First five debt relief orders

Staff Reporter
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First five debt relief orders

debt relief ordersTHE INSOLVENCY SERVICE announced Friday the issuance of the first five debt relief orders, for loans up to €25,000.

The District Court of Limassol issued the first five decisions from a total of 40 applications filed last week by the Insolvency Service to the court. The average amount per case was €18,000.

A total of 673 applications were filed to the Service for debt relief which, according to the Head of the Insolvency Service George Karotsakis seems to meet the criteria. However, he said, investigations will be conducted to ensure that the criteria are fully met.

Karotsakis said at a press conference that the aim of the Service, is all cases to be registered in the court until next October. He also said that it was positive that so far no application filed by the Insolvency Service has been rejected. As he explained, many young unemployed people who have student loans benefit from the debt relief orders.

Individuals with assets below €1,000 and monthly income below €200 may apply to the court via the government Insolvency Service for an order for debt relief of up to €25,000. The eligible individuals are also allowed to have a car up to €4,000, tools for a small business up to €6,000 euro as well as furniture and utensils for their family.

At the same time Karotsakis said that last week four applications were filed in the court, regarding personal repayment plans aiming, inter alia, to protect the borrowers’ main residence. The Service has received so for 26 applications for personal repayment plans. Karotsakis urged people to use these tools, saying that Cyprus insolvency framework ranks 17th in World`s Bank ranking.

Head of the Insolvency Service also said that a State plan for the protection of the main residence that subsidizes loan instalments up to 60%, without exceeding €10,000 per year, is on track and is expected to be approved in the next two months from the European institutions responsible for competition policy.

Property sales recovery underway?

Nigel Howarth
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Property sales recovery underway?

Property sales recovery underwayTHE NUMBER of property sales in Cyprus during April 2016 increased by 35 per cent compared with April 2015 according to the official figures issued by the Department of Lands & Surveys earlier today.

The 35% increase in April follows a 19% increase in March and a 54% increase in February. Increased numbers of sales have been recorded for the last eight months and a recovery in the property market appears to be underway.

The increase in sales follows moves by the government to reduce Property Transfer Fees, and exemption from Capital Gains Tax when properties purchased by 31st December 2016 are subsequently sold. Recent announcements regarding the island’s long-awaited marinas should also help to encourage property sales in their respective locations.

Although the signs are encouraging, sales are still in the region of 60% below the numbers sold in 2000.

April saw a total of 514 contracts for the sale of commercial and residential properties and land (building plots and fields) being deposited at Land Registry offices across the island.

Of those 514 contracts, 74% (380) were deposited by domestic (Cypriot) purchasers, while 26% (134) were deposited by overseas (non-Cypriot) purchasers.

Although sales fell by 10% in the capital city Nicosia, they rose in all the other districts. Sales in Famagusta increased by 106% compared with April 2015, while sales in Larnaca, Limassol and Paphos rose by 90%, 44% and 14% respectively.

Total Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 46 45 83 88 86 61 60 37 65 64 60 54
2016 54
 79
 82
 79
Famagusta 2015 16 27 17 17 21 33 45 14 30 29 33 42
2016 22
 35 33
 35
                
Larnaca 2015 90 71 98 67 68 111 95 75 85 87 111 114
2016 78
 108 121
 127
                
Limassol 2015 95 97 160 115 135 135 156 87 114 166 137 169
2016 92
 179 197
 166
                
Paphos 2015 74 85 94 94 95 124 140 88 91 117 105 134
2016 81
 100 106
 107
                
Totals
 2015 321 325 452 381 405 464 496 301 385 463 446 513
2016 327
 501 539
 514
                

During the four months of 2016 sales have risen 27% to reach 1,881 compared with 1,479 sales during the first four months of 2015.

Domestic property sales

Property sales to the domestic (Cypriot) market in April rose 34% compared to April 2015, with sales reaching 380 compared with 284 in April last year.

With the exception of Nicosia, where the number of property sales fell 7%, they rose in all the other districts.

Sales in Larnaca rose 128% compared to April 2015, while sales in Famagusta, Limassol and Paphos rose 106%, 36% and 2% respectively.

Domestic Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 39 36 71 74 74 58 56 36 55 60 50 44
2016 43
 70
 10
 69
Famagusta 2015 9 2 16 16 9 30 28 14 25 24 24 41
2016 20 31 21
 33
                
Larnaca 2015 77 49 91 40 45 82 60 62 53 59 81 81
2016 68 96 85
 91
                
Limassol 2015 71 77 147 90 86 100 123 65 81 127 82 123
2016 68 158 145
 122
                
Paphos 2015 39 38 86 64 34 63 83 64 47 92 71 89
2016 61 72 59
 65
                
Totals
 2015 235 202 411 284 248 333 350 241 261 352 308 378
2016 260 427 382
 380
                

Property sales to the domestic market during the first four months of 2016 are up 28% compared with the first four months of 2015 with sales reaching 1,449 compared to last year’s figure of 1,132.

Overseas property sales

Property sales to the overseas market also saw a strong growth – up 38% compared to April 2015, with sales reaching 134 compared with 97 in April last year.

With the exception of Nicosia, where sales fell by 29% they rose in all the other districts.

The two properties sold in Famagusta represented a rise of 100% in the number sold in April last year. Sales in Limassol rose 76%, while those in Paphos and Larnaca rose by 40% and 33% respectively.

Overseas Property Sale Transactions – 2015/2016 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2015 7 9 12 14 12 3 4 1 10 4 10 10
2016 11
 9
 10
 10
Famagusta 2015 7 25 1 1 12 3 17 0 5 5 9 1
2016 2 4 12
 2
                
Larnaca 2015 13 22 7 27 23 29 35 13 32 28 30 33
2016 10 12 36
 36
                
Limassol 2015 24 20 13 25 49 35 33 22 33 39 55 46
2016 24 21 52
 44
                
Paphos 2015 35 47 8 30 61 61 57 24 44 35 34 45
2016 20 28 47
 42
                
Totals
 2015 86 123 41 97 157 131 146 60 124 111 138 135
2016 67 74 157
 134
                

Sales to the overseas property market during the first four months of 2016 are up 24% compared with the first four months of last year with sales rising to 432 compared with last year’s figure of 347.

Cyprus Property Sale Transactions 2000 – 2016

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 (Apr)
 432 1,449 23.0% 1,881
Totals
 57,237 137,386 29.4% 194,623

Bank of Cyprus to foreclose on ten properties

Stelios Orphanides
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Bank of Cyprus to foreclose on ten properties

Bank of Cyprus to foreclose on ten propertiesBANK of Cyprus, the island’s largest lender, said that it will foreclose ten properties worth over €2.3m, which will test for the first time the new legislative framework on foreclosures.

The lender, which placed advertisements in the daily press including the Cyprus Mail, said that it will first foreclose six properties in Paphos, on June 23 before proceeding with another four in Nicosia on the following day.

The properties the bank plans to foreclose at “reserve sale prices,” the minimum price at which the lender will accept a bid at the auctions, comprise demolished or derelict houses.

The Cyprus Business Mail understands that the affected properties are part of a group of 25 cases representing bad loans worth €85m dating back to 2013 or earlier.

The advertised properties include a 5,263 square metres field storage in Gialia with a reserve price of €438,000, three plots in Mesogi Paphos with a total area of 587 square metres, 576 square metres and 520 square metres with a respective reserve price of €80,000, €78,400 and €71.600, a demolished basement and ground floor house on a 1,485 square metre plot in Paphos with a reserve price of €736,400, a derelict house with yard with an area of 186 square metres and a demolished house with a cistern with an area of 1,005 square metres with a reserve price of €186,600 for both also in Paphos.

The Bank also intends to foreclose a 619 square metres plot in Agios Dometios, Nicosia, at a reserve price of €398,000 and three fields in Paliometocho, one with an area of 6,355 square metres, and second with an area of 3,345 square metres and another with an area of 4,840 square metres at a minimum price of €30,160, €16,800 and €300,800 respectively.

As part of its 2013 bailout agreement, Cyprus had to modernise its foreclosure legislation in order combat strategic defaults and so reduce non-performing loans.

Paralimni marina contract awarded

Nigel Howarth
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Paralimni marina contract awarded
paralimni_marina
Paralimni marina – Source Sigmalive

A TENDER from the company “PMV Maritime Holdings Ltd” to construct and manage the Paralimni Marina has been accepted by the Ministry of Energy, Commerce, Industry and Tourism.

PMV Maritime Holdings Ltd submitted a tender following an announcement on 16th June 2015 that a strategic investor was being sought with land and marine space to construct the Paralimni Marina.

The marina is to be built near the fishing reserve of Ayios Nicolaos and will be able to accommodate 300 vessels. The development will include residential and commercial developments.

According to the tender invitation document issued in June 2015:

“The Republic of Cyprus aims to develop a world class marina in order to achieve the establishment of a safe navigation zone, enhance the tourist experience and reduce seasonality of tourism arrivals in the area by attracting higher-spending year-round tourists.

“Tourism is a significant sector of the Cypriot economy. A number of tourism stakeholders of the public and private sectors have highlighted their belief that the development of marinas in Cyprus will provide an additional incentive to attract tourists throughout the year and will thus contribute to the improvement of the quality of the tourism product of Cyprus.

“the Paralimni Marina should not interfere with the orderly operation of the fishing shelter or its infrastructure.”

Approval of primary home protection expected

Stelios Orphanides
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Approval of primary home protection expected

Primary home protection schemeCYPRIOT authorities are expecting the European Commission’s “go ahead” scheme aiming at protecting insolvent households repay their mortgages for their primary home with an annual budget of €2m, after the Commission requested and received additional information, an official said.

“The questions raised by the European Commission were of procedural nature requesting clarifications which were answered on Wednesday and we expect that we will soon have the green light to implement this scheme,” Charalambos Petrides, chairman of the Cyprus Land Development Corporation said in a telephone interview on Friday. “The scheme aims at helping low earners who are really in need of it based on concrete criteria as they are risking losing their home”.

The scheme, which applies in cases of primary homes with a market value of up to €250,000 and maximum outstanding mortgage of up to €300,000 depending on the composition of affected families, provides for the application of “the same income standards which the CLDC applies,” Petrides added.

Beneficiaries of the scheme may have up to 60 per cent of their monthly mortgage instalment subsidised for up to three consecutive years, Petrides said, adding that the subsidy covers both interest and capital payments. Applicants are required to first exhaust the restructuring procedures before resorting to the Insolvency Service, the division of the Department of Company Registrar and Official Receiver. An appointed insolvency advisory may advise to apply for the scheme.

The support provided by the scheme, already approved by the cabinet last year, “is the last remaining rescue net offered by the Corporation” after applicants request via court order for “personal insolvency arrangements,” Petrides added.

He added that the scheme, which has a cap of €10,000 per year would be able to help more than 200 households which regularly serviced their loans before being affected by unemployment or a drop in income and will not apply to strategic defaulters.

The Cyprus Business Mail understands that authorities requested the opinion of the European Commission after the state-aid commissioner Theophanis Theophanous expressed reservations concerning the scheme’s compatibility with state aid legislation.

Cyprus advised to do more

Nigel Howarth
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Cyprus advised to do more

European Commission urges Cyprus to do moreFOLLOWING its 2016 country report on Cyprus issued in April the European Commission issued Cyprus with a number of recommendations concerning the island’s national reform programme on Tuesday:

  • Following the correction of the excessive deficit, respect the medium-term budgetary objective in 2016 and in 2017. By the end of 2016, adopt a binding mechanism containing the growth rate of the compensation of public employees. By the end of 2016, adopt the horizontal reform of the public administration and the law on the governance of state-owned entities, and implement the reform of local governments. By the end of 2016, adopt the secondary legislation to complete the new budgetary framework.
  • By June 2017, ensure reliable and swift systems for the issuance of title deeds and the transfer of immovable property rights. Eliminate impediments to the full implementation of the insolvency and foreclosure frameworks and ensure adequate resources for the Insolvency Service. Increase the efficiency and capacity of the court system. Reform the civil procedure law.
  • By the end of 2016, take measures to ensure a decline in non-performing loans and accurate valuations of collateral for provisioning purposes. Increase the range of information available for creditors to make the credit registry fully operational.
  • Remove impediments to investment, notably by implementing the action plan for growth, pursuing the privatisation plan and strengthening the national regulatory authorities. Take measures to increase access to finance for small and medium-sized enterprises.
  • Enhance the capacity of the public employment services and their provision to the long-term unemployed; improve outreach to the non-registered unemployed. Adopt legislation for a hospital reform and advance with the planned implementation of universal health care coverage.

Further reading

Council recommendation on the 2016 national reform programme of Cyprus

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