Determined action over Title Deed fiasco

George Psyllides
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Determined action over Title Deed fiasco

Cyprus Title Deed protestIN THE ABSENCE of tangible government action, main opposition AKEL said on Wednesday it will be preparing two proposals designed to iron out kinks in a 2015 law that sought to sort out the Title Deed mess, offering relief to so-called trapped buyers.

The law sought to resolve the problems for homeowners who had paid for their properties but were not issued with their Title Deed either because it was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

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

However, following a string of court decisions in cases where banks objected to the law, the government had said it would seek ways to plug any loopholes.

AKEL MP Aristos Damianou said the matter was revisited by parliament in July 2017, after decisions, mainly by courts in Paphos and Limassol, that found the law unconstitutional.

It had been decided at the time that government departments would look into the matter together with the Legal Service, in a bid to make corrections and secure the rights of trapped buyers.

“We waited for over six months. We had warned at the time that in the absence of government initiative parliament would not remain idle,” Damianou said.

On Wednesday, the party’s parliamentary group decided to prepare and submit next week, two proposals that will be jointly tabled with all parties aiming at tackling “this huge social problem”.

Damianou said government departments will be invited in due course to offer their views but parties could no longer wait for the executive to act.

The AKEL MP said the proposals will seek to safeguard buyers who have paid the full amount of their purchase and were not at fault. Encumbrances will be taken into account but the proposals will weigh the wider public interest.

“In our understanding, the wider public interest is to cover all those people who have paid off the price as per sales contract, but they cannot get a deed because the businessman has outstanding issues with the banks,” Damianou said.

He said banks will have a say in the matter but they will not be able to veto decisions.

Some of the court cases have been won by the banks, largely on the grounds that the buyer’s claim on the property infringed on the contract between the bank and the developer.

But in September, the Larnaca district court upheld the 2015 law, allowing trapped property buyers to obtain their Title Deed irrespective of the developers’ own commitments to banks.

The attorney-general had instructed the departments involved to continue implementing the law while appeals were filed at the supreme court, which will have the final say on the matter.

Earlier this year, Interior Minister Constantinos Petrides said that despite the matter not being resolved, the ministry had prepared a bill which it sent to the Legal Service for processing last October.

“As it transpired from the differing district court decisions, it is a complicated legal issue and due to this an in-depth study is required,” the minister said.

Damianou said parliament knew about the problems but it could not remain idle any longer.

“Inaction on this matter cannot be justified in any way.”

Measures to tackle non-performing loans

Press Release
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Measures to tackle non-performing loans

non-performing loansWITH today’s far-reaching measures, the Commission is delivering on the Council’s Action Plan to address the high stock of non-performing loans (NPLs) and prevent their possible future accumulation. It builds on ongoing efforts by Member States, supervisors, credit institutions and the EU: this has led to stocks of NPLs declining in recent years across banks and EU countries.

Despite good progress, however, more needs to be done to address remaining stocks of NPLs and their possible build-up in the future. Today’s measures aim to put the EU banking sector on an even sounder footing for future generations, with rock-solid banks that perform their indispensable role in financing the economy and supporting growth. The package complements work on the Capital Markets Union and is an essential step towards the completion of the Banking Union, one of the immediate priorities agreed by EU leaders to strengthen Europe’s Economic and Monetary Union.

In addition, the Commission is also presenting its second progress report on the reduction of non-performing loans in Europe, showing that the decline of NPL stocks is continuing.

Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union, said: “As Europe and its economy regain strength, Europe must seize the momentum and accelerate the reduction of NPLs. This is essential to further reduce risks in the European banking sector and strengthen its resilience. With fewer NPLs on their balance sheets, banks will be able to lend more to households and businesses. Our proposals build on the significant risk reduction already achieved in recent years, and must be an integral part of completing the Banking Union through risk reduction and risk sharing.”

This package sets out a comprehensive approach with a mix of complementary policy actions that target four key areas:

  • Ensuring that banks set aside funds to cover the risks associated with loans issued in the future that may become non-performing.
  • Encouraging the development of secondary markets where banks can sell their NPLs to credit servicers and investors.
  • Facilitating debt recovery, as a complement to the insolvency and business restructuring proposal put forward in November 2016.
  • Assisting Member States that so wish in the restructuring of banks, by providing non-binding guidance – a blueprint – for establishing Asset Management Companies (AMCs) or other measures dealing with NPLs.

In particular, the proposals include the following key elements:

Ensuring sufficient loss coverage by banks for future NPLs

  • A Regulation amending the Capital Requirements Regulation (CRR) introduces common minimum coverage levels for newly originated loans that become non-performing. In case a bank does not meet the applicable minimum level, deductions from banks’ own funds would apply.
  • The measure addresses the risk of not having enough funds to cover losses on future NPLs and prevents their accumulation.

Enabling accelerated out-of-court enforcement of loans secured by collateral

  • Under the proposals, banks and borrowers can agree in advance on an accelerated mechanism to recover the value from loans guaranteed with collateral.
  • If a borrower defaults, the bank or other secured creditor is able to recover the collateral that underpins a loan in an expedited way, without going to court.
  • Out-of-court collateral enforcement is strictly limited to loans granted to businesses and subject to safeguards. Consumer loans are excluded.

Further developing secondary markets for NPLs

  • The proposal will foster the development of secondary markets for NPLs by harmonising requirements and creating a single market for credit servicing and the transfer of bank loans to third parties across the EU.
  • The proposed Directive defines the activities of credit servicers, sets common standards for authorisation and supervision and imposes conduct rules across the EU. It means that operators respecting those rules can be active throughout the EU without separate national authorisation requirements.
  • Purchasers of bank loans are required to notify authorities when acquiring a loan. Third-country purchasers of consumer loans are required to use authorised EU credit servicers. Consumer protection is ensured by legal safeguards and transparency rules so that the transfer of a loan does not affect the legitimate rights and interest of the borrower.

A technical blueprint for how to set up a national Asset Management Companies (AMCs)

  • The non-binding blueprint guides Member States on how they can set up national AMCs, should they find it useful, in full compliance with EU banking and State aid rules.
  • While considering AMCs with a State aid element as an exceptional solution, the blueprint clarifies the permissible design of AMCs receiving public support. The blueprint also sets out alternative impaired asset measures.
  • The blueprint suggests a number of common principles on the set-up, governance and operations of AMCs. The blueprint draws on experience and best practices from AMCs already set up in Member States.

Background

Banking Sector risks have been significantly reduced in the EU in recent years. Banks under the supervision of the European Central Bank have raised €234 billion of additional capital since 2014 and have much better liquidity buffers. This is thanks to significant regulatory measures already adopted and to be further strengthened by the Bank Risk Reduction Package which the Commission proposed in November 2016.

Although significant progress has been made, NPLs are one of the key remaining legacy risks in Europe’s banking system.

Addressing the high stock of NPLs and their possible future accumulation is essential to complete Banking Union. NPLs are loans where the borrower is unable to make the scheduled payments to cover interest or capital reimbursements. When the payments are more than 90 days past due, or the loan is assessed as unlikely to be repaid by the borrower, it is classified as an NPL. The financial crisis and subsequent recessions led more borrowers being unable to pay back their loans, as more companies and people faced continued payment difficulties, or even bankruptcy. This was particularly pronounced in Member States that faced long or deep recessions, with banks in those countries building up NPLs on their books.

The Commission proposed in October 2017 to make NPL reduction measures an essential part of the process of completing Banking Union by sharing and reducing risk in parallel. This was welcomed by the European Parliament and Council.

With today’s proposals, the European Commission is following up on the Action Plan on reducing non-performing loans (NPLs), agreed by Europe’s finance ministers in July 2017. In the Commission Communication on Completing the Banking Union (published in October 2017) and in the First Progress Report (published on 18 January 2018), the Commission committed to effectively implementing those elements of the Action Plan for which it is responsible.

More information:

MEMO

Factsheet

(Press release issued by the European Commission)

Sea caves desecration continues

Nigel Howarth
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Sea caves desecration continues
Peyia sea caves protest
Peyia sea caves protest (Photo credit Cyprus Mail)

RENEWED desecration in the stunning and environmentally sensitive sea caves area of Peyia in Paphos has sparked protests amongst local residents and today’s news that a 168-room hotel and 20 villas have been given the nod of approval is bound to trigger further controversy.

In 2009 property developers caused irreparable damage to the natural environment using heavy machinery to cut into the sea caves coastal rock formations. (The area is the birthing habitat of the Mediterranean Monk Seal, which is listed as the most “critically endangered” marine mammal species in the Mediterranean by the International Union for the Conservation of Nature.)

At that time Andreas Evlavis, the Paphos District Secretary of the Green Party said that “the developers have caused a huge amount of damage. When they realised they had been spotted, the driver of the vehicle ran away.”

Cypriot Deputy George Perdikis announced that an investigation carried out by the state environmental protection agency found numerous cases of illegal activity at the Paphos beauty spot.

The Paphos District Office representative for beaches, Andreas Charalambous, was equally upset. “I have been to see this problem for myself and it’s terrible.”

He stressed, “I believe that my bosses are aware of the case and have handed the file over to the police, and then the matter will go to court.”

However, it appears that no action was taken over the illegal activities.

Renewed desecration

Earlier this month more than two hundred people turned out to support a demonstration at the protected sea caves area opposing building development near the sea caves, where six villas are under construction. A demonstration earlier in the week outside the parliament in Nicosia was supported by a large number of environmentalist groups.

Speaking to the Cyprus Mail Andreas Evlavis that this is just one of the developments in the area which is detrimental to the environment.

“Our demonstration on Sunday showed that the six villas are not our only target, but all of the damage that has taken place here in the last years.”

The House watchdog committee has requested the auditor-general to investigate how it was made possible for a developer to acquire land at the environmentally sensitive sea caves in Pegeia and obtain permission to build villas.

Latest developments

The Cyprus Mail has reported today that the development of a five-star hotel and so-called luxury villas in the environmentally sensitive area near the sea caves has been given the go ahead by the environment department.

The proposed development comprising a 168 room five-star hotel and 24 residences and 20 villas with swimming pools will be located next to the sea caves and archaeological site of Ayios Georgios, adjacent to Natura2000 areas.

This latest development is bound to trigger further protests.

But given their past performance it seems likely that the authorities will be either unwilling or unable to step in and protect the island’s natural beauty.

Pissouri homeowners running out of hope

Andria Kades
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Pissouri homeowners running out of hope
devasted pissouri property Limnes
Peter Field’s damaged home – photo credit: Cyprus Mail

DESPITE promise after promise from ministers and state officials, no measures have been taken to counter the land slippage that has caused the destruction of homes and roads in Limnes village Pissouri since 2012.

In total, 60 properties with cracks in the walls as well as 14 houses and a complex of 28 apartments have all been seriously affected and owners are seeking support from the state, according to Georgia Elina Zoi, a lawyer who has taken up the case.

The long-standing issue stems from land slippage in the area that the state is very much aware of.

Mick Ellis, who bought his house in 2013, says the current situation is a disgrace.

“No one’s doing anything about it, they’re still selling houses,” he said.

“It’s disgusting.”

None of the residents are seeking to battle it out in court, Zoi told the Sunday Mail. They just want the government to accept the landslide as a matter of natural disaster and help the affected people find a safe place to live.

Four families have been evicted since 2012. When the problems first appeared, Aristo developments provided a few tenants who were staying in an apartment complex with a different place to stay.

When it became obvious the problem was not just in the developer’s complex but throughout the area, it stopped, according to Zoi.

Ellis, who used up his life savings to obtain the property he lives in, said “I have absolutely no desire to see anyone punished or go to jail.

“What’s happened, happened. Just find a solution.”

In his opinion, the government is reluctant to take any action because digging deep into the case might unearth short-comings.

Member of the Pissouri community council Markos Foutas conceded that the area was declared a building zone in 1981 and procedures were not carried out in the same way they are today.

Analysis of satellite images (InSAR data) revealed land slippage was happening as early as 2006 at around 2cm, according to Zoi. The effects did not become obvious until 2012.

In December last year, fixed points in the ground were installed to monitor the movement which by March 8 had reached 10-18cm, she added.

This all points towards asking the state to identify the affected area as a landslide area, compensate the affected residents for natural disaster and immediately take measures to avoid further expansion of the problem towards the village, Zoi said.

Ellis, whose swimming pool has now disappeared, says “just declare it a natural disaster, apply for EU funds and help us out. The Bank of Cyprus has lots of properties they’ve repossessed. Make a deal with them and offer us a place to live.”

The ordeal is costing them their health, he adds.

“My wife has had cancer twice. The stress is killing her.”

Even electricity poles have moved because of the land slippage causing cables to stretch and tear.

Although they were repaired, “we’re just winning time,” Foutas said.

Cracks appear in the roads on a regular basis and through the district office tries to stay on top of it, that doesn’t solve the problem, he added.

The interior ministry did not respond to request for a comment for the Sunday Mail.

Residents in the meanwhile are doing all they can. Since July 2015, several property owners grouped together to form the Pissouri Housing Initiative Group (PHIG). The group is chaired by Peter Fields. He and his wife have been evicted from their home after it was declared unsafe. Photographs make it obvious why.

A twitter account @Fight4Pissouri has also been created trying to garner enough attention for a solution to be found.

In 2015, former Interior Minister Socrates Hasikos had announced plans to put measures in place that could resolve the problem. These included expanding projects designed to channel rainwater away from the area. New wells were also set to be drilled to monitor the underground water.

The cost, quoted at €20m, was going to be paid for by the government.

Nothing materialised and then the government changed its mind, saying the fault lay with the contractors who had, for instance, used inadequate filling-in works.

According to Zoi this was nothing but a ploy as the engineers who designed the homes over 20 years ago are either retired or dead.

In June last year, British High Commissioner Matthew Kidd visited the area to see the damage for himself and try and intercede with Interior Minister Constantinos Petrides.

“We weren’t really expecting anything to come of it,” Ellis said. “And nothing did.”

On Thursday, however, a meeting at the presidential palace took place between the director of the president’s office Petros Demetriou, members of the Pissouri community council and Zoi, representing the residents.

“It’s our last card,” Foutas said.

“We are very happy with the meeting,” said Zoi before adding: “I am hesitant to be too optimistic.” Experience has shown her otherwise.

During the meeting, the council showed Demetriou a presentation showcasing the extent of the problem.

“We were told that (Demetriou) needed a few days to speak with the respective government departments and then prepare a memo to show the president,” Zoi said.

During the meeting, two requests were made, Foutas specified.

Firstly, that the government should begin projects to resolve the issue as it had pledged in 2015.

“Several studies have been carried out,” and it’s time for action, he said. In the past three years, the properties have deteriorated drastically and there are fears the measures promised by the government at the time will not now be enough.

The second request is that affected residents should be compensated with a safe place to live, starting with the more serious cases.

First, there are the families who have been evicted – their homes precariously dangerous – residences that have some problems and properties which have yet to demonstrate issues, but it is just a matter of time.

They should be helped in that order, Foutas said.

“Meeting government officials is a start – but it has taken over four years to get here. Maybe they did not push it before but now the damage is widespread it cannot be ignored,” said Ellis.

Fields, who rents an apartment with his wife since his eviction, said he visits his home to look after the garden only to find equipment has been stolen.

The ordeal “really has been a nightmare. At the age of 70 to 80 you don’t expect to be denied a place to live.”

Permits for new homes down 18 per cent

Nigel Howarth
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Permits for new homes down 18 per cent

Cyprus new homesTHE NUMBER of building permits authorised in Cyprus during December 2017 stood at 437 compared with the 454 authorised during the same month in 2016; a fall of 3.7% according to official figures released by the Cyprus Statistical Service.

However, the total value of these permits rose by 16.7% to reach €151.4 million compared to December 2016, while their total area rose by 65.8% to reach 187.9 thousand square metres.

During December 2017, building permits were issued for:

  • Residential buildings – 301 permits
  • Community residencies – 2 permits
  • Non-residential buildings – 85 permits
  • Civil engineering projects – 18 permits
  • Division of plots of land – 26 permits
  • Road construction – 5 permits

During 2017, 5,728 permits were issued compared to 5,354 in 2016; an increase of 7.0%. The total value of these permits has increased by 48.6% and the total area by 47.3%.

Building permits for new homes

The 301 residential building permits approved in December 2017 provided for the construction of 325 new homes (dwellings). These comprised 169 single houses (compared with 213 in December 2016) and 156 multiple housing units such as apartments, semis, townhouses and other residential complexes (compared with 184 in December 2016); a fall of 18.1% compared with December 2016 when permits were issued for the construction of 397 new homes.

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

Month 2016
(Dwellings)		 2017
(Dwellings)		 Increase/
Decrease		 %age
Change
January 243 381 138 56.8%
February 312 383 71 22.8%
March 306 412 106 34.6%
April 201 289 88 43.8%
May 278 424 146 52.5%
June 287 381 94 32.8%
July 382 537 155 40.6%
August 229 244 15 6.6%
September 289 362 73 25.3%
October 384 543 159 41.4%
November 341 658 317 93.0%
December 397 325 -72 -18.1%
Totals 3,649 4,939 1,290 35.4%

During 2017, the number of new homes for which permits have been issued rose by 35.4% to reach 4,939.

Of those 4,939 new homes, 1,863 are destined to be built in Limassol, 1,395 in Nicosia, 743 in Paphos, 666 in Larnaca and 272 in Famagusta.

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

Strong growth in property sales (Update)

Nigel Howarth
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Strong growth in property sales (Update)

Cyprus property salesTHE DEPARTMENT of Lands and Surveys reports that the number of property sales contracts deposited at Land Registry offices across Cyprus in February 2018 rose 46 per cent compared to February 2017.

This rise follows a rise of 64% in January, 36% in December, 39% in November and an 18% rise in October.

During February a total of 666 contracts or the sale of residential and commercial properties and land (building plots and fields) were deposited at Land Registry offices across Cyprus, compared with the 456 deposited in February 2017.

This is the highest number of contracts deposited during February since 2010 when 704 contracts were deposited.

Although sales in Larnaca fell by 1%, they rose in all the other districts.

In percentage terms Famagusta led the way with sales rising by 174% followed by Paphos, where sales rose by 87%. Meanwhile sales in Limassol and Nicosia rose by 45% and 32% respectively.

Total Property Sale Contracts – 2017/2018 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2017 72
 73
 79
 80 118 162 124 76 87 117 170 306
2018 146 96
Famagusta 2017 21
 19 40
 29
 38 46
 59 47 57 51 52 169
2018 48 52
Larnaca 2017 102
 100 113
 69
 119 96
 103 88 107 111 151 181
2018 112 99
Limassol 2017 132
 177 232
 192
 298 304
 289 201 203 306 321 532
2018 225 256
Paphos 2017 96
 87 162
 136
 183 235
 184 160 148 183 212 349
2018 164 163
Totals 2017 423
 456 626
 506
 756 843
 739 572 602 768 906 1537
2018 695 666

During the first two months of 2018 the number of contracts for the sale of property deposited at Land Registry offices has risen 55% to 1,361 compared to the same period last year.

The highest rise of 150%, was recorded in Famagusta, followed by Paphos with a 79% increase.

Significant increases were also recorded in Nicosia (67%) and Limassol (56%), while the smallest increase (4%) was recorded in Larnaca.

Revised sales statistics

Of the 666 contracts, 306 (46%) were deposited by domestic (Cypriot) purchasers, while 54% (360) were deposited by overseas (non-Cypriot) purchasers. This is a very sharp increase in the number of overseas sales and is difficult to understand.

However, according to a notice on the Department of Lands & Surveys website, the way the sales statistics are presented for foreign buyers has been modified following improvements to the method of coding. (Unfortunately details of these modifications have not been published.)

The Department also suggests avoiding comparing 2018 foreign buyers’ statistics with earlier years.

Hopefully details will be forthcoming before March figures are published.

One positive change to the figures is that the Department lists foreign sales to EU citizens and non-EU citizens separately as presented in the table below:

Overseas Property Sale Contracts – 2018

District Source Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia EU 10 8
Non-EU 10 4
Famagusta EU 15 24
Non-EU 36 10
Larnaca EU 9 9
Non-EU 43 46
Limassol EU 15 17
Non-EU 103 87
Paphos EU 41 58
Non-EU 105 97
Totals EU 90 116
Non-EU 297 244
TOTAL 387 360

Cyprus Property Sale Contracts 2000 – 2018

Year Overseas Sales Domestic Sales Percentage
Overseas Sales		 Total Sales
2000 450 12,214 3.6% 12,664
2001 1,207 12,849 8.6% 14,056
2002 2,548 14,111 15.3% 16,659
2003 3,981 15,294 20.7% 19,275
2004 5,384 11,947 31.1% 17,331
2005 6,485 10,106 39.1% 16,591
2006 8,355 8,598 49.3% 16,953
2007 11,281 9,964 53.1% 21,245
2008 6,636 8,031 45.2% 14,667
2009 1,761 6,409 21.6% 8,170
2010 2,030 6,568 23.6% 8,598
2011 1,652 5,366 23.5% 7,018
2012 1,476 4,793 23.5% 6,269
2013 1,017 2,750 27.0% 3,767
2014 1,193 3,334 26.4% 4,527
2015 1,349 3,603 27.2% 4,952
2016
 1,813 5,250 25.7% 7,063
2017
 2,406 6,328 27.5% 8,734
2018 (Feb)
 747 614 54.9% 1,361
Totals
 61,771 148,129 29.4% 209,900
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