Property management company ceases trading

Nigel Howarth
-
4

LAST week, Spanish-based property management company Overseas Keys announced that it had ceased to trade. The company managed a number of properties in Cyprus from its office in Pernera.

In a letter to its clients the company’s MD, Kenneth Richardson, explained that “As a result of the sustained and unsubstantiated slanderous attacks on our business that has resulted in significant losses, we have quite simply run out of resources that would allow us to continue to operate. I have had no choice but to make all staff redundant.”

We understand that a number of Overseas Keys’ clients are pursuing the company to recover advanced payments made for services that it will no longer be able to deliver.

Focus of the Cyprus town planning bills was wrong

Editorial
-
8

INTERIOR MINISTER Neoclis Sylikiotis fired a broadside against the legislature, earlier this week, for delaying passing the five bills relating to the town planning amnesty. Sylikiotis had been angered by the postponement of discussion of the bills at committee level and what he saw as the deliberate delay in deputies making a decision.

He did not mince his words, accusing deputies of employing delaying tactics, “in a co-ordinated and methodical way, constantly coming up with new suggestions or proposals, many of which aimed to change or weaken every innovative proposal put forward by the bills”. The President of House was also targeted by the minister, for having gone back on his promise to arrange the approval of three of the five bills 10 days ago.

While the minister’s anger was understandable, these are complex bills which need to be carefully evaluated. The practice of House committees to ask for the views of all parties affected by a law proposal does not contribute to speedy decision-making, and sometimes it gives rise to irrational decisions. In the case of the town planning bills, after inviting developers, estate agents and an array of government officials, deputies remembered that representatives of the banks had not been invited to give their views, so another meeting was arranged.

Banks objected to provisions

Banks, which are part of the Title Deeds problem, expressed objections to certain provisions, causing deputies to look for new compromise solutions. However the chairman of the Legal Affairs Committee Ionas Nicolaou gave assurances that all five bills would be approved before the House broke up for the May elections. Whether the bills will be approved in their original form or will be changed by deputies to satisfy interested parties remains to be seen.

Bills do not strike a balance

Nicolaou’s claim, a couple of months ago, that “we aim to strike a balance between the rights of the buyer and the seller, but also guarantee the rights of the mortgagee”, was not likely to inspire much confidence. What balance needed to be struck? Surely after the property fiasco which has left around 100,000 foreign home owners without Title Deeds and wrecked Cyprus’ reputation abroad, the legislators should have one objective: to guarantee the legal right of a buyer to be handed a Title Deed as soon as he pays for a property. How is allowing a seller to carry on using a property he has sold, as security for his bank loans, a case of striking a balance?

The government, to its credit, has tried to address the problem with its bills, by stipulating big fines for delays, omissions or fraudulent information in documentation required for obtaining a Title Deed, but has it gone far enough in protecting the buyer? We mention this because legally protecting the buyer is of critical importance to gradually restoring Cyprus’ tarnished reputation and kick-starting the stagnant property market.

Hundreds of holiday homes remain unsold, despite prices being slashed, because potential, foreign buyers have been made aware of the Title Deeds fiasco. A sound legal framework, ensuring the immediate issuing of Title Deeds, combined with attractive prices could re-kindle foreign interest and put in motion a small property market recovery that would benefit the economy.

Government aimed to collect revenue

Unfortunately, this was not what the government set out to achieve in drafting the bills. Its main objective was to collect funds through the town planning amnesty, because revenue from property transactions had hit rock-bottom. Under these provisions, people, who had not secured final approval for their flats or houses because of building permit violations, would be entitled to pay a fine to the state and secure the approval necessary for the issuing of Title Deeds. When the deed was issued transfer taxes would be paid to the state.

Securing Title Deeds will be expensive

But will people take advantage of the amnesty to secure Title Deeds, which will be a costly exercise? Many Cypriots, especially those not planning on selling their property, would most probably prefer to wait a few more years for a Title Deed rather than pay thousands of Euros in fines and taxes to have one issued, at a time of economic uncertainty and tight money. This may also explain why deputies are not in a big hurry to approve the town planning bills – there is no public pressure apart from the agitating by the impatient minister.

The irony is that the big problem faced by the people who have been pressuring the government for action – the 100,000 foreign property-buyers without Title Deeds – would not be solved by the eventual passing of the bills. There is no obvious or easy solution to that problem, which is why the government has focused on formulating bills that would raise state revenue.

Parliament blamed for Title Deed bills hold up

Charlie Charalambous
-
7

CYPRUS Interior Minister Neoclis Sylikiotis rounded on parliament blaming it for dithering over a Title Deed amnesty and therefore trapping thousands of home owners.

“Before thousands of citizens I am accusing some MPs of trying to thwart the reforms envisaged by the government instead of protecting the public interest,” Sylikiotis told reporters.

“Despite the public pledge from House President Marios Garoyian… that the House would approve three of the bills discussed it was then decided to postpone again,” he added.

With growing frustration that one of the government’s key policy issues is seemingly the victim of an election year Sylikiotis also blamed coalition partners Diko for dragging their feet.

He said thousands of buyers were left to wait longer after being unjustly left in the lurch for years.

The minister said three of the five bills already discussed could be passed without affecting the remaining two.

He argued that the three bills ready to be voted on would enable thousands to acquire Title Deeds and repair Cyprus’ tarnished reputation among foreign buyers desperate to obtain deeds.

Streamlining town planning regulations and ushering in a Title Deed amnesty has buyers’ rights as its core philosophy.

This is seen as a popular move that would earn the government brownie points during a difficult period.

Sylikiotis claimed a “group of MPs” were “systematically” trying to waylay the process at the committee stage.

Five bills to ease the Title Deed backlog and streamline land registry red tape were tabled to the House last year and had cross-party support which makes the delay even more puzzling. There was also a lengthy consultation process before the bills were even tabled.

Nevertheless, opposition Disy vice president Ionas Nicolaou denied there had been any deliberate delay on behalf of parliament as the bills had gaps in them which needed rectifying.

The proposals aim to better regulate the property sector by streamlining the issuing of Title Deeds and introducing a town planning amnesty for those who have infringed on building regulations.

Modernising the property permit system and easing the logjam would also see a steady flow of much needed cash into empty state coffers, not to mention giving home owners piece of mind.

It is believed that more than 100,000 applications are snared over town planning disputes and that once the laws are passed around 20,000 Title Deeds could be issued annually.

Estimated government revenue for each Title Deed issued is €7,000 on average.

Tweaking town planning and property licensing is seen as the best way of bolstering confidence in Cyprus real estate among foreign buyers especially now the market is struggling.

New legislation will enable the authorities to issue different types of Title Deeds to speed up a complicated system.

A key element is to approve Title Deed issues where they have been held up by minor infractions.

The property owner will be able to pay a cash penalty to legalise the infraction and receive the Title Deed.

Legislation also seeks to better protect buyers from unscrupulous contractors.

Prices & valuations what is your house worth?

Pavlos Loizou MRICS VRS
-
7

I EXPECT that the vast majority of those reading this article are more interested in learning that their house is indeed worth more than their neighbour’s, rather than whether or not it is actually better than theirs.

When it comes to property it is important to distinguish between three often used, and misunderstood, concepts – price, value, and worth:

  • Price is the amount at which a property is actually sold for.
  • Value is the estimate of what a property could sell for in the open market, i.e. an estimate of price.
  • Worth is the specific value that an individual assigns to a given property or to use the property for a particular purpose, i.e. someone who wants a two bedroom flat within 50 metres of the beach, is likely to assign a higher value to it than one who is simply looking for a two bedroom flat.

Thus, when it comes to explaining why valuers are often slightly over, or under, what a property actually transacts at, this is partly down to that theirs is an estimate of price (i.e. a value), whilst the property transacts at a specific ‘price’. In the same light, a bid outside of what would be a ‘logical’ range would probably come from, say, an operator of holiday flats as the flat has a higher value/worth to them.

What does this have to do with my house you might ask? Well, the neighbour’s house is always better than yours because of our inert nature of always comparing what we have with that of others, and always wishing we had what they have. This is colloquially known as “keeping up with the Joneses”, and basically relates to ‘conspicuous consumption’, which is lavish spending on goods and services acquired mainly for the purpose of displaying income or wealth.

At the same time, when it comes to our own assets there appears to be what is called in behavioural economics, an “endowment effect”. In other words, people place a higher value on objects they own than on objects that they do not. In one experiment, people demanded a higher price for a coffee mug that had been given to them but put a lower price on one they did not yet own.

Putting the two together leads us to a simple explanation of our comparison of house prices. A valuer looks at any house as ‘coldly’/ impartially as possible and assigns a value to it ignoring any special buyers. After we have bought the house we tend to assign a higher value to our home than to others similar to it, even though more often than not we comment how much ‘nicer’ other houses are.

When thinking about how much your house is worth, it is important to be as impartial as possible. As for the “keeping up with the Joneses” remember that “a rich man is a middle class person living in a poor neighbourhood.”

About the author

Pavlos Loizou MRICS is the lead consultant at Leaf Research

Leaf Research carries out real estate market research and financial modelling for development projects and for properties that are used as part of a business. The company specialises in development, tourism & leisure, health & wellness, the education industry, and ‘green energy’.

Buying property in Cyprus – book review

Dr Alan Waring
-
21

THE risks faced by property buyers, especially foreigners, in Cyprus are now legendary. The backlog of 130,000 properties still awaiting their Title Deeds (some for as long as 20 years or more) includes some 30,000 bought by foreigners.

In addition to the Title Deeds delays, a significant number of buyers also allege that they have been defrauded either by their developer and/or their lawyer. ‘Double selling’ fraud is the most frequent complaint.

Unfortunately, redress is proving most difficult to obtain as, uniquely for a country that claims to follow English law and precedents, the Attorney General has declared that property fraud in Cyprus is a civil rather than a criminal offence and does not warrant an automatic police investigation. Aggrieved buyers are therefore forced to take out long-winded civil actions or private prosecutions and judges are proving reluctant to find in favour of plaintiffs.

With such a minefield for buyers to contend with, the recently published ‘Buying Property in Cyprus – Golden Commandments‘ by Nigel Howarth is timely and on-target for overseas buyers thinking of buying a property in Cyprus. Nigel Howarth has lived in Cyprus for many years and runs the highly popular Cyprus Property Buyers and Cyprus Property News websites.

The 32-page book contains a wealth of well-structured advice and guidance based on his immense knowledge and experience. Topics covered include the intricacies of buying a new property, especially off plan, the potential tricks and traps and how to avoid them.

Other sections cover buying a re-sale property, buying as an investment and financing a purchase.

The section on Title Deeds is especially illuminating – and sobering – for the unwary. Nigel Howarth rightly points out that while successive Interior Ministers have promised much to correct the Title Deeds scandal, thus far little has emerged in practice.

The book is not (and does not claim to be) a complete answer to all questions and risks concerning buying property in Cyprus. For example, it does not mention the five Bills currently being examined by Parliament which the Interior Minister claims will correct the Title Deeds problem once and for all. This claim is, in any event, highly contentious and many believe that the Bills are ill-conceived and unworkable. The book also does not mention the fact that the Cyprus government does not appear to have implemented the EU Unfair Commercial Practices Directive in respect of immovable property and, at one stage, were denying that the Directive applied to immovable property.

All in all, the book is an essential reference for anyone wishing to avoid unnecessary heartache and financial loss as a buyer of property in Cyprus.

About the author

Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East with industrial, commercial and governmental clients. He is a Fellow of the Institute of Risk Management and is a founding member of the IRM Cyprus Regional Group. Contact via Dr Alan Waring & Associates.

The e-book ‘Buying Property in Cyprus – Golden Commandments’ is available free of charge in our Publications section.

Cyprus protesters at overseas property exhibition

Nigel Howarth
-
27
Conor O’Dwyer & Alpha Panareti Owners Group members outside ‘A Place in the Sun Live’ overseas property exhibition at Earls Court

BRITISH property buyer Conor O’Dwyer staged a protest outside ‘A Place in the Sun Live’ overseas property exhibition at Earls Court accompanied by members of the Alpha Panareti Owners Group, in a move that could cause further damage to the Island’s beleaguered property industry.

O’Dwyer told Cyprus Property News last week that he planned to protest outside the exhibition. He said that he would be raising awareness of the pitfalls of buying property in southern Cyprus and distributing leaflets warning people about the problems that he, and others, have encountered.

The thousands of visitor who flocked to the exhibition were greeted with placards reading ‘Shame on Cyprus’ and ‘Cyprus Island of fraud’ along with others naming a specific bank and property developer.

Members from the Alpha Panareti Owners Group joined Mr O’Dwyer in his protest. Many of these believe that they have been mis-sold property and are taking advice from their lawyers on possible legal remedies.

‘A Place in the Sun Live’ claims to be “the UK’s biggest and best-attended overseas property exhibition” and is organised in conjunction with the popular Channel Four television programme, which attracts millions of viewers each week. The exhibition ends today.

The protest caused some unrest amongst exhibitors, which included a number of property developers from Cyprus, but the police were on hand to ensure there were no problems and that everything remained calm.

1...538539540...695Page 539 of 695