by the local Planning Authority and they will pass the Certificate to the Land Registry (assuming that all is OK). As a consequence, the reported backlog of 39,490 deeds will exclude those properties that have not received a Certificate of Final Approval for whatever re”

    Nigel, it makes me wonder how many developers who say that they cannot afford to apply for a completion certificate as our developer says for his building estates. If the above backlog do not include this type of problem, the mind boggles as to the correct figure is. Land registry says that because of my developers “lack of finance” if I want my Deeds, then I have to go it alone to the Land Registry as the developer is the one who has to apply for the completion certificate of his developments if they are finished? Our developer has not gone bankrupt he has just ceased trading due to lack of cash flow. Pleading poverty!!!!

  • @molliemoo on 2014/07/14 at 12:35 pm – Not every contract deposited as the Land Registry will require a separate Title Deed to be issued. For example – sales of land and sales of residential/commercial property with Title Deeds to non-EU citizens would not need a Final Completion Certificate.

  • @kufrahdog on 2014/07/14 at 12:03 pm – there is a third ‘silo’ – those properties that have been built totally illegally without planning and building permits. The only time these get picked up is when someone complains (although some of the 299,000 recently recognised could be part of this ‘silo’).

    As you suggest, the whole system needs re-engineering. The Interior Minister has acknowledged this fact – see Cyprus ‘failed miserably’ on Title Deeds. Whether the has the power and the tenacity to actually achieve something remains to be seen.

  • molliemoo says:

    I don’t understand why the LR don’t know of a property until the Final Completion Certificate is issued. Each property’s Contract of Sale is usually registered at the LR, and they have the ability to issue N50’s so why aren’t they aware of that property when it comes to issuing their figures?

  • Deanna says:

    No mention of properties with/without Deeds before 2009 – and there are hundreds – if not thousands, who bought in the ’90s and early 2000s (myself included).

    Are these properties too embarrassing to put in figures, or have they been magic’d away?

  • kufrahdog says:

    Nigel, re your 14 July 2014 @ 9:47 am.

    Thank you for your comment. You make the point most succinctly: in effect the authorities involved in the Cyprus property system operate as independent silos, with each silo operating according to its own set of rules and processes, with little or no exchange of information between them.

    Those with vested interests and the corrupt exploit the weaknesses of the silo mentality to the detriment of the purchaser.

    When the Audit Office report that a backlog of 39,490 titles cannot be transferred due to unpaid mortgages, taxes and other debts they are, in fact, broadcasting the narrow silo view rather than reporting the combined total numbers from all the authorities concerned with the management and control of property.

    If building infringements due to developer violations of planning and building laws and regulations were to be taken into account the actual backlog of potential title deed transfers would far exceed the reported 39,490.

    As long as the Cyprus government accept the status quo and do nothing to re-engineer the organisation and processes for the management and control of property, the public will continue to be fed misinformation and suffer at the hands of the incompetent and corrupt. KD.

  • Stuart says:

    Notwithstanding the fact that the above figures total €75.32 million rather than the €73.6 million quoted, Deputy Georgiou claimed recently that €156 million had been collected by the state from property transfer fees in the past two and a half years.

    Whichever version is correct, it has been shown that recent statements by Interior Minister Hasikos have been rather economic with the truth and based more on attempts at sensationalism than on reality.

    The possibility of a 50% reduction in Property Transfer Fees will certainly have had a delaying effect when there are savings of €4,582 to be made on a €200,000 home or €12,582 on a €400,000 property.

    Property Transfer Fees are supposed to be calculated on the ‘market value’ of the property at its date of purchase but if the Contract of Sale was not deposited at the District Lands Office, fees will be calculated on the ‘assessed’ value of the property on the day the transfer takes place.

    These assessments have often been shown to be far higher than the true market value of the properties concerned and need to be challenged in the Supreme Court. Furthermore, for some reason, District Lands Offices like to be paid in cash rather than by cheque.

  • Mike says:

    Any figures published by any department or agency controlled or influenced by politicians will always paint the brightest picture it can and by design leave out any kind of statistic which could be interpreted in a negative way or indicate any failing in their ideology.

    Developers will always be protected no matter what their crimes or ‘artful ways’ are; to fail in protecting them would bankrupt the nation. Identifying and publishing the numbers if illegally built properties would result in swathes of public service departments and employees being proven to be totally unfit for purpose and surplus to requirements.

    Until transparent accountability is freely available to the public then anything from the Audit Office or any ministry will form part of the self admiration documentation released for public consumption. And it seems to work bizarrely.

  • @kufrahdog on 2014/07/14 at 8:22 am – The problem is that the Land Registry has no knowledge that a property exists until it has been issued with a Certificate of Final Approval. The inspection of a property is carried out by the local Planning Authority and they will pass the Certificate to the Land Registry (assuming that all is OK). As a consequence, the reported backlog of 39,490 deeds will exclude those properties that have not received a Certificate of Final Approval for whatever reason.

  • kufrahdog says:

    Yet there is no mention of the fact that a proportion of the Title Deeds that have not been transferred to purchasers will be due violations of the planning and building laws and regulations by developers, both before and after land division. We know that such violations will prevent the issue of respective Final Completion Certificates.

    While it appears that the Land Registry can monitor and make public the transfer of title that cannot be made due to mortgage and tax encumbrances and thus enable the calculation of revenue delayed to the state, why can’t the same be done by the appropriate authorities in respect of properties that have infringements brought about by developers violating the planning and building laws and regulations?

    While the current arrangements permit the transfer of title post land division regardless of any violations of planning and building laws and regulations by developers – and that itself is an anomaly in the property system – there is also something radically wrong with the system if the number of properties with planning and building infringements deliberately created by developers cannot be identified together with the associated revenue loss.

    One wonders whether the report by the Audit Office covers these points. KD.

  • UBoat says:

    Im certainly No expert, however. I have a property in the Famagusta area, and going on people I know who have got there Title deeds these figures don’t seem to add up. I don’t know anyone who has got theirs recently I.e. in the last few years, So where have they magically got those stats from ???

  • Peter Davis says:

    Don’t you love the thinking.

    No thought for the broken dreams, failed marriages, broken health with worry and concern… Just what’s in it for us.

    Wow, costing us money too bad. I wish it could cost those responsible much much more.

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