Police call for Aristodimou’s arrest

Staff Reporter
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16
Theodoros Aristodimou
Theodoros Aristodimou – Photo credit: ? ????????????

POLICE have recommended arresting prominent developer Theodoros Aristodimou, his wife, and a former Paphos municipality official, reports said, as part of a probe into the demarcation of land plots in Paphos.

Daily Politis on Monday said Aristodimou, who had also served as chairman of Bank of Cyprus in the past, his wife Sotiroulla, and former municipal engineer Savvas Savva, were named as suspects in a police report submitted to the state legal services.

The case was reported to police on July 1 and concerned an application filed by Aristo Developers, Aristodimou’s company, for a permit to demarcate 177 plots in the Skali area.

The application was approved, but according to the complaint filed to police, it later emerged that new plans were added in the file and the previous ones had been annulled.

With the new plans, the company basically took back some 5,000 square metres, which had been previously earmarked as green spaces in accordance with the rules and regulations.

The value of the land was estimated at €2.0 million, Politis said.

The company denied the accusations, saying the municipality got the calculations wrong. It claimed that the municipality had asked for new plans to be submitted and the discrepancy came about because the land area was bigger than what was recorded on the title deeds.

The changes in the demarcation of green areas were made at the behest of the water department to protect a stream.

Property prices in decline four and a half years

Nigel Howarth
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4

SINCE the introduction of the RICS Cyprus Property Price Index more than four and a half years ago, residential property prices in the major urban areas of the island have fallen steadily.

Nationwide, the average price of a 2-bedroom 85sqm residential apartment of medium quality, in a good state of repair and with its all-important Title Deed has fallen by 38.1%, while the average price of a 3-bedroom 250sqm semi-detached house with a garden with the same specification has fallen by 27.3%.

As we reported last month, pundits believe that the downward spiral in prices will continue for the first half of the year, the exception of real estate in prime locations.

Although sales have increased during the past four months, whether this will result in an upturn of prices remains to be seen; typically the quarterly price index is published towards the end of the following quarter. And we have anecdotal evidence that vendors are slowly becoming more realistic about pricing and are accepting offers below advertised prices.

Price falls vary considerably in different parts of the island as can be seen in the charts and tables below.

Property prices – residential houses

Cyprus-house-prices

Town/District
Residential house prices at the end of Q4 2009
Residential house prices at the end of Q2 2014
Percentage Change
Nicosia €523,438 €402,242 -23.2%
Limassol €496,250 €327,051 -34.1%
Larnaca €438,750 €281,400 -35.9%
Paphos €460,417 €348,105 -24.4%
Paralimni/Famagusta €412,500 €335,552 -18.7%
Average house price €466,271 €338,870 -27.3%

Property prices – residential apartments

Cyprus-apartment-prices

Town/District
Residential apartment prices at the end of Q4 2009
Residential apartment prices at the end of Q2 2014
Percentage Change
Nicosia €171,155 €112,809 -34.1%
Limassol €177,978 €112,046 -37.0%
Larnaca €187,590 €115,305 -38.5%
Paphos €154,917 €99,952 -35.5%
Paralimni/Famagusta €153,790 €83,378 -45.8%
Average apartment price €169,086 €104,698 -38.1%

Note that the RICS index does not include the prices of holiday homes, which have fallen more than those of residential properties; considerably more in many cases.

Cyprus MPs lunacy in action

Nigel Howarth
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44

sheer_lunacyTHERE seems to be no end to the lunatic decisions of Cypriot MPs when they voted through the bill amending the Immovable Property Tax law for 2014 at a plenary session of the House.

The ignorance, lunacy, stupidity of the bill – call it what you will – has driven yet another nail into the coffin of Cyprus’ one thriving property market. I pass all the MPs (with one exception) my wholehearted congratulations on a job well done – bravo ladies and gentlemen!

The only MP with the intellect to appreciate the consequences of the bill was Giorgos Perdikis, who voted against it. It is ‘unfortunate’ that his parliamentary colleagues failed to comprehend the consequences of their actions.

The bill proposes that Immovable Property Tax will be paid by those who have purchased property, and deposited their Contract of Sale at the Land Registry and taken delivery of the property (regardless of whether the property has been issued with its Title Deed). Property developers must have heaved a sigh of relief when they heard the news as it is they who will benefit from the changes – and who knows, they may have even petitioned the government to make these changes.

(However there is a provision in the bill that exempts those who have not obtained the Title Deed through no fault of their own; for example if the developer is insolvent.)

So, on the face of it, the purchasers of those properties whose 39,490 Title Deeds have been issued and are awaiting transfer will be required to pay Immovable Property Tax (plus, possibly, thousands more whose Title Deeds have yet to be issued); this bill is clearly unfair.

Had the bill been worded so that purchasers would be liable for tax if the Title Deed “was available for transfer”, that would have been acceptable and fair. (Although this would not include purchasers who had made illegal changes to the property, I’m sure the legal brains in Nicosia could have conjured up some appropriate wording to cover this situation.)

But as the bill currently proposes, purchasers will have to pay Immovable Property Tax irrespective of whether the property’s title is burdened by a mortgage and/or other impediments, the developer has not cleared the company’s tax debts, etc., etc., etc..

Furthermore, if the development company goes into liquidation before the transfer of title to the purchaser takes place, the purchaser can wave goodbye to the Property Tax they have paid – and even more worrying – possibly the property itself!

Anyone who buys property in Cyprus without a clean Title Deed should now be considered as suffering from a mental illness and hospitalised until they recover their senses.

Who in their right mind is going to agree to pay tax on something they don’t own and may never have the possibility of owning through no fault of their own?

What about the 39,490 Title Deeds?

Nigel Howarth
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10

EARLIER today I received the following email from Andreas Symeou – a former high ranking official at the Department of Lands & Surveys in Nicosia and one of the architects of the Specific Performance Law enacted in 2011..

(Readers who attended the Title Deed seminar organised by the Cyprus Property Action Group at the Elysium Hotel in Paphos in 2009 may recall Mr Symeou, who gave an overview of new legislation being prepared at the time).

“Title Deeds for All”: what about the 39,490 title deeds issued but still standing in the names of developers?

On your front page, one can see a photo of demonstrators with placards saying “All we need is a title deed”, “Property rights and title deeds for all” etc.

Certainly the delay in issuing title deeds is a very serious problem in Cyprus, although it has been alleviated in recent years. An equally similar problem, however, is the fact that thousands of title deeds which have been issued still stand in the names of the developers/sellers.

According to an official statement, the number of title deeds which have yet to be issued by the Land Registry is 23,417. At the same time and more surprisingly, 39,490 of the title deeds which have been issued in recent years have not been transferred in the names of the purchasers. It appears that the main reason for this abnormal situation is the fact that a lot of purchasers are not in a position (or are not willing) to pay the unreasonably high transfer fees (5-8% of the market value, as determined by the land Registry).

In two articles of mine in your site (“Transfer fee reductions could increase public revenue”, published on Tuesday 22nd November 2011 and “Transfer fee discount could be win-win for all”, published on 26th October 2013) I was arguing that a radical reduction on the amount of transfer fees would be beneficial to both the public revenue and the purchasers.

A few days ago the Minister of Interior announced that the Government intends to cut the transfer fees by up to 50%. The decision of the Government is welcomed, but the way the Minister of Interior announced it was wrong. From the moment of the Minister’s announcement, all transactions in the Land Registry have stopped, as the purchasers are waiting the passing of the new legislation. The correct action would be for the government to pass the new Law in absolute secrecy and speed so that the market would not be upset.

It is high time for the Government and the House of Representatives to act rapidly, passing a Law reducing to a minimum the transfer fees. At the same time additional discounts should be given to those purchasers appearing before the Land Registry shortly after the passing of the Law. By this simple and common sense approach both the public revenue and the purchasers will benefit within a short period of time.

Andreas D. Symeou LL.B, M.Sc (U.L.A.), MRICS
Property Consultant
Visiting Lecturer at Neapolis University, Paphos

I called Mr Symeou and we talked about the problems people were facing and that the figure quoted of 39,490 waiting to be transferred could be as a result of a number of other issues:

  • A proportion of those titles cannot be transferred to purchasers because they are burdened with mortgages and/or other impediments which the developer has failed to repay.
  • Some of transfers could be blocked because the developer has not cleared his Immovable Property and Capital Gains tax commitments.
  • It could also be that a purchaser has not paid the whole purchase price to the developer and the developer is refusing to transfer the property.
  • It could also be that the purchaser is in conflict with the developer as the property they purchased has construction issues or is in conflict over another matter.
  • Perhaps the developer is trying to extort money from the purchaser and preventing the transfer until he receives payment.
  • And of course the title deed may be ‘blighted’ as a result of planning irregularities that have been legitimised under the provisions of the Town Planning Amnesty.

So there are a whole host of reasons why there are 39,490 waiting to be transferred, although those unwilling or unable to pay the unreasonably high transfer fees will account for many of them.

We agreed that the figures produced by the Land Registry only told part of the story and further detailed analysis is needed. I plan to pursue this with the stakeholders after parliament’s summer recess.

Troika push repossessions bill

Elias Hazou
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reposessionLEGISLATION easing the procedures for property foreclosures may be put to the cabinet for approval by next Wednesday so that it can then go to parliament and be passed within the month, Attorney-general Costas Clerides has said.

He was speaking after meeting with the troika mission heads in Nicosia yesterday, where they discussed amendments to the repossessions law, which the international lenders have made a precondition for concluding the current progress review of the Cyprus adjustment programme.

The lenders have indicated that not passing the bill on repossessions could jeopardise the release of the next tranche of international aid – injecting a sense of urgency into authorities.

As with all legislation, the Attorney-general’s office must first comb through the foreclosures bill to ensure it is legally airtight and not in violation of the constitution before it forwards it to the cabinet.

Clerides said that under the latest timetable, the bill needs to be sent to parliament as soon as possible so that it can be enacted into law by the end of July. The troika’s ongoing review mission (the fifth) is scheduled to be concluded on July 25.

Though not going into specifics, Clerides spoke of “different views” on the provisions of the bill between Cypriot authorities and the island’s international creditors, but said these differences could be overcome.

The chief aim is to amend existing legislation allowing for swifter repossession of properties, he stressed.

One of the suggestions reportedly put forward by the Attorney-general’s office is that the value of a property to be repossessed be determined conjointly through valuations by the lender (the bank) and valuers appointed by the property’s owner. Currently, the value of properties facing foreclosure is determined only by the bank.

Clerides acknowledged that the current repossessions system is both inefficient and time-consuming, but cautioned that any changes should not leap to the opposite extreme.

“It would be incorrect, just for the sake of speeding up [foreclosure] procedures, to do away with the balances and curtail some of the rights, primarily of debtors,” he noted.

The repossessions bill, along with a second bill governing insolvency, are designed to address the issue of mounting non-performing loans (NPLs), a huge burden on banks’ balance sheets. NPLs currently stand at 47 per cent of all outstanding loans, and in its last review the troika deemed their rising number the “single greatest challenge currently facing the Cyprus economy.”

Title Deed backlog costing millions

Nigel Howarth
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16

tax-cutBETWEEN June 2009 and May 2014 the Land Registry issued a total of 62,672 Title Deeds of which a mere 23,182 (37%) have been transferred, while the remaining 39,490 are pending.

The news report, which was published in the Cyprus Weekly, did not reveal how many any of these remaining 39,490 deeds cannot be transferred due to unpaid mortgages, taxes and other debts of the transferor (the developer/vendor).

According to Land Registry figures, between 2012 and May 2014 the Government collected €73.6 million from Title Deed transfers across the island:

In 2012 the state collected:

  • Nicosia – €11 million
  • Limassol – €8.61 million
  • Paphos – €7.11 million
  • Larnaca – €5.77 million
  • Famagusta – €1.55 million

In 2013 transfer fee collections amounted to:

  • Limassol – €8.61 million
  • Paphos – €8.06 million
  • Nicosia – €7.35 million
  • Larnaca – €4.88 million
  • Famagusta – €1.56 million

And during the first five months of 2014, the government collected:

  • Paphos – €3.26 million
  • Nicosia – €3.12 million
  • Limassol – €2.52 million
  • Larnaca – €1.53 million
  • Famagusta – €0.39 million

The annual report from the Audit Office concludes: “Taking into consideration the large number of cases where for various reasons the issuance of title deeds is pending, it is obvious that if they are finalised, the state’s revenue will come to millions of euros from transfer fees.”

The Audit Office has suggested that a system be implemented to monitor the licensing of developments in relation to the issuance of Title Deeds.

It is generally accepted that recent statements made by the island’s Interior Minister, Socrates Hasikos, concerning a possible 50% reduction in Property Transfer Fees may be delaying purchasers from paying until the government reaches a decision.

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