Property sales surge (Update)

1. @J Sutton, gotta hand it to Nigel for always fighting the corner of the down trodden buyers in Cyprus. I too am in the unfortunate position and was led to believe that shortly I would have deeds, alas only to be told recently that the deeds will be issued to the developer first but NOTE: the build has no final cert.of completion due an issue. not with the actual properties per say but its boundary with a neighbour….

   Anyhow land reg said just be happy if you get these deeds registered to you as the buyer, and bunch together with the other neighbours to resolve planning issue it will enable you to have deeds ‘cleansed’ of any ref to this planning infringement (or else my property by law is non saleable and cannot be used as collateral etc). Let me see how it pans out in the end and will re post, but strikes me as odd as different people are being told different things. One thing is certain the govt. really needs to start looking at the massive infringements and culprits, and not pick on the minnow infringements making everyone’s life a pain.

2. Before anyone buys a villa in Cyprus they’ve been here as a tourist. That is if they can get through immigration at Paphos. What a picture we present to these potential customers.

3. I am still telling every tourist and visitor to the island I meet that they should on no account contemplate purchasing any property here – for obvious reasons. I see no reason to change this routine.

4. This is scary still so few and less sales in 2016 than in 2015

   In contrast with domestic sales, property sales to the overseas (non-Cypriot) market fell 52% in February compared with February 2014 with a mere 59 properties being sold compared with the 123 sold in the same period last year

   The GPB is declining and expect to fall to the lowest Level against the USD since 1985.

   This could stop the rising property prices in the South of Europe as we saw in 2008 it started with the GPB.

5. Nigel,

   I need some clarification to your comments. Please help me understand: what is the difference in between loan and mortgage? Isn’t a loan for house/apartment called “mortgage”? Not sure how loan gets “converted” to mortgage? I mean banks can always repossess the property whether or not you have a title deed; or whether or not it is a house loan or mortgage. Please help me understand.

   I thought of applying for a title deed to make it easier to sell the apartment and get out of the loan with BOC, but now is that a good plan? We are still unsuccessfully negotiating with a bank. Would asking for a deed make it worse?

   Another thing, my understanding was that once you get a title deed, you need to pay property transfer fee to Cyprus government and from then on you will be paying property tax to the tax office. I don’t understand why poster Jill was asked to pay IPT tax to developer. What is actually IPT tax and why it was outstanding? I mean is that tax for all 12 years?

   Thanks so much for your help and clarification.

   (Editor’s comment: A ‘mortgage’ is a special type of loan in which the money is lent using the property as collateral. When you buy a property off-plan it doesn’t exist and therefore a mortgage cannot be granted.

   In Cyprus those buying property off plan take a home loan, which is usually guaranteed by the developer. (This enables the bank or whoever loaned the money to recover the property if the borrower defaults n their repayments.)

   When the property ‘exists’ i.e. it’s Title Deed has been issued and ownership of the property is transferred (conveyenced) to its purchaser, the home loan is converted to a mortgage and a charge is registered against the property – and the borrower pays one percent of the loan advanced to the Land Registry.

   Applying for a Title Deed will weaken your negotiating position with the bank. Because in doing so you are effectively agreeing to the terms of the loan by agreeing that it will be converted to a mortgage.

   Property Transfer Fees are the Cyprus equivalent of UK Stamp Duty Land Tax (SDLT).

   There is no equivalent of Immovable Property Tax in the UK – think of it as the Mansion Tax that was being talked about a couple of years ago.

   Why does Jill have to pay her developer? As he’s the owner of the property he has to pay Immovable Property Tax and in virtually all contracts I have seen the buyer becomes liable to pay when they take delivery of a property. They typically contain a clause similar to the following:

   “As from the day the Purchasers are in possession of the property, they undertake to be responsible for and to pay all the Government, municipal and local authorities’ taxes, levies, duties or charges (if any) raised on or in connection with the possession of the Property hereby sold.”

   The law on IPT changed in 2014 whereby purchasers pay IPT directly to the Tax Department when they take delivery of a property. But this law was not retrospective and in the past developer’s didn’t bill their customers IPT until the property’s Title Deed became available for transfer.

   Any IPT overpayments that Jill or anyone else may make are recoverable from the Tax Department.)

6. We have applied for our title deeds as a result of the introduction of the new law last September.

   We were led to believe that minor irregularities with the property would not prevent the issue of the deeds. After several phone calls to various departments over the last few months and the reassurance that there was no problem and the application was progressing we were then told last week that we had no chance of our deeds because the Developer had not built a footpath to comply with the Building Permit. The Developer has washed his hands of the project now. The information is that a pavement is too big a problem for the authorities to over look. The surveyor that we employed to advise says that the road opposite is not wide enough to allow a pavement that complies with the specifications of the-building permit.

   We are at a loss what and who to approach to get a definitive answer to this situation.

   Can we pay to provide a footpath ourselves or has the footpath got to go round the whole development of 7 properties?
   Even the staff at the various offices cannot or will not tell me.

   We are at a loss to resolve this ,we now live in the UK and would love to sell the property to release the Capital.

   John S

   (Editor’s comment: In this situation I’m afraid the purchasers of the properties will need to pay for the remedial work and then sue the developer to recover their costs. But there is a further issue in your case regarding the width of the road. I suggest that you ask the surveyor you’ve employed to advise you to meet with the planning people at the District Office to see if a satisfactory solution to the problem can be reached.)

7. Nigel, From previous CPN articles it was my understanding that a completion certificate was not a pre-requisite for an application for title deeds under the “trapped buyers’ law. However, in your response to Jill above you imply that this is not the case, and that an additional application is necessary for a forced issue of a title deed. Can you please clarify?

   Secondly, it is now 6 months since the new law came into force, and it was reported that some 4000 applications had been made in the first month or so. We all know how slowly things work in Cyprus, but are you aware of any of these applications which have actually resulted in the issue of title deeds?

   Finally, I am pleased to hear that you have had a meeting with DLS officials, no doubt representing the interests of all of us without title deeds, and thanks for all your efforts in this direction. Do you plan to publish a report on your meeting?
   Regards
   Steven

   (Editor’s comment: If a Title Deed for a property has not been issued the trapped buyers has the right to request the ‘forced issuance of a Title Deed’. (Friends of mine in Limassol recently completed and submitted this request form.)

   When I met with the DLS in Nicosia I was advised that they’d received 8,500 applications – and yes, some people have already received their deeds. I recently ran a poll on a forum where a number of people said that they’d received their deeds.

   Following my meeting in Nicosia I drafted an 8 page article that I sent to them for review and comment. As soon as I receive those comments I’ll make whatever changes may be necessary and publish.

   I flew to the UK yesterday and didn’t bring my notes from the meeting with me. But as I recall the backlog of properties waiting to be issued with Title Deeds has fallen from somewhere in the region of 130,000 to around 20,000.)

8. Hi Nigel.

   How far do you think I could push Alpha on a CHF mis-selling case? So far the offer which they say is ‘final’ is a 25% discount to convert to a new 10 year Euro or GBP loan at fixed rate of 2% above base.

   Regards Peter

   (Editor’s comment: I don’t really know. Reductions negotiated by one of he groups with the Alpha Bank is based on the number of years their members have had the loan and the amount they borrowed.)

9. It seems that if the developer has outstanding mortgages on developments, the buyers should have laws in their favour now.Thank goodness for that. BUT what we can’t understand is this having to pay outstanding IPT direct to the developer and not to the Tax Office

   1. because we always understood this would be payable at the point of the Title Deeds being handed over and

   2. because our developer has never paid them in the past so us paying the money owed over to him instead of direct to the Tax Office would be the same as setting fire to it and saying goodbye money.

   Yet, unless we can prove we’ve paid all outstanding charges to the developer, we can’t get Title Deeds. Also, we understood previously that the issuance of the Title Deeds would have nothing to do with what the developer has or has not done but it now turns out that, actually, he has to have a completion certificate.

   As our developer flatly refuses to complete, all the excitement that we felt that, at long last (after 12 years!!) our Title Deeds would be available, is as usual pie in the sky.

   (Editor’s comment: It’s a requirement of the ‘trapped buyers’ law that you must fulfil your contractual obligations to the developer (which in many cases includes property-related taxes). The Tax Department and the local authorities will know how tax he owes and he will not get away without paying it.

   As for the Completion Certificate – at any time you have the right to request a ‘forced issuance of Title Deed’ via the DLO requiring the developer to do whatever is necessary to enable the DLO to issue a Title Deed. Penalties for failing to comply include a fine of up to €10,000 – and in some cases I’ve heard about the DLO has requested the District Office to issue Completion Certificates – the fees will be charged to the developer.)

10. Sales Surge?….

    “Well saying it’s so, don’t make it so”. (As Tom Sawyer said in Huckleberry Finn).

    Figures printed appear to show ‘it’s so’ but I haven’t seen anything here to prove them right. God forbid that government statistics would be artificial?

11. @Nigel – I know you will – but just to say please do keep us fully up to speed on the fine details (and implications) of the trapped buyer’s law – especially pertaining to CHF loans.

    A successful program would mean an end to some of the more ghastly situations.

    (Editor’s comment: The ‘trapped buyers’ law has no implications for those with CHF loans. However if you apply for your deeds and have a CHF loan, the loan is converted to a mortgage and registered as a charge against the deed when it’s registered in your name. This will weaken your case against the bank for mis-selling as you have effectively agreed to the loan by allowing it to be converted to a mortgage.

    So if you are planning to take action against the bank for mis-selling the loan or you are negotiating with the bank, do not apply for your deeds.

    Also, under the provisions of the law in addition the ‘trapped buyer’, the vendor of the property, the mortgagee under the mortgage contract deposited at the Land Registry and the lender who granted the loan to the ‘trapped buyer’ to purchase the property are also entitled to apply to have the Title Deeds of a property transferred to the purchaser.

    When the Title Deed is available for transfer, the purchaser (and other interested parties) will receive a notice from the District Lands Officer (a FORM «ΙΕ») asking if they have any objection to the transfer taking place and giving them 45 days to to file an objection. If purchasers contesting their loans fail to raise an objection, the loan will be converted to a mortgage and registered as a charge against the deed when it’s registered in the buyer’s name. The implications of this are the same as if the purchaser applied for the Title Deed.)

12. In the coming year we expect to see structural changes implemented to accelerate the issuance of Title Deeds.

    I’m sorry to sound negative about this article but where have we heard this statement before. Maybe this is part of the new sales patter.

    (Editor’s comment: I had a meeting last week with two senior officials at the Department of Lands and Surveys Head Office in Nicosia last week to discuss the ‘trapped buyers’ law. Further changes are on the way.)

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