Proposals to modernise rent laws

Annette Chrysostomou
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Proposals to modernise rent laws

Cyprus proposals to deal with bad tenantsTHE HOUSE legal committee on Wednesday discussed proposals to strengthen property owners’ rights to evict tenants who refuse to pay their rent.

The proposed legislation, submitted by MPs Nicos Nouris, Giorgos Georgiou, Efthimios Diplaros and Marios Mavrides, aims to overhaul outdated tenancy legislation and make procedures more effective when tenants fail to meet their contractual obligations.

In a statement after the session, Nouris welcomed the fact that all sides agreed that the legislation really needs to be modernised.

“The rent law was introduced after the tragic events of the 1960s and 70s in the Republic of Cyprus, with the intention of protecting troubled citizens, who mainly rented business premises, from eviction and from unreasonable rent increases,” he said.

“Conditions have changed and unfortunately over the course of time, too many problems have arisen from tenants who take advantage of the legislation’s weaknesses.”

The draft law, he said, was help those owners who are tied to bad tenants.

The proposals primarily seek to introduce an out-of-court procedure by which the landlord can, without initially involving the court, hand a claim form to a tenant who has not paid the rent. If there is no payment within 21 days, a debtor would have the right to seek a 90-day extension, but after that expired the case would then be filed with the court.

Most importantly, once at court judges would issue a decision to evict within six months.

Nouris said owners, if they want to speed up the process because they want to use their premises for business, could repossess them in three months if they are willing to waive their claim for unpaid rent.

His party will insist on the basic idea but is willing to discuss additional ideas which can facilitate the process, the Disy MP concluded.

Property owners have for years complained that the law favours tenants and allows them to take advantage of the legislation and the slow performance of the justice system.

At the moment, those who know how the system works in Cyprus exploit the slow justice system and refuse to pay their rent knowing that it may take several years before they’re evicted.

In the meantime, landlords must be ready to shoulder the cost of prolonged court cases.

Owners of destroyed homes in Pissouri on BBC

Bejay Browne
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Owners of destroyed homes in Pissouri on BBC

BRITISH residents of Pissouri village whose homes haves been destroyed by disastrous land slippage featured on the BBC’s ‘Inside Out South’ programme on Monday 24 September.

Retirees Kayt and her husband Peter Field, a former army colonel, contacted the BBC in desperation after six years of toing and froing, bounced between the government and local officials, with no action being taken to counter the land slippage that has caused destruction of homes and roads since 2012, and no compensation offered.

The pair are one of several couples appearing on the BBC programme.

They told the Cyprus Mail on Monday that the affected home owners felt abandoned by the Cyprus government and that lives had been ruined.

“We were evicted in March 2015, with no interaction with the officials at all. They just slapped a notice on our door that our home was not fit to live in. No help was offered and no care for people was shown,” she said.

A BBC team were recently in Pissouri for a few days covering the homeowners’ plight.

The Fields and others are hoping that highlighting the predicament might prompt the government to show a humanitarian approach, and some sort of care and concern towards stricken residents, she said.

Cracks appeared in their dream home a few years ago, and like other houses there, the Fields home has now split apart. Walls are bowed, roofs collapsed and gardens and pools destroyed.

The Fields purchased their four-bedroom villa with a substantial garden and pool in 1993, and decided to retire to Cyprus, a country they fell in love with when Peter was stationed on the island.

“We have always loved Cyprus and the people, but the government have let us down badly,” she said.

The pair are now having to rent a property nearby and watch their much-loved home disintegrate before their eyes.

“No-one has the price of another house do they, what are we supposed to do? We are living on a pension and paying rent. This is not what we planned at all.”

Various experts have found that the homes that were sold to unsuspecting buyers, were built on a ‘slow moving landslide’, something that the Cyprus government has yet to formally accept, she said.

Sixty properties with cracks in the walls as well as fourteen houses and a complex of 28 apartments have all been seriously affected. In 2015, several property owners came together to form the Pissouri Housing Initiative Group (PHIG)

Home owners, Antony and Penelope Walker, are members and said that PHIG has paid out thousands of euros to obtain studies and papers from various renowned international experts and also satellite imaging, at a cost of 25,000 euros, which measures the movement.

“According to the imaging of our area, it is moving up to 40 cm per year, this is a lot when it’s pressing against your house,” he said.

Despite assurances from ministers that the state would help and solutions would be found nothing has happened.

In 2015, the former interior minister, Socrates Hasikos, announced plans to put measures in place that could resolve the problem at a cost of €20m, to be paid for by the government,

The Limassol District Office has since said that this offer was made ‘without the district offices’ go ahead, said Walker.

“It’s like being in a revolving door and we are being given the run around. I’m not entirely sure why the local authority won’t accept the findings. It seems the district office is trying to quash everything we are trying to do,” he said.

The Cyprus Mail was unable to contact the district officer Marios Alexandrou for comment on Monday, and was informed that he was on leave for the day and not contactable.

“The situation for those of us who are residents in the immediate area is now extremely serious and solutions need to be found,” Field said.

YouTube video from ‘Inside Out South’ broadcast on BBC One in the south of England on Monday 24th September 2018:

[youtube= https://www.youtube.com/watch?v=f6K3iqFjaQY&w=470&rel=0]

The Cyprus swimming pool nightmare

Christiana Achilleos
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The Cyprus swimming pool nightmare

THE MUNICIPALITY of Paphos has recently visited numerous apartment complexes with outdoor swimming pools in the area of Paphos and served owners and tenants of these apartments with notices stating they are operating public swimming pools without licenses.

Under the current Law and regulations, swimming pools in apartment complexes are considered to be “public swimming pools”.

According to the Law a “public swimming pool” is a swimming pool which is intended to be used by the general public or groups of the public, such as members of clubs, educational institutions, hotels, tenants of apartment complexes etc, irrespective of ownership and/or partial usage, but it does not include a swimming pool which is intended to be used by the members of a family and/or their guests.

Although swimming pools used by members of a family and their guests are considered to be private, any such swimming pools in apartment complexes are considered to be public and as such require a license to operate.

The European Standard differentiates swimming pools in apartment complexes from other public swimming pools and lowers the standard of maintenance, operation and licensing.

Cyprus Law does not differentiate such swimming pools and hence imposes another financial burden on the owners and Management Committees of apartment complexes.

Promises for the change and revision of the Law and regulations in order to reflect the European Standard principles have been communicated to all interested parties by the Ministry of Interior; however, nothing has been done so far.

The reality is that, pending the change in the Law and regulations, Management Committees must comply with the expensive, time-consuming and complicated requirements set out in the Law and regulations and apply to the Municipality of Paphos in order to obtain the relevant licenses.

Otherwise, according to the Law, any person who operates a swimming pool without having a license or any person who acts contrary to the Law and regulations is guilty of committing a criminal offense and is subject to a fine up to £450 and, if the offence continues after this person has been convicted, the person is guilty of committing an additional offense and is subject to an additional fine amounting up to £50 per each day the offense is continued.

Further to any other penalty imposed by the Court, the latter, in case of a conviction, can order the suspension of the operation of the swimming pool for any such time as the Court thinks necessary.

Such criminal proceedings will cause damage to the Cyprus economy, especially to tourism if the result is the closure of the pools, due to the onerous requirements to obtain a license. The property owners are tourists who will not visit their apartments for their holidays if the pool is closed. Foreigners will not invest in apartments in apartment complexes as their holiday homes if there is no pool they can use. The sunshine and the properties in Cyprus are sources of income for the island and it would be a shame to inflict damage on the property market which has just started to recover.

Our law firm shares the views of the owners and Management Committees of apartment complexes and intends to help the owners and Management Committees in their attempt to lobby the government and, in the meantime, offer assistance to those who have been served with any such notices and criminal proceedings by the Municipality of Paphos.

Christiana Achilleos
Senior Litigation Lawyer
L.G. Zambartas LLC

Lawyers minimum fees in the bin

Nigel Howarth
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Lawyers minimum fees in the bin

FOLLOWING a successful complaint to the European Commission by Fairness in Fees, the law requiring Cyprus lawyers to charge clients according to the Minimum Fee Regulations has been revised and the Minimum Fee Regulations abolished.

An extraordinary meeting was held on the 19th June 2018 at which the Cyprus Bar Association (CBA) decided to abolish the Minimum Fee Regulations immediately in their entirety, which included fees relating to the provision of out-of-court-cases.

In addition, Cyprus amended Article 24(1)(k) of the Advocates’ Law that empowered the CBA to “fix lawyers fees for out-of-court cases”.

The amended article now reads “observing the principles of free and fair competition, to regulate the way and procedure for resolving disputes arising in relation to lawyer’s remuneration for out-of-court cases“.

What the papers said

Although this impending change in the law was reported in the Greek newspaper Phileleftheros and in-Cyprus.com both reports grossly understated/misrepresented it’s significance. I.e:

“The lawyer’s minimum wage is determined according to time spent and the location (in or out of the office) of these meetings. Lawyers may claim travel fees if these meetings take place outside the city where their law office is located.”

The reality

The now defunct Minimum Fee Regulations for out-of-court-cases fixed vast swathes of fees including such things as:

  • Drawing up contracts of any nature including: Wills, Deeds of Gift, Powers of Attorney and bills of exchange. (Based on mathematical formulae relating to their values and bearing no relationship to the work done.)
  • Registering limited companies
  • Trademarks
  • Filing a business name and patent
  • Administration of estates (fees that bore no relationship to the work done as they were effectively a fixed proportion of the value of the estate.)

Any lawyer who failed to charge clients according to the Minimum Fee Regulations faced disciplinary action by the CBA including being struck-off!

Robert O’Donoghue QC of Brick Court Chambers in London, who was instrumental in lodging the Fairness in Fees complaint with the European Commission has published an article on the subject – Cyprus lawyers forced to abandon minimum fees.

Free competition now rules!

Now that the Minimum Fee Regulations have been consigned to the litter bin, anyone wishing to engage the services of a lawyer in Cyprus to draw up their Will, act as their Power of Attorney, administer their estate, etc., etc. can shop around and get competitive written quotations for the work.

It is also vital that if the work involves the administration of the estate the agreed fee, which must not be a percentage of the estate’s value, is written into the Will.

Fairness in Fees

Fairness in Fees are considering their next steps. For further information contact Fairness in Fees.

S&P raises Cyprus credit rating to BBB-

Nigel Howarth
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S&P raises Cyprus credit rating to BBB-

cyprus credit rating raisedON FRIDAY Standard & Poor’s Global Ratings raised its long- and short-term foreign and local currency sovereign credit ratings on Cyprus to ‘BBB-/A-3’ from ‘BB+/B’ with a stable outlook.

In its announcement S&P explained the rationale behind its decision:

The Cypriot economy will continue to grow at a solid pace through 2021, our forecast horizon, enabling the government to alleviate its debt burden.

Measures by Cypriot policymakers to markedly reduce the stock of nonperforming assets in the banking system via financial support and legislative changes have improved the sector’s health and are likely to facilitate further recovery efforts.

Any additional financial state support to the banking sector will only moderately affect the sovereign balance sheet.

The ratings are also supported by policymakers’ efforts to consolidate public finances and restore the health of the banking sector. In 2018, the government injected about 15% of GDP into the country’s second-largest bank, the majority state-owned Cyprus Co-operative Bank (CCB), to strengthen its balance sheet and carve out its nonperforming assets into a residual entity. This will significantly reduce the banking sector’s non-performing exposures (NPEs) to an estimated one-third of total loans from one-half before.

We also expect that various other legislative changes will support Cypriot banks’ efforts to further reduce bad assets over the medium term. We assume additional support to the banking sector via the government’s balance sheet from now through 2021 will be moderate.

Commenting on the upgrade President Anastasiades tweeted “The return after 6.5 years to investment grade is the strongest confirmation of the prudent management that we followed and continue to follow, our economy is recovering with the best omens being confirmed.”

S&P warns of vulnerabilities & risks

In its announcement S&P warned that vulnerabilities still persist from high levels of private sector debt. Despite recent developments, the banking sector’s stock of NPEs remains large and its ability to attract financing at reasonable costs is likely to remain challenged for a while. Nevertheless, we expect that the underlying recovery will support the sector’s efforts to strengthen. The Cypriot private sector balance sheet is among the most indebted in Europe, at about 240% of GDP (at end-2017; not including special purpose entities).

Despite solid economic growth, private sector debt is likely to remain high over the medium term, although tapering slowly via repayments–currently financed by savings, restructuring, ongoing write-offs, and debt-for-asset swaps with banks.

S&P also notes that the increasing concentration of the economy in tourism and construction activities presents another potential risk.

Further reading

Ratings On Cyprus Raised To ‘BBB-/A-3’ On Growth Prospects And Banking Sector Consolidation; Outlook Stable

Sea caves development a ‘litany of irregularities’

George Psyllides
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Sea caves development a ‘litany of irregularities’

A SPECIAL audit into the procedures that led to the approval and construction of expensive villas and a hotel in an environmentally sensitive sea caves area in Peyia, Paphos, has uncovered a litany of irregularities, according to a report published on Friday.

The audit had been requested after a public outcry over the construction projects in the sea caves area, one skirting the boundaries of the Akamas national park, as well as other Natura sites, which had not been properly and adequately assessed by the environment department.

The submerged and partially submerged sea caves are the birthing habitat of the Mediterranean Monk Seal (Monachus monachus), which is listed as the most “critically endangered” marine mammal species in the Mediterranean by the International Union for the Conservation of Nature.

According to the audit service, the probe found numerous “weaknesses in the procedures that were followed, both in changing the building zones” after appeals were satisfied, but also in relation with the permits issued in the sea caves area. The appeals were filed by Peyia Municipality in 2003.

The report said the plots in question came about after the redistribution of land in 1988, done for farming purposes. The audit said that at least the plots next to the coastal protection zone could not be developed because of the rocky terrain and questioned why they had been included in the redistribution in the first place.

No environmental study had been carried out, in violation of EU directives, while the zoning changes, following appeals, raised the building coefficient almost threefold.

The audit also found that the appeals had been filed after the deadline and the Peyia mayor sat on the three-member panel that assessed them.

“The committee examined two important appeals filed by Peyia Municipality which were almost fully satisfied,” the audit service said. “We think that the mayor’s participation in the decision-making violates the principles of impartiality and equality.”

In 2007, a few months before the appeals review was finalised, three significant sales transactions were done in the area. The land was bought by developers who benefitted from a spike in value after the zones were changed.

Six villas were constructed on one of the plots, with sales documents filed at the land registry many months before the environmental impact had been assessed and before a town planning permit had been secured.

The municipality had also requested an extension of the tourist zone to supposedly enable a large family to meet its housing needs.

“As we found out, one of the plots remains unused, while the members of the family to whom it has been transferred are the owners of a large number of pieces of land in Limassol and Paphos. The second plot has been divided and sold to various people and developing companies.”

Despite the findings, there is little or nothing the authorities can or are willing to do to rectify the situation.

A ministerial meeting in March decided that the clock could not be turned back and authorities could only limit the damage by rectifying some other illegalities and take steps to avoid them in the future.

The meeting heard that some eight irregularities will have to be restored at one of the two main projects in the area, Korantina, including kiosks, a lifeguard tower, and rock works.

The ministers were assured that the projects are not expected to have irreversible effects on the area’s environment.

The area where the six villas were being constructed by Leptos, had been rezoned in 2008 nine days before the presidential elections by then interior minister Christos Patsalides.

Patsalides defended his action arguing that he had simply accepted the recommendations of experts, which had been prepared following consultations with local officials, the district administration and the union of communities.

No one had objected after the publication of the decision, he said.

The former minister in the Tassos Papadopoulos administration questioned why building permits were granted 10 years later if the decision at the time had been wrong.

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