State-sponsored fleecing is island-wide

Editorial
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13

IN response to the recent complaints about the Planning Department in Limassol, I can assure you the same fleecing occurs in Paphos.

In February 2003, we bought a Paphos flat with a purchase price of €123,000. The contract was filed by our lawyer in March 2003. In July 2010, the developer advised us our Title Deeds were now available for purchase.

Because we live in Canada, and would not be back in Cyprus until January 2011, we gave our Paphos-based lawyer power of attorney and the necessary funds to complete the land transfer. When he went to Paphos’ Land Registry Office (LRO), he was told the LRO had increased the value of our flat to €185,000 – a 50 per cent increase.

We would now be required to pay property transfer fees amounting to €5,833.64, rather than the €3,690.58 that would have been charged based on our purchase price.

When we questioned this unwarranted increase, our lawyer informed us that the valuation was ultimately at the LRO’s discretion and we could either simply pay the new amount or do so with an objection. The LRO could decline our objection and also set an even higher value for the property.

We sent the additional funds, but with a proviso that an objection be lodged. However, our lawyer signed off on the LRO valuation without filing an objection. His reasoning being that he was presented with information that other flats in our development had been sold in the same time period as our purchase at prices considerably higher, and the valuation placed on our flat was the best he could obtain.

When we arrived in January 2011, we expressed disbelief that we were able to buy our flat for one third less than the price paid by others in the same project and in the same time period. After two unsatisfactory LRO visits, we urged our lawyer to get more clarification on the assessed value. The LRO gave him information specific to nine flats in our project which, according to them, sold at prices per sq. metre which justified their valuation of our flat.

We contacted the owners of three of these nine flats listed by the LRO.

  • Flat no. 17 (126 sq. metres) was purchased for €1,234 per sq. metre. The LRO list showed the price as €1,796 per sq. metre – an increase of 46 per cent.
  • Flat no. 16 (73 sq. metres) was purchased for €1,123 per sq metre. The LRO list showed the price as €1,765 per sq. metre – an increase of 57 per cent.
  • Flat no. 6 (92 sq. metres) was purchased for €1,281 per sq metre. The LRO list showed the price as €1,831 per sq. metre – an increase of 43 per cent.

These three examples demonstrate that the LRO has fabricated information in order to fleece buyers like ourselves. This abuse can only bring the whole system into disrepute, and foster cynicism and distrust of government regulations and practices. It would be interesting to know whether this practice affects only properties purchased by foreign passport holders.

Declan Lane
Paphos

Moody’s reviews Cyprus banks for possible downgrade

David Crowther
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1

THE BANKS under review are Bank of Cyprus, Marfin Popular Bank and Hellenic Bank. Moody’s said the action followed its decision on May 9 to place Greece on review for a possible downgrade, which suggested that the likelihood of a Greek sovereign debt restructuring could be rising.

The review of Cypriot banks reflected its concerns over heightened risks related to their sizeable exposure to Greek debt and significant lending to the Greek private sector. Moody’s said there were also funding risks which could arise in the event of a potential Greek debt restructuring.

According to Cyprus’s finance ministry, Cypriot banks hold about 5.1 billion Euros ($7.3 billion) worth of Greek bonds.

Moody’s said the exposure was estimated at about 68 percent of the rated banks’ aggregate pro forma Tier 1 capital.

“Although Moody’s recognises that the banks currently maintain solid capitalisation levels overall, our review will assess shock absorption capacity on a case-by-case basis under a stress scenario,” Moody’s said.

It said it also wanted to assess the Cypriot government’s willingness and ability to extend systemic support to its banking sector in the event of a possible Greek debt restructuring.

Moody’s cut Cyprus’s sovereign ratings two notches in February to A2 on concerns at the exposure of the banks to Greece and structural problems in the island’s economy.

Standard and Poor’s has cut Cyprus twice since last November, while Fitch has placed Cyprus on a negative watch for a possible downgrade. (Reuters)

CPAG’s Denis O’Hare interview with Rosie Charalambous

Nigel Howarth
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21

EARLIER this evening Denis O’Hare of the Cyprus Property Action Group spoke with Rosie Charalambous on the CyBC Radio 2 programme ‘Round and About’ about the unfair commercial practices law and plans to flood the Island’s Consumer Protection Service with complaints.

Mr O’Hare started by explaining the background to the Unfair Commercial Practices Directive:

“The (EU) unfair business to consumer commercial practices Directive was developed in 2005 and member states were given a couple of years to implement it. It was transposed into Cypriot law effective 12th December 2007.

Part of the Directive mandated the (EU) states to inform consumers of this law and the avenues of redress. Here in Cyprus, it was well and truly hidden; even today it is not mentioned on the Consumer Association’s website and just a couple of weeks ago the head of the Consumers’ Association said that he’d never heard of the law.

The law makes it a criminal offence for a business not to inform consumers of material facts that would change their behaviour towards a product.”

Rosie Charalambous: “They might not have bought the property had they known it was mortgaged.”

Denis O’Hare: “Exactly, exactly!”

Click here to listen to the 14 minute interview between Rosie Charalambous and Denis O’Hare.

Property buyers plan flood of complaints

Editorial
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35

Property buyers plan flood of complaintsACCORDING to Denis O’Hare from the Cyprus Property Action Group (CPAG), buyers plan to demand en masse that their title deeds be immediately issued or they receive their money back with interest.

The claims will be filed in accordance with the EU Unfair Commercial Practices law, which is now effective in Cyprus. However knowledge of this law does not appear to be widespread. Two weeks ago the head of the Cyprus Consumers Association, Petros Markou, told the Cyprus Mail that he had never even heard of it.

The new joint action by property buyers is being organised by CPAG as just one part of a co-ordinated exercise involving UK MEPs at the EU, in order to force the government to act on the issue of withheld title deeds, a practice which is damaging to the island’s property market and image.

“The government of Cyprus in response to previous lobbying of the EU by CPAG’s supporters was forcibly pushed into action declaring to all and sundry that legislation would be passed to fix the problem for buyers. However, after originally promising this legislation by the end of 2008, only recently did the Minister of the Interior boast that he had finally cut the Gordian Knot, his oft-used phrase for this mess, by getting certain bills passed by parliament,” said CPAG’s O’Hare.

“Unfortunately it is now clear that passed legislation, which was mostly designed to try to clear the festering illegality in the industry caused by the abject failure of this and previous governments to enforce the nation’s planning laws, does not address the main problem of undisclosed developer mortgages encumbering people’s homes.”

He said they would now turn to the Consumer Protection Service, the agency which enforces the EU Directive Unfair Commercial Practices law, among others, and is also tasked with taking court action on behalf of complainants if required. It also has powers to hand out heavy fines to transgressors and jail sentences can be used against persons who hinder their investigations.

CPAG has coordinated via UK MEP, Daniel Hannan, that most if not all of the 72 UK MEPs co-sign a letter to Vivian Reding, EC Commissioner for Justice, requesting that the failure to transfer title deeds immediately after purchase be deemed an unfair commercial practice in all circumstances, regardless of when the sales contract was signed.

O’Hare said that many CPAG supporters had also written to Reding with a similar request and confirmed that buyers of other nationalities are now writing to their country’s MEPs to seek support to outlaw this title deed practice.

Asked if he really thought that the Consumer Protection Service would be able to obtain buyers’ deeds or get their money returned O’Hare said: “In a word no! But this in itself will establish that Cyprus cannot or will not enforce EU law and this means that the EU Commission will be forced to take action against Cyprus, according to our MEPs.”

Furthermore, having exhausted the local legal remedy individual buyers can use the European Court of Human Rights, which is also free, in order to press for their property rights. Under an EU Directive the state is responsible for any losses caused by non-enforcement of the law.

Editor’s comments

For more information about raising a complaint with the Commerce Ministry’s Consumer Protection Service visit the Cyprus Property Action Group website.

Ongoing contempt for property purchasers

Gavin Jones
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21

ostrich-like behaviourI WOULD like to refer to the editor’s choice letter published in the Sunday Mail of May 1, regarding the Limassol Planning Department’s arbitrary re-evaluation of a buyer’s property.

I, and no doubt thousands of others, are wondering what it’ll take for Cyprus to clean up its act regarding property purchasers being duped by the heinous practices of certain developers, lawyers and banks in relation to the ongoing title deeds’ scandal.

Successive governments have allowed this situation to fester and this ostrich-like behaviour continues, despite the current administration trumpeting the recent passing of bills which in reality do not address the core issue of existing property ‘owners’ being saddled with fraudulent developer mortgages.

There also exists a further hurdle in the form of the Land Registry bumping up the perceived value of properties in order to extract higher property transfer fees for the state coffers. And this in a market whose values are falling. Nice money if you can get it.

It seems the authorities are hell-bent on adding the finishing touches to their nation’s depressed and now tottering economy and helping to confirm the island’s already negative reputation vis-a-vis integrity and natural justice.

RIP Cyprus. Your days are irrevocably numbered.

Gavin Jones
Paphos

Ball starts rolling on Title Deeds

Editorial
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14

A LARGE number of property owners will soon have their much-desired Title Deeds, as authorities launch procedures to implement the recently passed town-planning amnesty laws.

The head of the Land Registry Office, Andreas Christodoulou, yesterday announced that his department was expected to conclude an evaluation on a list of properties by the end of this month, which will allow owners of properties with small discrepancies to acquire their deeds.

“We will move forward with evaluating the value of the properties in each area, so that they can be published in the order that will be issued by the Interior Minister,” said Christodoulou.

“We will submit our evaluations per area by the end of May and based on the law that was recently passed by parliament, the Interior Minister will issue an order, which will determine the amounts that each person will be called to pay, depending on the discrepancy,” he explained.

For the first six months after the order has been issued, applications for town-planning amnesty will be submitted by property owners who are facing problems having their Title Deeds issued.

Specially appointed committees will examine each application and depending on the discrepancy, they will determine the price that will have to be paid by the applicant to have deeds issued.

According to Christodoulou, there are currently over 120,000 properties without deeds – belonging to local as well as foreign buyers – while on average, around 10,500 new applications for Title Deeds are submitted each year.

Editor comment

THIS is excellent news for those who are unable to obtain Title Deeds due to minor planning infringements, but questions remain on the length of time it will take the authorities to issue the deeds.

In 2010, the Land Registries issued and transferred Title Deeds for a total of 13,701 properties. This was an improvement on the 2009 figure of 11,444.

Assuming that the productivity of the Land Registries and other departments involved in the process of producing Title Deeds can be increased so that 20,000 a year can be transferred and the figure of 10,500 new applications each year remains constant, it is going to take around 12 years to clear the backlog.

Moreover, figures have yet to published on how many deeds are held up due to planning infringements and how many are held up due to more serious problems, such as developer mortgages.

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