CYPRUS Property News has attracted more than 750,000 visitors over the past year and as we approach the festive season. I expect this number would have been greater had it not been for the dDDOS attack we suffered in June.
Here are the top ten stories that have attracted the most interest from you, our readers, over the past 12 months:
Number 1: EC asks Cyprus to comply fully with EU law – In July, the European Commission decided to send an additional letter of formal notice to Cyprus because their national rules do not comply with EU law on unfair commercial practices (Directive 2005/29/EC) and unfair contract terms (Unfair Contract Terms Directive, Council Directive 93/13/EEC).
The Commission opened this infringement case in 2013 based on a series of complaints from EU citizens who bought real estate in Cyprus. Real estate developers, banks and lawyers had allegedly omitted to inform buyers about pre-existing mortgages when selling immovable properties.
As far as we are aware, Cyprus has yet to enact legislation to comply with EU law. It is absolutely essential that anyone considering buying property in Cyprus requests the Land Registry to carry out a Title Search, which will highlight mortgages and other debts attached to the property. And to be safe, if you must have a property in Cyprus, only buy one that has ‘clean’ Title Deed.
Number 2: Alpha Bank loses Swiss Franc loan court action – What at first appeared to be a positive news story that the Alpha Bank lost a case against a British national, turned sour.
The bank accused the defendant of failing to comply with the obligations of his Swiss Franc loan agreement. But following various legal arguments and rulings in related cases (one of which was a judgement of the European Court of Justice), the judge at the Larnaca court rejected the bank’s claim and awarded costs to the defendant.
Although he won the case and was awarded costs, the defendant remains more than €180,000 Euros out of pocket. A dozen visits to Cyprus for court hearings that never took place resulted in loss of earnings plus travel and accommodation costs. The deposit he paid the developer has not been refunded; neither has the money he paid to the Alpha Bank nor the money he paid his lawyer.
The closing words of his email to me were “Where is the justice in this country? Who can you trust?”
Number 3: Paphos marina may have cruise ship facilities – The long running and every popular Paphos marina pantomime took another turn in the year when the cabinet gave the go-ahead for a new study to look into building cruise ship facilities as part of the marina.
Stalled by legal battles and bureaucracy for decades, some believe that by the time construction of the Paphos marina gets the go ahead, rising sea levels caused by climate change will force it into the pages of history.
Number 4: New criteria for passport scheme – Details of the more stringent conditions for individuals applying for citizenship and passports under the Government’s Citizenship by Investment scheme emerged following bad press and criticism from the European Commission and accusations of money laundering.
But this was like closing the stable door after the horse had bolted. In November, the Greek-language newspaper Politis revealed that fugitive Malaysian businessmen Low Taek Jho had obtained citizenship. A few days later Politis revealed the names of a further 25 investors who had bought citizenship and passports.
The government, allegedly, is in the process of revoking the citizenship of the 26 and the European Commission has asked Cyprus whether it will investigate “possible misconduct” in the matter.
(In a related story published today, Reuters has seen Cyprus Government documents showing that a number of Conservative Party donors have sought Cypriot citizenship since UK voted to leave the EU in 2016.)
Number 5: Cyprus banks awash with properties – News that the Cyprus Banks have acquired more than 14,000 properties comprising commercial, residential, tourist, small apartments, small shops, farmland and building plots from businesses and households through foreclosures and debt-to-asset swaps.
This number represents around 40% of the total number of properties sold in the past five years, based on the number of contracts deposited at Land Registry offices, which inflates the sales statistics published by the Department of Lands & Surveys, making it impossible to assess the true state of the property market.
Number 6: Alarm bells over house prices – The Central Bank of Cyprus sounded alarm bells over rising house prices, particularly in Limassol, due to the Invest Citizenship scheme and has highlighted the need for vigilance.
It said that prices of flats in Limassol recorded significant increases which are manifestly higher than other areas in Cyprus, while prices of apartments have accelerated faster than house prices – evident by the number of luxury towers going up along the coast.
The CBC noted that residential house prices in Famagusta and Paphos – where foreign demand has an effect – recorded significant increases compared with Nicosia, where price increases were subdued.
Number 7: Swimming pool laws set to hit tourism revenues – Another report concerning the problems caused by the laws and regulations dating back to 1992 that define swimming pools in building complexes as public pools, despite the fact they are in private ownership.
More vigilant inspections by the authorities identified a number of pools that were not licensed and which were closed by their complex Management Committees to avoid legal action.
Number 8: Affordable housing scheme starts next month – Seeking to assist vulnerable groups and gradually resolve the structural problems in the housing market, the government introduced an affordable housing scheme.
Cypriot and EU nationals living in Cyprus for more than 5 years may apply, but there are conditions.
Gross household income should not exceed €22,000 for a single person, €40,000 for a couple, €44,000 for a couple with one child, €48,000 for two children, €58,000 for three children, €68,000 for four, €70,000 for five, and €76,000 for six children.
The owners cannot sell the unit before 10 years had elapsed from the day it was acquired and it must be used for at least 10 years for permanent residency. Eligible individuals can only benefit from the housing scheme once.
- Limassol – apartments +6.63%, houses +2.77%.
- Paphos – apartments +7.49%, houses +1.90%.
- Larnaca – apartments +3.57%, houses +4.73%.
- Famagusta – apartments +2.57%, houses +4.99%.
- Nicosia – apartments +1.96%, houses +1.81%.
We’ll be able to gauge the accuracy of these predictions were when property price indexes are published in the new year.
Number 10: Cyprus property boom is not a bubble – The Finance Ministry insisted that the Cyprus property boom was not a bubble and considered such an eventuality as remote. But it acknowledged that a potential massive sell-off of properties acquired by commercial banks through debt-to-asset swaps, as well as large investment firms acquiring non-performing loans portfolios, could push prices down.
It also noted that the ongoing property market recovery, as well as the rise in construction activity, are factors helping to boost the banks’ balance sheets. Because they are increasing the total value of mortgage assets and improve the prospect of repayment of the construction sector’s ever high non-performing loans.
We’ll see if the Finance Ministry is correct over the next 12 to 18 months.
Music video of the year
When I’m not busy answering your questions and editing Cyprus Property News, I occasionally relax by watching YouTube music videos. This year I came across an American acapella group ‘Pentatonix’ and their reworking of the Simon & Garfunkel classic “The Sound of Silence”, which was written by Paul Simon in the aftermath of the 1963 assassination of John F. Kennedy. Turn up the volume and enjoy!
May I take this opportunity to wish you a Merry Christmas and a Happy and Healthy 2019.