Third largest price falls in EU

Nigel Howarth
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Third largest price falls in EU
House prices – annual rate of change for the euro area and the EU
House prices – annual rate of change for the euro area and the EU

HOUSE prices in Cyprus fell by 5.7% in the first quarter of 2014, compared with the same quarter of the previous year, according to Eurostat.

The largest annual falls in house prices were recorded in Croatia (-9.7%), Slovenia (-6.6%), and Cyprus (-5.7%) – and the highest increases in Estonia (+17.5%), Latvia (+10.4%) and the United Kingdom (+8.0%).

The largest quarterly falls were recorded in Croatia (-2.7%), Luxembourg (-2.3%), and Slovenia (-1.7%) – and the highest increases in Estonia (+4.8%), Sweden (+2.4%) and the United Kingdom (+2.2%).

House prices, as measured by the House Price Index, fell by 0.3% in the Euro area and rose by 1.0% in the EU in the first quarter of 2014 compared with the same quarter of 2013.

Further reading

Eurostat newsrelease 107/2014 – 10 July 2014

Property sales up 51 per cent in June

Nigel Howarth
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6
Property sales up 51 per cent in June

PROPERTY sales in Cyprus increased for the fourth consecutive month in June with sales increasing in all districts compared to June 2013.

During May a total of 403 contracts for the purchase of commercial and residential properties and plots of land were deposited at Land Registry offices across Cyprus; a 50.9% increase on the 267 contracts deposited during the same period last year.

In percentage terms, Larnaca performed best with sales increasing by 103% to reach 81 compared to the 40 sold in June 2013. Sales in Limassol increased 88%, while sales in sales in Limassol, Paphos and Famagusta increased 88%, 21% and 13% respectively.

Cyprus property sales - June 2014

Overall sales during the first half of this year have improved 34% compared to the first half of last. And although improvements have been seen in most districts, sales in Paphos have fallen 7%, but if the upward momentum continues they should soon recover.

We will publish a breakdown of the sales figures as soon as the Department of Lands and Surveys publishes the relevant data.

Deal reached on Immovable Property Tax

Nigel Howarth
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10
Deal reached on Immovable Property Tax

Immovable Property TaxA BILL for the Immovable Property Tax to be levied in 2014 was agreed by the Cypriot parliament earlier today with 53 votes in favour and just one against.

Reports coming in say that the tax will be levied as last year (on 1980 property values).

The property tax will be paid by those who have gained possession of the property, regardless of whether the property is registered in their name (i.e. regardless of whether they have its Title Deed).

However there is a provision in the bill that exempts those who have not obtained the Title Deed through no fault of their own. Hopefully this provision will apply to those who are unable to obtain their Title Deeds because:

  • They have not been produced.
  • They cannot be transferred to the purchaser due to encumbrances (such as developer’s mortgages and other debts) that prevent their transfer.
  • The buyer is unwilling to pay the extortionate fees that the more nefarious property developers tend to charge to release the deeds for transfer.

But it looks as if those whose Title Deeds are freely available but who have not paid the Property Transfer Fees will be required to pay the Immovable Property Tax.

The bill also moves the payment date from October to the end of November as this will give the taxpayer more time to find the money – and this move will also allow the Land Registry to find more new properties, which will help to increase the tax revenue collected.

In addition, while the existing law provides a 10% discount for those who pay within 30 days of the deadline, the new law provides a 15% discount for those paying 30 days before that.

Bank plans property sales via website

Nigel Howarth
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Bank plans property sales via website

Bank-of-Cyprus-saleFOLLOWING the practice of many banks around the world, the Bank of Cyprus plans to launch a website in the next two or three weeks where it will advertise all the property that it owns and wishes to sell.

Needless to say the Cyprus Real Estate Agents Association has objected as it feels its members should be involved in the sell-off/fire sale.

According to a Cyprus Daily source: “Calling for proposals is a sign of transparency and proper sales procedure. Association members who had a meeting with bank officers were told that this is regular practice by lenders all over the world.

“Hellenic Bank (in Cyprus) already follows this practice…Bank of Cyprus has now some 600-700 properties for sale here and abroad, especially in London.

They are mostly branches or other assets of former Laiki Bank.”

However, the same source rebuffed any suggestion that the new website was connected to possible future home repossessions from owners in Cyprus who cannot repay their loans.

“Repossessions are not the lender’s main objective, this is not what the management aims at, far from it,” said the source.

However, it is generally accepted that the larger developers whose bad loans exceed €6 billion will suffer repossessions at some time in the future.

The Bank of Cyprus desperately needs as much revenue as possible and cannot afford the luxury of hanging on to assets it no longer needs.

Building permits down 24% in April

David Crowther
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Building permits down 24% in April

THE NUMBER of building permits authorised in April 2014 stood at 384 compared with the 508 authorised in April last year; a fall of 24.4%, according to figures released by the Cyprus Statistical Service.

Compared to April 2013, the total area of these permits fell by 33% to 57,330 square metres from 85,812, while their value fell 36% to €56.6 million from €87.9 million.

During April, building permits were issued for:

  • Residential buildings – 260 permits
  • Non-residential buildings – 80 permits
  • Civil engineering projects – 15 permits
  • Division of plots of land – 22 permits
  • Road construction – 7 permits

Building permits for new home construction

The 260 residential building permits authorised in April provided for the construction of 254 dwelling units comprising 135 single houses and 119 multiple housing units (such as apartments, semis, townhouses and other residential complexes).

This is a drop of 15% compared with April 2013 when building permits were issued for the construction of 297 new homes.

Cyprus building permits April 2014

Year to date

During the first four months of 2014, a total of 1,637 building permits were authorised; a fall of 14.1% compared to the 1,905 permits authorised during the same period last year. The total value of these permits has fallen by 37%, while their total area has fallen by 46%.

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

Immovable Property Tax up in the air

Nigel Howarth
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13

ACCORDING to information allegedly leaked from Parliament, the Inland Revenue Department has recommended that the Immovable Property Tax Act of 2013 be extended for a further year, which would mean collecting IPT based on 1980 values as in the past.

However after some consideration, Parliament has said that there is a need to revise the 2013 Act despite the Inland Revenue’s recommendation.

The continuation of the current regime is favoured by the majority of political parties as they consider that draft bill proposed, which is based on 2013 property values, shifts the burden of taxation unfairly. (see New Immovable Property Tax lies).

AKEL, Environmentalists and some other parties are expected to table amendments that would raise last year’s tax-free threshold from €12,500 to €40,000.

George Perdikis of the Green Party has been reported as being in favour of extending the 2013 Act with amendments that would reduce the IPT collected from €138 million to between €90 and €120 million.

Apparently, efforts are being made to include the 299,000 newly discovered properties into the mix, but these will also need to be taxed at their 1980 values.

Protecting property developers

DIKO MP Angelos Votsis is expected to submit a draft bill requiring those who have deposited their contracts of sale at the Land Registry but who have yet to receive the Title Deeds to pay the Immovable Property Tax due rather than the developers. (A similar proposal was submitted last year).

Other possible options

Several options for setting the tax based on 2013 property values have been leaked, including:

  • Tax free threshold set at €100,000 and remaining taxpayers pay at 0.11% (expected to generate €136 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay at 0.11% (expected to generate €127.9 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay 0.09% for property holdings valued up to €500,000, 0.1% for property holdings up to €5 million, 0.13% for property holdings up to €10 million and 1.5% for holdings in excess of €10 million (expected to generate €125 million).
  • Tax free threshold set at €100,000 and remaining taxpayers pay 0.09% for property holdings valued up to €5 million, 0.11% for property holdings up to €30 million, 0.12% for property holdings in excess of €30 million (expected to generate €138 million).
  • Tax free threshold set at €130,000 and remaining taxpayers pay 0.11% for property holdings valued up to €5 million and 0.12% for property holdings in excess of €5 million (expected to generate €129.9 million).

It is possible that Parliament will be unable to reach agreement before the summer recess and that a decision will be taken in October.

 

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