Will Cyprus follow Spain’s example

Nigel Howarth
-
6

THE Spanish government has announced plans to temporarily reduce the rate of VAT on newly built housing in an attempt to encourage sales and boost its moribund property market.

The announcement came at a recent press conference where the Spanish Finance Minister, Elena Salgado, announced that rate of VAT on newly built housing will be reduced from 8% to 4% until the end of the year.

The move should help reduce the large number of unsold properties that have been built in recent years. Property prices in Spain have plummeted since 2008 while the number of sales and employment levels have also fallen significantly.

Cyprus is in a similar position to that of Spain with thousands of newly built properties remaining unsold and littering the once popular seaside areas. Prices too have fallen and unemployment in the industry has risen sharply since the market peaked in 2007.

But the Cyprus government’s response to the economic crisis is to introduce a number of bills that, amongst other measures, will raise VAT from 15% to 17% and more than double the amount it collects in Immovable Property Tax from €10 million to €24.2 million/annum.

The Cyprus Land & Building Developers Association has written to President Demetris Christofias on two occasions urging him not to increase taxation as this would cause a further deterioration in the business climate and increase unemployment.

George Strovolides, the president of the Cyprus Land & Property Owners Association (KSIA), has said that the imposition of new taxes on property will have tragic consequences. He has written to the Island’s Finance Minister Kikis Kazamias requesting an urgent meeting to discuss the tax raising bill.

Unless the Cyprus government is willing to follow Spain’s example and takes positive measures to stimulate property sales, the outlook for the Island’s real estate sector looks very bleak.

Russians interested in Paphos tourist investment

Nigel Howarth
-
7
Photograph: InBusinessNews.com

InBusinessNews reports that a Russian investment group is planning a multi-million Euro tourist project in Paphos that includes a marina for small boats, hotel, seaplane landing and take-off facilities and a series of recreational developments.

Apparently the Russian investment group presented their plans to Savvas Vergas, the Mayor of Paphos, almost a month ago. It seems that interest in the project arose after the FIABCI world conference that took place last May in Paphos.

When Mr Vergas was interviewed by InBusinessNews he declined to reveal many details of the proposed project. But he did say that the potential investors wanted to see a willingness by the local authority to assist in obtaining the necessary permissions required to implement the project.

According to the report, Mr Vergas has accepted an invitation to Moscow to attend a screening of the project and will be launching a new restaurant called “Old Paphos” in downtown Moscow later today.

Cyprus at number nine in Top of the Props

Nigel Howarth
-
4

SPAIN was the most popular investment destination for British overseas property investors according to a survey published last week by themovechannel.com.

Spain was followed by France in second place and the USA in the number three spot. These were followed by Portugal and Italy, in fourth and fifth places respectively.

Brazil sneaked into sixth place, followed by Bulgaria. Rounding off the August Top of the Props chart was Turkey in eighth place, followed by Cyprus. Barbados took the final place in the property investment popularity contest, coming in at number 10.

The full breakdown of the move channel’s Top 40 is as follows:

RankCountryShareChange
1Spain12.34Non-mover
2France9.2Non-mover
3USA6.75Non-mover
4Portugal6.1Non-mover
5Italy5.89Non-mover
6Brazil4.22Non-mover
7Bulgaria3.31Up 4
8Turkey3.22Down 1
9Cyprus2.77Down 1
10Barbados2.47Up 4
11Cayman Islands2.43Up 17
12Thailand2.33Down 3
13Morocco2.24Down 1
14Cape Verde2.17Up 1
15Greece2.02Down 5
16Germany1.97Up 1
17Malta1.64Down 1
18Slovenia1.5Up 6
19Poland1.38Non-mover
20Canada1.12Non-mover
21Croatia1.08Up 4
22India1Down 4
23UAE0.99Down 1
24Hungary0.9Down 3
25St Lucia0.73Down 12
26Mexico0.63
27Egypt0.59Down 4
28Montenegro0.46Up 2
29Switzerland0.45Down 3
30Jamaica0.35Down 1
31Australia0.34Up 1
32Nicaragua0.31Up 13
33Malaysia0.3Non-mover
34Czech Republic0.28Up 12
35Tunisia0.28Non-mover
36Bahamas0.24Down 2
37Indonesia0.21Down 10
38Panama0.21Up 3
39Philippines0.16Down 2
40St Kitts and Nevis0.16Down 1

Founded in 1999, TheMoveChannel.com is the leading independent website for international property, with more than 400,000 listings in over 100 countries around the world, marketed on behalf of agents, developers and private owners.

Town planning amnesty presentation at Paphos UKCA

Nigel Howarth
-
3

UNDER the provisions of the amnesty laws, those who have yet to receive their Title Deeds can submit a Statement of Intent by October 7, 2011 to have planning infringements legitimised or can submit a full application in cases where architectural plans are available.

The statement of intent should be affordable as it involves only filling an application and getting the statement under oath from the architect, no drawings involved, just a general description of the problem.

A fee to correct any planning infringements will only be imposed if the property has been overbuilt. The fee will be based on the extent of the overbuild and will be based on values set by the Land Registry that will be a fraction of its actual market value. There is a 20% discount for those making an application during the first year of the amnesty and a 10% discount for those applying in the second year.

Coverage problems or other building issues like excessive height or distances from boundaries etc. will be resolved with non financial measures such as planting, appearance improvements etc.

Come along to the presentation and listen to what the amnesty has to offer. There will be an opportunity to have your questions answered.

The presentation will be held at the UKCA in Paphos on
Saturday, 27th of August starting at 10:00 am.

(The UKCA clubhouse is situated on the main coastal road in Chlorakas heading towards Coral Bay and opposite the St George Hotel).

Austerity measures will add to property industry woes

Nigel Howarth
-
10

AUSTERITY measures amounting to some €750 million in 2011 and 2012 were announced last Wednesday by the Cyprus Finance Minister, Kikis Kazamias.

The measures include plans to raise the VAT rate from 15% to 17% per cent, increase income tax from 30% to 35% for those earning €60,000 a year or more, and a higher tax on the interest on bank deposits, which is currently 10% and which may be increased to 15%.

Plans to change immovable property tax were also announced. These reduce the amount at which immovable property tax becomes payable from €170,000 to €120,000. Owners of properties whose 1980 value is €120,000 or less will still be exempt, but then the tax is assessed on a sliding scale:

  • Owners of property having a 1980 value between €120,001 and €170,000 will pay 0.4% tax.
  •  Owners of property having a 1980 value between €170,000 and €300,000 will pay 0.5% tax.
  • Owners of property having a 1980 value between €300,000 and €500,000 will pay 0.6% tax.
  • Owners of property having a 1980 value between €500,000 and €800,001 will pay 0.7% tax.
  • Owners of property whose 1980 value is €800,001 or more will pay 0.8% tax.

The government anticipates that these changes to immovable property tax will raise €24.2 million.

Last month, the Cyprus Land & Building Developers Association wrote to President Demetris Christofias calling on him not to increase taxation as this would cause a further deterioration in the business climate and increase unemployment.

However, the announcement of a 2% hike in the rate of VAT and increases in property taxes will add to the chronic problems facing the Island’s property market and the Land & Building Developers Association has written to president Christofias again expressing the concerns of its members.

Other countries have recently reviewed their taxation systems to help revive their ailing property markets.

In Ireland, for example, the government has reduced the stamp duty for deeds to 1% on the first €1,000,000 and 2% on the remainder.

The government of Holland has just announced plans to cut its overdrachtsbelasting (conveyancing tax) from 6% to 2% for a year in an effort to boost its housing market.

And in Spain, another country facing economic hardship, the VAT rate for new houses is just 7%.

Fitch downgrades Cyprus two notches closer to junk

Editorial
-
4


THE move by Fitch puts the Island’s long-term foreign and local currency ratings at BBB, a notch closer to junk level than last month’s downgrades by credit ratings agencies Moody’s Investors Services and Standard & Poor’s.

The Director of Fitch’s Sovereign Group, Chris Price said: “The two-notch downgrade of Cyprus’s ratings to ‘BBB’ reflects the actual and anticipated fiscal slippage, compounded by Fitch’s expectation that the sovereign will be unable to access the international debt markets in order to refinance an increasing debt maturity profile in H211 and H112. The 2011 deficit is now expected to be close to 7% of GDP and not all of the increase, from 4%, since the agency’s most recent analysis in June can be attributed to the naval base explosion, which took out half of Cyprus’s electricity generating capacity”.

On 11 August, the new government intends to put before parliament an austerity package to be implemented mainly in 2012. Fitch understands that the package is designed to restrain public sector wage costs and employee numbers, cut welfare costs by better targeting of recipients and raise taxes. If agreed by parliament and successfully implemented, it would cut the prospective 2012 general government deficit by about 3.5pp to 2.5%, effectively restoring the expected fiscal position reported in the 2011 Stability Plan.

Fitch understands that the package has been endorsed by the leaders of all the main parties and agreed with the Social Partners.

While Fitch anticipates that the austerity package will be approved by parliament, the agency remains concerned about the execution risks of implementation, particularly given the inability of previous administrations to address fiscal consolidation and structural reform measures. – Fitch Ratings-London-10 August 2011

1...521522523...695Page 522 of 695