Planning issues the victim has to pay

Nigel Howarth
-
5
Planning issues the victim has to pay

ALTHOUGH amendments to the Trapped Buyers law may help those deceived into buying property built on land that its developer had earlier mortgaged to the bank to get their Title Deeds, planning infringements remain a serious problem.

Planning infringements are shown on Title Deeds as notes of unauthorised works and indicate that the developer has failed to comply the conditions set out in the planning and building permits authorised for the development’s construction.

These planning infringements must be corrected before the ‘notes’ can be removed and a ‘clean’ Title Deed issued.

And herein lies the gross injustice. The developer responsible for causing the planning infringements gets off scot-free – and it’s left to the property buyer to pay for any remedial work and then sue the developer to recover their money!

Furthermore, some notes require remedial work to be carried out before the purchaser, who now owns the property, can use it as collateral for a loan or sell it on the open market.

A double whammy! (four actually):

  • A property with notes cannot be sold and therefore has no market value.
  • The victim is required to pay Property Transfer Fees on its market value as assessed by the Land Registry, despite the fact that the property has no market value.
  • The victim (the purchaser) has to pay for the indiscretions of the cowboy builder (developer) in order to make the property saleable.
  • To recover the cost of the remedial work, the victim has to sue the ‘criminal’.

The simplest solution to this gross injustice is for the planning authority to impose fines on the ‘criminal’ sufficient to pay for the remedial work required to remove the ‘note’ from the deed, plus a further amount to dissuade the ‘crook’ from repeating his misdemeanours.

Planning infringements

Planning infringements come in all shapes and sizes:

  • Failure to complete roads, pavements and green areas, build boundary walls too high, etc. Note that developers make no money for building roads, etc.; costs are included in the price that buyers pays.
  • Failure to install fire doors, signage, etc. as required by the Fire Service.
  • In other cases, developers overbuild; building more properties on the site than permitted by their permits or building them larger to maximise their sales revenue.

The list is endless!

It goes without saying that buying a property in Cyprus without a ‘clean’ Title Deed is a big mistake.

Trapped buyers bill changes approved

George Psyllides
-
6
Trapped buyers bill changes approved

MPs UNANIMOUSLY approved amendments seeking to improve a 2015 law that aimed to resolve the ‘trapped buyers’ issue, where thousands of property buyers were left stranded without a Title Deed despite having paid for the property.

In 2015, parliament passed a law aimed at helping thousands of trapped buyers who had paid for their properties in full but had not been issued with their Title Deeds because the developers had their own mortgages on the properties, which they failed to repay.

Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave banks a claim on properties that had been mortgaged by developers.

The head of the land registry had been granted the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions, as the state sought to sort out the Title Deed mess.

However, banks contested the trapped buyers law and won rulings at district court level stating it was unconstitutional. Courts said it violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.

The matter is before the Supreme Court, which will have the final say.

The amendments seek to ensure the involvement in the process of all three parties – buyer, lender, and seller – and affords the capacity of filing a substantiated objection and securing a court order within a defined timeframe to stop the transfer.

The state legal service had expressed reservations on the matter, arguing that as long as the land registry director’s authority to remove encumbrances remained, the constitutional snags could not be resolved.

House President Demetris Syllouris said he too was a trapped buyer and informed MPs that in two visits to the UK, British MPs had raised the issue.

Akel MP Aristos Damianou said thousands of Cypriots and foreign nationals found themselves in a difficult position, remaining without a Title Deed to the property they had fully paid without it being their fault.

The land registry said some 30,000 people were affected.

“We are affording the land registry a new opportunity to tackle legal obstacles set by the banks in the process,” Damianou said.

Despite the problems, around 6,500 people managed to secure a title under the 2015 law.

MPs freeze foreclosures despite warnings (update)

George Psyllides
-
2
MPs freeze foreclosures despite warnings (update)

PARLIAMENT on Friday voted to temporarily suspend foreclosures on properties that could be eligible for inclusion in a state borrower relief scheme but also changed the foreclosures legislation despite warnings that it would have negative repercussions on banks and the economy.

Earlier, MPs rejected a proposal to postpone the vote on the two bills.

The objective of the proposal, which passed with the votes of opposition parties, was the temporary postponement of foreclosure procedures relating to primary residences, which could be eligible for the Estia debt relief scheme that starts in September.

Opposition MPs argued that the suspension was necessary due to the uncertainty as to which borrowers would be eligible.

The opposition also approved changes to the foreclosures legislation that will make it harder for banks to collect their dues, possibly causing problems to the wider economy.

The law on foreclosures was amended in the summer of 2018 to make it more effective, some four years after it was passed by parliament with changes that essentially rendered it ineffective and unable to help banks reduce non-performing loans.

Up until then, the IMF, the European Commission and the European Central Bank (ECB), the troika of international creditors which supervised Cyprus’ 2013 bailout, had been calling for an amendment to the law to make it more effective.

Ignoring the warnings, opposition MPS amended provisions and, in essence weakening the banks’ ability to collect their dues at a time when supervisors are piling on the pressure for a reduction in bad debts.

Banking sources had suggested the amendments would essentially afford protection to strategic defaulters and possibly increase their numbers since foreclosure procedures would slow down or be weakened.

They fear that fresh capital would be needed since there will be changes in the valuation of collateral, as well as possible bank downgrades by ratings agencies.

Ruling Disy chief Averof Neophytou said his party would vote against the proposals because they were going to lead the economy and the financial system into fresh adventures.

House finance committee chairman, Diko MP Angelos Votsis, who had submitted the proposal on behalf of his party, initially supported postponement of the vote to give time for improvements to be made to the foreclosures legislation.

But he later said that they would support the proposals because there was mistrust towards the banks and courts must also take into account the central bank’s restructuring code. According to Votsis, courts so far have chosen to make decisions taking into consideration bank solvency.

Diko chairman Nicolas Papadopoulos said he had supported not putting the proposals to the vote since discussion at the House finance committee had not finished. However, since they went to plenum, he supported his proposal.

Update 19 July 2019

Yesterday, President Nicos Anastasiades vetoed the bills passed by the opposition saying that the changes would impact “the values of the collateral, straining bank balance sheets and leading to demands from supervisors for additional provisions and fresh capital.”

Parliament must convene within 15 days to decide whether to accept or reject the veto. Rejection would mean the issue ending up before the Supreme Court, which will have the final say.

Massive rise in new home construction

Nigel Howarth
-
0
Massive rise in new home construction

THE TOTAL number of building permits authorised in Cyprus during April 2019 stood at 520 compared with the 531 authorised during April 2018; an increase of 10.9% according to official figures released by the Cyprus Statistical Service and provided for the construction of 742 new homes.

Compared to April 2018 the total value of these permits rose by a staggering 596.0% to €742.3 million and their total area rose by 167.7% to 271.6 thousand square metres.

During April 2019, building permits were issued for:

  • Residential buildings – 374 permits
  • Non-residential buildings – 82 permits
  • Civil engineering projects – 14 permits
  • Division of plots of land – 39 permits
  • Road construction – 9 permits

Building permits for new homes

The 374 residential building permits approved in April 2019 provided for the construction of 742 new homes (dwellings). These comprised 276 single houses (compared with 262 in April 2018) and 98 multiple housing units including apartments, semis, townhouses and other residential complexes (compared with 79 in April 2018).

Of those 742 new homes, 284 are destined for Limassol, 199 for Nicosia, 119 for Larnaca, 109 for Paphos and 31 for Famagusta.

Building Permits Issued for the Construction of New Homes
(Number of Dwellings)

Month 2018 (Dwellings) 2019 (Dwellings) Increase/Decrease %age Change
January 476 548 72 15.1%
February
 431
 576 145 33.6%
March
 467
 615 148 31.7%
April
 418
 742
 324
 77.5%
Totals 1,792 2,481 689 38.4%

Annual construction figures

During the four months of 2019, a total of 2,111 building permits were issued compared to 1,984 in the corresponding period in 2018; an increase of 56.4%, while their total value and area increased by 133.4% and 45.4% respectively.

The 2,111 permits issued over the period provided for the construction of 1,003 new homes in Limassol, 738 in Nicosia, 390 in Larnaca, 287 in Paphos and 63 in Famagusta.

According to the Cyprus Statistical Service, building permits constitute a leading indicator of future activity in the construction sector.

House prices up 0.8 per cent in Q1 2019

Nigel Howarth
-
0
House prices up 0.8 per cent in Q1 2019

Cyprus house prices up 0.8 per cent in Q1 2019THE CYPRUS Statistical Service (CYSTAT) has announced that prices for houses and apartments in Cyprus rose by an average by 0.8 per cent in the first quarter of 2019 compared to the second quarter in its latest House Price Index (HPI).

The HPI also reports that residential property prices in Cyprus have risen by 4.3 percent on an annual basis.

According to CYSTAT’s press release, the Cyprus House Price Index (HPI) “is a quarterly index which measures the change in the average prices of residential dwellings. It captures all types of residential properties, both new and existing. The land component of the residential property is included.

“The data source used for both, indices and weights, is the Department of Lands and Surveys, Ministry of Interior. The data cover all areas which are under the control of the government of the Republic of Cyprus.”

Year Quarter House Price Index (2015=100) Quarterly Change (Compared to the previous quarter) (%) Annual Change (Compared to the same quarter of the previous year) (%)
2010 Q1 114.37 -1.6 -6.6
Q2 112.79 -1.4 -6.9
Q3 112.39 -0.4 -5.7
Q4 112.05 -0.3 -3.6
2011 Q1 111.56 -0.4 -2.5
Q2 113.99 2.2 1.1
Q3 111.22 -2.4 -1.0
Q4 107.60 -3.2 -4.0
2012 Q1 106.40 -1.1 -4.6
Q2 106.02 -0.4 -7.0
Q3 110.14 3.9 -1.0
Q4 108.22 -1.7 0.6
2013 Q1 104.54 -3.4 -1.7
Q2 104.77 0.2 -1.2
Q3 103.05 -4.7 -9.3
Q4 100.78 0.9 -6.9
2014 Q1 98.08 -2.7 -6.2
Q2 103.55 5.6 -1.2
Q3 102.70 -0.8 2.8
Q4 101.56 -1.1 0.8
2015 Q1 97.52b
Q2 100.59 3.1
Q3 102.49 1.9
Q4 99.40 -3.0
2016 Q1 97.29 -2.1 -0.2
Q2 99.18 1.9 -1.4
Q3 101.87 2.7 -0.6
Q4 102.72 0.8 3.3
2017 Q1 99.64 -3.0 2.4
Q2 102.74 3.1 3.6
Q3 102.46 -0.3 0.6
Q4 105.24 2.7 2.4
2018 Q1 103.34 -1.8 3.7
Q2 103.98 0.6 1.2
Q3 104.19 0.2 1.7
Q4 106.95 3.5 1.6
2019 Q1 107.78 0.8 4.3

b There is a break in the series in the first quarter of 2015 due to redefinition of the model variables.

New trapped buyers bill vote tomorrow

Annie Charalambous
-
0
New trapped buyers bill vote tomorrow

AN AMENDED trapped buyers bill designed to overcome the shortfalls in the current law is to go before the House plenum for a vote on Friday.

The new law, which was debated in the House Legal Committee for over 18 months, is expected to be voted in unanimously providing trapped buyers with new ‘weapons’.

The bill was drafted by Opposition AKEL, ruling DISY, centre DIKO, socialist EDEK, the Solidarity Movement and the Greens.

The lawmakers and government technocrats believe that the new law will cover shortcomings in the existing legislation on which district courts have based their rulings.

District courts have argued that legislation approved in 2015 contradicted articles 23 and 26 of the Constitution governing the right to property and to free contracts.

Members of the House Legal Committee told Phileleftheros that thousands of trapped buyers will now be given their property titles without any legal obstacles. And that the amendments are such that even if a bank does take a case to court it will be hard for them to challenge the new law.

They also believe that justice will be awarded to thousands of buyers, some of whom paid many thousands of Euros for their property, and have been unable to get Title Deeds due to developers’ unpaid debts.

The new bill provides that if all conditions are met, the director of the Land Registry will send an initial notification to the buyer, the seller and the mortgagee. And after one month, the director will inform interested parties of his intention to proceed with the transfer of the property in the name of the buyer. The transfer will take place within 45 days after the notice is served.

© 2019 In-Cyprus.com

Who are the trapped buyers?

Trapped buyers are people who were deceived by nefarious developers, lawyers and estate agents into buying property in Cyprus that its developer had earlier mortgaged to the bank or who had failed to pay the company’s outstanding tax and other debts.

In these situations, the banks and others have what is known as ‘first charge’ over the property enabling them to repossess the property and sell it if the borrower fails to repay their debt. (This charge takes precedence over the purchasers right to own the property created when their contract to purchase the property was deposited at the Land Registry for what is known as ‘Specific Performance’.)

Although the first iteration of the trapped buyers enabled thousands of purchasers to obtain title (ownership) of the property, shortfalls in the law prevented the right of many thousands of purchasers to obtain Title Deeds.

Many foreign purchasers, who paid for their properties in full, have taken they cases to the European Court of Justice for a ruling on the matter.

 

1...238239240...697Page 239 of 697