PROPERTY prices have always been a dubious issue in Cyprus. One reason is that it is a very small property market without the volume of transactions that would give a reliable indication of price trends and values. The fact that banks needed 10 to 15 years to repossess properties on which loans were not being serviced also distorted prices, keeping them unjustifiably high.
Then there was also the habit of property owners to inflate the price of their house or plot and insist this was the value, even if there were no buyers. There would be people claiming their home was worth €2 million even if they found nobody to pay the ridiculous asking price. Someone would occasionally be found to pay an extortionate asking price but it was an exception rather than a confirmation of the inflated values.
Even the Land Registry Department took advantage of this mindless inflation of values, because it allowed it to collect higher transfer tax when a property was sold. The department, as a matter of routine, would refuse to accept the price on the sales contract and impose tax on the price arbitrarily decided by its officials, who based their evaluation on the prices supposedly paid for other properties in the same area.
The justification for doing so was based on the suspicion that money had been paid under the table, so that a smaller transfer tax would be paid. It was a ridiculous way for a department of the state to behave, but in Cyprus even the state authorities contributed to the efforts to inflate property values. And this habit continues to this day.
The other day it was reported that the values on which we would be paying Immovable Property Tax (IPT) would be those prevailing in January 2013, even though the Land Registry admitted that prices, on average had fallen by about 15 per cent since then. And we would not have known this if it had not been cited as an explanation for the lower transfer tax paid by the First Lady for the Limassol plot she had bought from the Church; apparently, she paid transfer tax on 2014 land values.
While for IPT purposes, it is understandable that property values would be arbitrarily decided by Land Registry officials, but the Technical Chamber ETEK is absolutely right in demanding that the criteria and assumptions used for the calculations should be made public. People have the right to know how the state made its evaluations because they also have the right to question them.
It is high time that Land Registry officials were made accountable for their decisions. They have been allowed for too long to arbitrarily determine property values, happily inflating them in order to boost tax revenue for the state, and oblivious to the distortions caused to the property market. Making them accountable and forcing them to explain the methodology behind their valuations would limit their ability to abuse their power.
Good article and one we have known for years. As a Cypriot Expat I will be first to admit that the entire Cyprus mentality is about ripping people off.
Cypriots have screwed British, Lebanese, Arabs, now Russians and Chinese out of money.
Banks are thieves and so is almost every individual in the Government including presidents in the past and current
I have been hit by the Banks to the point where I am ruined, but I have not made any money in Cyprus, but saved a lifetime so that I can go back buy a property and rest.
I wish the worst for Cyprus. Getting screwed from your own people is far worse than what the Turkish did with a take over of the North.
At least the people were compensated with homes and land in the South, but we expats get nothing after the Government Rape in March 2013
Hello Costas Apacket, I have been on the government website regarding valuations, but unfortunately as our developer has no money and not applied for a completion certificate for our estate our estate valuations do not show up. — Catch 22 applies.
Regards.
Since most of us can now see the up to date valuations of our properties on the Government’s own website surely it would be fairer for the DLOs to use these valuations when calculating Title Deed Transfer Taxes and IPT bills?
However, since many of these up to valuations show a significant reduction in value from the original sales contract price, will this fairer calculation ever happen or will the higher sales contract price, so often hotly disputed as too low in the past, now be classed as sacrosanct, since this will result in more tax take?
OK We do not have our title deeds but, We have paid in full for our property with NO encumbrances, just a Developer who has a memo on the property, he is not bankrupt! just not trading (he is actually the front-man for all the trades) the man who rakes in the cash and under the table stuff. Why cannot the prospective owners not be given a valuation of the property from the Land Registry? Who is correct with their valuations, Accredited Valuators or the Land Registry. There seems to be a discrepancy between them.
Plus it’s a joke the valuations the Estate Agents give to peoples property when they try to sell their homes, grossly undervaluing them so they can sell at an inflated profit.
No we’re not selling, just getting our chests clear, for whatever good it will do. But we would still like to know how much our property is worth. But who do we go to.
Nice picture of Limassol District Lands Office wherein operate some of the (presumably) best qualified Land Registry officials who arbitrarily decide the value of your house or plot of land.
With no clearly defined rationale to substantiate their valuations, it’s little wonder that they are now being challenged to produce transparent methodology in order to satisfy public scrutiny.
But can we expect the habits of a lifetime to change any time soon?
Overcharging is normal in many walks of life in Cyprus, from restaurants to car servicing and repairs, which even goes as far as fake invoices and demands for cash – no cheques, no credit cards…..no income tax and no VAT, plus an overcharge in some circumstances of hundreds of Euros. Why should we expect the property market be any different?
Public employees need to understand that demanding more money than is owed, is not just morally wrong it is also a criminal offence.
It is the same offence and section as if a police officer stopped you in your car and demanded €50 just because he’s in a position of authority. (with a 10% discount for spot payment).
It’s wrong IT’S CRIMINAL. I know I was prepared to attend the police station and register a case of Blackmail against the public employee working in the Land Registry. She couldn’t understand that she was doing was criminal because she didn’t gain any monetary value personally, but that the Government did.
In withholding my title deeds and demanding more money she was guilty of blackmail, misfeasance and offences under Cyprus Law including theft.
Fortunately my developer stepped in and resolved the issue of demanding over two and half thousand euros more than I should have paid, because she thought it was a good idea, and that she was in a position of authority to do so.
On refusal the price was dropped several times, and then, with a final offer to knock off €400 euros if I paid now? To which I pointed out that her actions showed that she knew she had no justification for the demand in the first place.
It’s either a case of “Screw the expat” or a case of identifying a training need. But in either case it needs challenging.
Peter Davis. MICM(Grad). Chartered CIPD and law lecturer (retired)
Excellent article and a very telling last paragraph. Will it – a reduction in LR power and abuse, greater openness and accountability – happen? Don’t hold your breath!