PICAS meeting at Dhekelia Leisure Resort in Larnaca

IF YOU have a problem related to property ownership in Cyprus, join us at the special ‘Open Forum’ meeting of PICAS (Property In Cyprus Action Support group) starting at 14:30 on Wednesday 27 February at the Dhekelia Leisure Resort in Larnaca.

You can have free access to reliable, qualified information from our expert panellists to help you find a solution to your problems in a friendly, safe and confidential environment.

Our panel will include Nigel Howarth, the well-known independent advisor on Cyprus property matters – and Stelios Stylianou, the highly respected lawyer from Nicosia with extensive experience on property law.

They will be joined by special guests/observers Stelios Kyriakides from the Foreign & Commonwealth Office (FCO) in London – and Zoe Woodward, Consular Officer from the British High Commission (BHC) in Nicosia.

The main focus of the meeting is to provide support and guidance to those facing difficulties when buying or selling property in Cyprus. At the meeting on 27th February, our regular panel members will be in attendance to answer your queries and offer their advice.

Click to find further information about this open forum and PICAS and find directions to the Dhekelia Leisure Resort.

Free tickets to ‘A Place in the Sun Live’ at Olympia

A Place in the Sun team in Cyprus
Jasmine Harman, Laura Hamilton, Jonnie Irwin and Amanda Lamb

A Place in the Sun Live is the UK’s largest and best attended overseas property exhibition next taking place at London Olympia 12th-14th April 2013.

The exhibition features over 150 exhibitors with homes for sale from less than £20,000 to over £1 million in all the popular property-buying destinations, including Cyprus. Many agents will be promoting exclusive show offers and discounts to make the cost of buying an overseas home even more affordable.

Channel 4 presenters Amanda Lamb, Jasmine Harman, Jonnie Irwin and Laura Hamilton will all be appearing at the exhibition giving their top tips on buying property abroad and available during the A Place in the Sun magazine signing sessions to answer your questions about buying your perfect place in the sun.

And with A Place in the Sun Editor Liz Rowlinson hosting panel sessions with industry insiders and expert Q&As, there’s everything from the fun of the hunt to the serious business of buying overseas property the right way.

Free tickets

Once again, the organisers are offering free tickets worth £10 each – and you can get yours by clicking on your complimentary ticket to A Place in the Sun Live and following the instructions.

Armou family still living in limbo

THE LUXURY development was built by JNM developers. All of the houses, which were only built in 2004, have serious structural problems, from slanting floors, to the partial collapse of stairs, walls, swimming pools and patio areas. Outside drains are exposed in one garden and retaining walls have split.

In November, homes had official notices placed on them stating the decree shall remain in force until such time as repair works deemed necessary by the District Officer are carried out.

A day later, owners were informed that electricity supply to their homes would be cut but it is still connected.

Simon Phillips, his wife Jen and their two children are the only family still living at the development. They say they are unable to move due to financial restrictions and the prospect of homelessness hangs over them.

Phillips said: “We don’t earn enough to take out a mortgage or to rent another property. I would only be able to afford a tiny apartment.”

He said he was also fearful of the possibility of looting if his home were left empty. “I received a phone call from a woman named Sonia…she works at the District Office and placed the notices on all of our doors. She reminded me that we couldn’t stay as there is a ban order in place and that we have to move for our own safety. But I pointed out that although the other five houses have been affected and admittedly our outdoor space has too, including our entrance steps, car port, swimming pool and patio, which have all moved, our house has not.”

“It’s similar to a fault line. We are in a unique position in that our house is behind this line while all of the other homes, and our front garden, are in front of it,” he added.

Phillips said he has appealed to a district official to return with an engineer to confirm his hypothesis but is still waiting to hear back. The Cyprus Mail was told the official was currently away.

“Chucking a family of four out on the street surely can’t be a solution. I want to be compensated with a property of equal value and similar to mine. We paid for it outright and don’t have a mortgage. It cost us €250,000,” said Phillips.

He said that although several people had kindly offered temporary use of their holiday homes or empty properties, that was no way to live. “It’s impractical and impossible. We all need some peace and relief from this terrible situation.”

But he said if the electricity was cut off, as threatened, the family would be forced to move.

A report by the president of Paphos’ Architects and Civil Engineers Association, Chrysostomos Italos was completed in June 2012 and has been handed over to the legal advisers of the homeowners. Italos places the blame firmly on the developer.

Armou family still living in limbo

Gaining access after paying reservation fee

WHEN a buyer wishes to purchase a property in Cyprus, he would quite often enter a reservation fee agreement to reserve the property and pay a reservation fee prior to signing his purchase contract.

The property would be taken off the market and the reservation fee agreement would simply set out the circumstances in which the fee is returned to the seller or kept by the buyer.

For example, if a structural survey reveals a defect in the property then the reservation fee may be returned to the buyer. Alternatively, if the buyer has changed his mind for no apparent reason then the reservation fee may be retained by the seller. It is also wise for a lawyer to keep the reservation fee monies for the benefit of both parties until completion rather than the buyer transferring the monies directly to the seller.

We have found that in practice reservation agreements should also include a clause relating to access to the property. Sometimes the time period between signing a reservation agreement and executing a sales contract may be quite lengthy as the buyer may be waiting for a mortgage to be approved or the lawyer is awaiting a waiver letter from the bank as the development may have developer’s mortgages.

A potential buyer should never assume he will be allowed to visit after paying a reservation fee because that may not be the case and this can be incredibly frustrating for a potential buyer. After the reservation fee has been paid a seller may go overseas and an agent may refuse access as he may be concerned that the buyer may get cold feet.

Gaining access is incredibly important if you are planning to carry out renovation work on a property and builders will be required to provide you with quotes. Alternatively, if you are planning to rent out the property then you would want letting agents to visit and view the property in order that you don’t lose out on valuable rental income after completion.

So, as well as paying care and attention to your sales contract, it is equally important for your lawyer to pay care and attention to your reservation agreement and not only set out the circumstances in which the fee is returned to either the seller or buyer. In fact, if you are a buyer you should ensure that your lawyer specifies the amount of visits, the length of the visits and the notice that should be given, for example 24 to 72 hours’ notice in order that your property is ready on the day of completion and you have not lost any valuable time or money.

The information and opinions within this article are for information purposes only. They are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific legal advice relevant to your particular circumstances.

About the author

Andrea Pavlou is a dual qualified English Solicitor and Cypriot Advocate and speaks fluent English and Greek.

She is a Senior Partner in the law firm Pavlou & Pavlou who specialise in Real Estate, Shipping, Corporate, Business and Private Client matters.

Construction workers strike ends

YESTERDAY, building contractors and trade unions reached an agreement in principle on their collective agreements, bringing the indefinite building strike to an end after nearly three weeks.

The two sides accepted new proposals put forward by Labour Minister Sotiroula Charalambous, which provide for the collective agreement to run until June 30, 2014. Both sides expressed thanked Ms Charalambous for her efforts.

Under the new agreement weekly salaries will remain the same with craftsmen, labourers and semi-skilled workers receiving €440, €380 and €403 respectively.

Ms Charalambous said that the agreement is an important step in the right direction for the benefit of the island’s construction sector, which has been severely hit by the economic crisis, adding that the agreement will help regulate sub-contracting and also combat unfair competition among construction firms.

The unions’ general assemblies are expected to ratify the agreement today.

Construction workers in Cyprus went on strike to protest against new collective agreements proposed by the building contractors and the large influx of cheap, largely unskilled, foreign labour who they accused of taking their jobs.

The strike flared into violence in Paphos last week when police confronted striking builders who tried to stop strike-breakers who were brought in to take over the work at a hotel construction site.

The striking workers are expected to return to work immediately.

Limassol property market’s dependence on Russians

ALTHOUGH the property market is in a depressed state, I am disappointed by the analysis of the data and specifically by statements made by market participants that “Limassol is doing fine”, compared to other cities, “because of the Russians”.

I would ask all to spend a few minutes analyzing the Land Registry’s data.

Cyprus’ property market is significantly dependent on foreign buyers. Specifically, foreign buyers accounted for 22% of transactions in 2009 and 24% in 2010, 2011 and 2012 (note that in 2007 they represented about 50% of transaction volume). But if we study the data further, we see that each district has, as we would expect, different percentages of foreign buyers. In 2012 foreigners accounted for 12% of buyers in Nicosia, 21% in Limassol, 21% in Larnaca, 34% in Famagusta and 35% in Paphos.

We can see that Limassol has nothing special when compared to other towns in terms of the influence of foreign buyers and that one could even go as far to say that it may be better off because of the low percentage of foreign buyers in relation to that in other coastal cities as overseas demand tends to be more volatile.

Why have we been having large percentage fluctuations in the number of transactions in other cities, but not in Limassol? The answer lies in two different places.

The first is that due to the overall low transaction volume, small numbers create what is termed the “percentages fallacy”. If you have €1.00 and you lose €0.05, you lost 5%. If you have €0.20 and you lose €0.05, then you lost 25%. Because Limassol and Nicosia represent 50% of transaction volume and because of the reduction in the number of transactions in other cities in previous years, the percentage changes in Larnaca, Famagusta and Paphos appear to be apparently huge even though in absolute numbers they are not. For example, in absolute terms, in 2012 Famagusta had a drop in transactions of 131 (from 714 transactions in 2011 to 583 in 2012) and Limassol a drop in transactions of 491 (from 2,118 in 2011 to 1,627 in 2011). Although the decrease in transaction volume is almost four times more in Limassol, in percentage terms the annual reduction is 18% in Famagusta vs. 23% in Limassol.

The second part of the explanation lies in where the reduction came from. The decrease in transactions by locals accounted for 77% of the total reduction (573 fewer properties were purchased by locals and 176 fewer properties by foreigners). Of this reduction, the biggest percentage drop in local buyers was in Limassol (-26% compared with 2011) whilst the biggest reduction in foreign buyers was for properties in Nicosia (-33% compared with 2011). Paphos was the only district to have an increase in transaction volume by both foreign and local buyers. It seems that the main reason that Limassol has been ‘holding on’ until now is not because of foreign buyers, but that the locals (who form 79% of its market) continued to acquire property until relatively recently.

Graph-l1

Foreign buyers play an important role in Limassol’s real estate market, which can seem larger than it really is because of their high concentration in specific areas (especially to the east of the city) and property types (houses or apartments with sea-view or in close proximity to the beach). A simple analysis of the data however, clarifies that it is the locals who continue to trade and “motor” its property market and that as local buyers begin to curtail their acquisitions Limassol’s property market will turn faster southwards than many seem to expect.

As aptly put by my childhood hero, Sherlock Holmes “The temptation to form premature theories on insufficient data is the bane of our profession.”

About the author

Pavlos Loizou MRICS is the lead consultant at Leaf Research

Leaf Research is a real estate consulting firm, providing high quality real estate market research, strategic consultancy, valuation, and financial modelling.