PARLIAMENT on Saturday accepted the president’s referral of a bill that indefinitely banned repossession of houses whose owners have no title deeds – even though they may have paid for them in full – because developers had already taken out loans on those properties which they cannot repay.
President Nicos Anastasiades refused to sign the bill, passed in March, into law, arguing that it was unconstitutional and created ‘a general and permanent shield’, not for vulnerable groups, but for a number of sellers and land developers.
He sent it back to parliament, which could either accept the referral or refuse to do so. In the latter case the issue would have been settled by the Supreme Court.
Twenty-seven MPs – from DISY, DIKO, EVROKO – voted in favour and 26 – AKEL, EDEK, Greens, Citizens Alliance and Zaharias Koulias – against.
Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by developers.
Tens of thousands have been left without title deeds as a result.
In March, MPs basically scrapped the date included in a clause in the main foreclosures law, which exempts this category of properties from repossession until April 30. This date was extended to July 10 on Saturday with the vote of 37 MPs.
According to the provision, such properties will be exempted provided the buyers paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller.
The government pledged to draft legislation dealing with the matter in a couple of months.
Under the terms of its bailout, Cyprus has set up a task force “on registered, but untitled, land sales contracts” that must prepare a study by the end of May.
This should have been done by October last year. [Editor’s comment: An earlier MoU called for this study to be completed by the end of June last year].
REGULAR readers will be aware that the basis on which Immovable Property Tax (IPT) is calculated will change this year; the calculation will be based on the revised valuation as at 1 January 2013.
The details of the revised IPT rates and tax bands are still being debated by parliament, but they cannot be set until all objections to the valuations have been processed and finalised. Last October Interior Minister Socrates Hasikos admitted that mistakes were made during the property revaluations and that 4,671 objections had been received by the end of September 2014.
Initially, those wishing to appeal the valuation may phone the Land Registry help line on 77777730 and follow the instructions.
You will need to have your passport and details of the property handy. The Land Registry officer will check if there has been a mistake in the valuation while you wait.
If they say there is nothing wrong and you then decide to object to the valuation you have until the April 24 to file your objection, which must be submitted to the District Land Office by themselves or their representatives. They need to complete the relevant form – and submit it together with the appropriate fee based on the 2013 valuation of their property:
For properties valued up to €100,000, the fee is €37.50.
For properties valued between €100,001 and €500,000 the fee is €75.00.
For properties valued between €500,001 and €1 million, the fee is €150.00.
For properties valued in excess of €1 million, the fee is €357.00.
Even if your appeal is accepted, the fee is not refundable. Regrettably, this is the way it is in Cyprus. You end paying up for the mistakes/incompetence of other people and government departments!
(Note that you will need Adobe Acrobat to read the relevant form and to display an approximate English translation of each field, float your mouse over the yellow speech bubbles.)
Finally, irrational rumours have been spreading that massive hikes in Immovable Property Tax will take place this year, which apparently emanate from expatriates living in Paphos who seem intent on spreading fear, uncertainty and doubt amongst their compatriots.
As far as we are aware, owners of property valued up to €200,000 will be exempted from paying IPT, while the remainder will be charged at a flat rate of 0.1% on their property’s 2013 value. But note that this may change once all the objections to the valuations have been processed and finalised.
The amount of tax to be collected is set out in the Memorandum of Understanding:
“Ensure additional revenues from property taxation of at least EUR 75 million by: (i) updating the 1980 prices through application of the CPI index for the period 1980 to 2012; and/or (ii) amending tax rates and/or (iii) amending value bands.”MoU April 2013.
“Implement the recurrent immovable property tax for the tax year 2015 based on a General Valuation (GV) for all immovable properties, determined on the basis of tangible building- and plot related characteristics. The design of the immovable property tax should ensure a broad tax base and IPT proceeds not lower than in 2013.”MoU September 2014.
Tens of thousands of home buyers are still without title deeds for houses they paid for
LAST MONTH parliament passed a bill, indefinitely banning repossession of houses whose owners have no title deeds, even though they may have paid for them in full, as the building developers had already taken out loans on those properties which they cannot repay.
Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by developers.
Tens of thousands have been left without title deeds as a result.
A clause in the main foreclosures law exempts this category of properties from repossession until April 30. According to the provision, such properties will be exempted provided the buyers paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller.
In March MPs amended the duration of the exemption, making it indefinite. The President refused to sign the bill into law and sent it back to parliament, arguing that it was unconstitutional and created ‘a general and permanent shield’, not for vulnerable groups, but a number of sellers and land developers.
But as property advisor Nigel Howarth earlier told the Mail, the amendment passed by the parties simply prohibits foreclosures, without addressing the key problem for the thousands of home owners trapped without title deeds.
He explained that even if a title deed were issued, it would still be in the name of the developer, not the buyer. And since the developer with an outstanding debt cannot transfer the deed, this means that whereas the property would not be repossessed, owners might end up paying the developer’s debt just so they could get the deed for a property they had already paid for.
“Developers are being lumped together with buyers. A way around this muddle might be a new amendment, somehow separating the developers’ liabilities from the buyers, but it won’t be easy,” Howarth said.
That’s because many developers tended to take home buyers’ cash, and rather than using the money to pay off their own loans on that specific property or land, they financed other developments, which likewise came into the red, spreading the malaise.
After the President’s refusal to sign the bill, interior minister Socrates Hasikos said the government was preparing new legislation to comprehensively deal with the issue.
Under the current system, where an apartment block has 10 flats, of which nine have been sold and paid for, the block as a whole is still held in mortgage due to the developer’s debt, and title deeds cannot be issued to any of the buyers.
But, Hasikos said by way of example, with the new law being drafted by the government, if a developer’s outstanding loan is €100,000 and the value of the flat that has not been fully paid for covers the developer’s mortgage, then the other nine flats are released from the encumbrance and title deeds issued to their buyers.
But this too is no fix, says Howarth. First, the value of the remaining flat in the block may be insufficient to cover the mortgage on that development.
A way around it might be for banks to transfer that mortgage onto another building project of the same developer. However this wouldn’t work either if the apartments in the other project are unsold, said Howarth, since the banks would have no guaranteed revenue stream.
The property expert stressed also that an indefinite ban on repossessing this category of properties helps no one, including the banks.
What’s more, it’s doubtful whether Cyprus’ international creditors will release the next bailout tranche as long as banks here are prevented from recovering loans gone bad.
Under the terms of its bailout, Cyprus has set up a task force “on registered, but untitled, land sales contracts” that must prepare a study by the end of May.
This should have been done by October last year. [Editor’s comment: An earlier MoU called for this study to be completed by the end of June last year].
To get MPs to withdraw the indefinite repossessions ban on these properties, the interior minister has asked them to extend the exemption to June 30 instead.
This Friday, the House plenary votes on the President’s referral of the bill. Should the House reject the President’s referral; the matter will be settled by the Supreme Court.
So far, the ruling DISY party is alone in seeking to have indefinite ban withdrawn. For the President’s referral to be upheld, they will need the votes of DIKO and the European Party. The latter has stated it will back the President, but only if it receives satisfactory assurances from the government that the matter will be regulated.
DIKO’s stance is still touch-and-go. MP Angelos Votsis told the Mail yesterday that they may decide to re-table a previous amendment of theirs, which sought to extend until the end of the year the repossession freeze on homes without title deeds.
DISY may go along with that or a similar proposal, to prevent the matter from being decided at the Supreme Court, where the President could lose, in which case the indefinite ban would take effect.
A great deal of horse-trading is expected ahead of the House plenary, which will also be voting on the insolvency framework, again linked to property foreclosures.
THE CYPRUS open bidding program for the first resort style casino to be located in Western Europe continues to generate interest from casino operators worldwide.
Appointed by the Government of the Republic of Cyprus, the Ministry of Energy, Commerce, Industry and Tourism, has been tasked to advance the process of licensing a single integrated casino resort that will be the leading resort destination in Europe and amongst the best casinos in the world.
Together with an economic restructuring in 2013, the privatization of major ports and marinas and an election to a western style leading government, Cyprus is a much more appealing place to invest and an ideal travel destination.
This “Super Casino” is projected to include malls, restaurants, shopping and entertainment venues unlike any other in the EU or the Middle East and will rival some of the casinos currently seen in Las Vegas and is expected to attract an additional half to one million tourists a year.
Realty International Group (RGI), a U.S. realty company based in Beverly Hills, CA, is currently focused on their properties in Cyprus and has put together a casino proposal package which includes an initial pre-established consortium. The consortium consists of prominent institutions and key people already in place for any interested party to easily proceed into the bidding process which will conclude by May 2015. With several large plots of land and over 1 million sq ft on their books available for purchase for such a project; RGI is profiling their largest beachfront parcel that is eligible for the casino development.
Located across a prime coastal area of Larnaca, and boasting over 3.5 million sq feet of land, this property includes over 1,200,000 sq ft of buildable plots and over 1,000,000 sq feet of tourist zone areas that can be utilized for a golf course, gardens, water attractions, horseback riding, canals and more. Approximately 150 meters from the sea and 4Km from the airport (noise study available), this is potentially the largest piece of land with road access that features the natural “Salt Lake” famous for the “Flamingo” migration each year. Some estimates, per an appraisal, are accommodations for a 900 room 5-star hotel, conference centres and large tourist attraction areas. This location, in addition, is open for discussions regarding partnerships or joint venture agreements.
As the first and only American real estate company working in Cyprus, RGI has teamed up with key alliances on the island to ensure their clients the ability to provide the support needed for a project of this magnitude.
HOUSE prices in Cyprus fell by 3.3% in the fourth quarter of 2014 compared to the corresponding period of 2013 according to a report published by Eurostat earlier today.
On an annual basis, house prices across the European Union rose by an average of 2.6%, and 1.1% in the Euro area. Compared with the third quarter of 2014, house prices remained stable in the European Union and fell marginally in the euro area (-0.1%) and in the fourth quarter of 2014.
Among the Member States for which data is available, the highest annual increases in house prices in the fourth quarter of 2014 were recorded in Ireland (+16.3%), Malta (+11.0%), Sweden (+10.4%), Estonia (+10.1%) and the United Kingdom (+10.0%), while the largest falls were recorded in Slovenia (-4.4%), Cyprus (-3.3%), Latvia (-3.2%) and Italy (-2.9%).
The highest quarterly increases were recorded in Malta (+4.6%), Ireland (+3.8%), Slovakia (+2.1%) and Luxembourg (+2.0%), while the largest falls were recorded in Latvia (-10.2%), Lithuania (-4.3%) and Cyprus (-3.0%).
AFTER the usual shenanigans we’ve come to expect from opposition parties, a plenary session of the House of Representatives will meet on April 17 to discuss and vote on the five draft bills comprising the insolvency framework.
Opposition parties objected to the date because President Anastasiades plans to be in Athens on the 17th reducing the number of MPs voting against the bill as the House Speaker Yiannakis Omirou (who objects to the bills) would stand in for the President. However, as it’s the House Speaker privilege to call a plenary session, Omirou could have called the meeting for a different date if he wished.
The plenary session will also deal with the referral of the Law on property buyers to whom no title deeds have been issued because their developer is unable to pay the bank or is in liquidation – and the lifting of the suspension of the foreclosures law.
The Finance Ministry has circulated a letter to all MPs warning them of the consequences that some of the proposed amendments to the insolvency bills will put the banking sector at risk if they are approved.
The Ministry is particularly worried by amendments put forward by the Communist AKEL party, enabling those who have been hit by the financial crisis to appeal to the courts to have repossessions against them frozen. Such amendments would obstruct the banks from putting pressure on strategic defaulters to repay their debts resulting in the banks being forced to increase their bad loan provisions, thereby reducing their liquidity.
Meanwhile, writing in the Financial Mirror, General Manager of FOX Smart Estate Agency George Mouskides in the Financial Mirror says that political parties must allow banks (by voting the relevant legislation) to chase the mega borrowers who do not service their loans. We must not allow seven developers, five politicians, three ex-bankers and one union to enforce the island’s monetary and banking policy.
Non-performing loans weigh in heavily on the country’s economy and must be prudently managed if lower interest rates are to achieve their intended purpose.
PARLIAMENT on Saturday accepted the president’s referral of a bill that indefinitely banned repossession of houses whose owners have no title deeds – even though they may have paid for them in full – because developers had already taken out loans on those properties which they cannot repay.
