Title Deed legislation will destroy property market

property market collapseALTHOUGH full details of the proposed legal amendments to Cyprus’ archaic property laws have yet to emerge, one thing is becoming clear; they will not restore investor confidence. Indeed they could well lead to the destruction of the overseas property market.

From the details that have appeared over the past few weeks, property developers will not be held to account for their actions, it will be left to those who have bought property to pay for their developer’s misdemeanours.

Developer mortgages

FIRSTLY, there is the proposed legislation concerning developer mortgages that was announced last month.

People who have been mislead and/or deceived into buying property built on land that the developer had previously mortgaged can get their Title Deeds by repaying the developers debt.

So in addition to paying for their house, they will need to repay the developer’s mortgage.

They will also require legal assistance to obtain a court order instructing the Land Registry to register title to the property to their name.

If buyers consider that their lawyer acted negligently, they can sue him/her. (Readers may recall that it took British couple Muriel Beaumont and Clifford Sims eleven years to sue their Paphos lawyer Nicos Papacleovoulou for negligence).

Planning infringements

YESTERDAY, details emerged on how the new laws propose to address planning infringements.

Once again, developers will not be held to account for their actions. And once again those who have bought property will have to pay to have any planning infringements caused by their developer regularised.

Buyers may then sue their developer to recover their costs. This will involve legal costs and expenses and cases may drag on for many years without any guarantee of a successful outcome.

MP George Perdikis suggested an obvious and fair solution; fining developers who were responsible for planning irregularities. However, his suggestion was rejected by the Town Planning Department.

Conclusion

THESE new laws have clearly been drawn up to suit the needs of developers, banks and lawyers; very little (if any) added protection will be afforded to those buying property.

These changes will add a further layer of bureaucracy to a process that is no longer fit for purpose, adding to the length of it takes to issue Title Deeds. Furthermore, as the existing laws are rarely enforced there is no guarantee that these ‘new’ laws will have any effect.

One thing is obvious, developers will not be held accountable for the actions; indeed these changes will encourage more developers to act nefariously safe in the knowledge that they will be acting within the law.

Calling on the victims of crime to pay for the misdemeanours of their developers and lawyers will destroy what vestiges of confidence remain in the Island’s overseas property market and will possibly result in its collapse.

Building permits drop in December

THE number of building permits authorised by the Cypriot Municipal Authorities and the District Administration Offices fell for the ninth consecutive month in December, falling by 7.3% over the year earlier to 733, comprising:

  • Residential buildings – 535 permits
  • Non-residential buildings – 108 permits
  • Civil engineering projects -39 permits
  • Road construction – 4 permits
  • Division of plots of land – 47 permits

Focusing on the 535 permits issued for the construction of residential buildings, these were approved for 916 dwelling units – 494 single houses and 422 multiple housing units such as apartments and other residential complexes.

Compared to the November 2009 total of 1,624 dwelling units, this represents a fall of 43.6%.

Cyprus building permits - December 2010
Source: Cyprus Statistical Service

Looking at the broader picture, during the whole of last year 8,777 building permits were authorised compared with the 8,950 authorised in 2009; a fall of 1.9%. The total value of these permits fell by 6.3% and the total area fell by 7.0%.

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

Strikes threatened

ADDING to the woes of the construction sector, strikes have been threatened by the builders’ trade unions PEO and SEK.

According to reports, the threatened strike action results from mass dismissals in the sector and the appointment of workers on poorer conditions and terms of employment.

Revised Cyprus Title Deeds laws by May?

THE GOVERNMENT’S town-planning amnesty bills will be put to the vote in parliament early next month as MPs aim to conclude discussion of two other bills designed to regulate mortgage issues before the May 22 parliamentary elections, it emerged yesterday.

Chairman of the House Interior Committee, AKEL MP Yiannos Lamaris said discussion has been completed and the bills were going to be submitted to plenum on March 3.

“A chapter concerning thousands of people is closing,” he said.

Apart from town planning matters, the government has also drafted two bills to regulate mortgage matters, currently under discussion at the House Legal Affairs Committee.

Committee member, DISY MP, Tasos Mitsopoulos said the aim was to bring the two bills before the plenum before parliament dissolves to the May elections.

On Friday, Interior Minister Neoclis Sylikiotis accused DISY MPs of stalling, something rejected by opposition legislators.

“The Interior Minister is being unfair when he criticises the legal affairs committee,” Mitsopoulos said. “If we had approved the bills as they were we would have caused a bigger problem.”

Mitsopoulos said the drafts had a lot of holes and omissions and the committee held many sessions to correct things.

Many people, including foreign buyers, have been left without deeds even after paying for their houses because developers did not pay the mortgage to the bank.

Thousands more remain without Title Deeds to their property due to irregularities at the time of construction or changes later on.

The legislation headed to the plenum on March 3 seeks to sort this problem out by legalising irregularities – under certain conditions – but Green party MP Giorgos Perdikis has his misgivings.

Developers should be held to account

Perdikis had proposed adding a provision to go after developers responsible for irregularities but it was rejected by the Town Planning Department.

He suggested fining developers who did not show interest in legalising the irregularities “or else there is no pressure on the party who did the irregularities”.

Perdikis said some 30 per cent of properties that cannot get a deed have irregularities created by the construction companies.

His suggestion was rejected because buyers could now apply themselves to legalise the wrongdoings and then take the developer to court to demand the money they paid in doing so.

“But when are they going to get their money and at what cost?” Perdikis said.

New laws suit developers

He added that the law was structured in such a way that it suited the developers who sold the houses.

“Only those (buyers) who need the title will do it,” Perdikis said, adding that many will be discouraged by the procedures and the cost.

Under the legislation, irregularities carried out by the current residents after the purchase – like closing balconies or building garages – can also be legalised, for a fee, as long as they do not affect third parties or encroach on state property.

Over 100,000 Title Deeds are currently pending with the government expecting to make some €150,000,000 per year from transfer fees if affected people apply en masse.

State drops criminal case against Conor O’Dwyer

ATTORNEY General, Petros Clerides, has decided to stay criminal proceedings against Conor O’Dwyer. In a three line letter to Yiannos G. Georgiades, Conor O’Dwyer’s lawyer, Clerides said simply:

“I refer to the above case (793/2010) and inform you that I have decided to suspend the prosecution against your client Cornelius Desmond O’Dwyer.”

The case against Conor O’Dwyer was filed by the Paralimni Police Chief last October and was in connection with him uploading material to the Internet relating to his dispute with property developer Christoforos Karayiannas & Son Ltd. The case raised significant issues concerning freedom of speech online in Cyprus.

Conor and his wife Michaela are currently in Cyprus filming with a crew from the national ITV network for their prime-time series “Homes From Hell” due to be transmitted later this year.

Minister and opposition in row over Title Deed bills

INTERIOR Minister Neoclis Sylikiotis yesterday urged parliament to vote for the government’s long-awaited town-planning amnesty bills and accused opposition DISY of stalling and trying to alter their provisions.

The Minister said that it is well-known that the dysfunction of the whole system of development control “but also a multitude of problems, violations and omissions by professionals in the construction sector, resulted, among other serious evils, in the victimisation … of thousands of property buyers, as well as the defamation of our country abroad.”

Sylikiotis urged parliament to vote for the bills, under discussion for the past 10 months, and accused DISY of stalling tactics.

“There are thousands of buyers and owners waiting for these bills to go through,” the Minister said. “The excuse put forward by some people, that this exhaustive dialogue in the House (Interior) Committee aims at improving the bills is inaccurate.”

He said the delay did not add anything toward improving the bills “but on the contrary, what it essentially achieves is to perpetuate a situation that only hurts the tens of thousands of buyers whose rights are not safeguarded while Cyprus continues to be degraded overseas.”

The Minister was referring to three of the five bills currently before the house dealing with various aspects of the Title Deed issue.

But he added that there was also a delay in processing the other two bills – which regulate the mortgage issue – currently being discussed in the House Legal Affairs Committee, chaired by DISY’s Ionas Nicolaou.

Sylikiotis urged DISY MPs to “abandon their stalling tactics and efforts to alter or neutralise the essence of the … innovations and reforms, which protect the buyers’ rights by overcoming past anachronisms.”

DISY responded in the afternoon, accusing the Minister of making baseless claims and spoiling the constructive climate at a critical moment.

MP Christos Stylianides said “despite their many reservations on various points … the parliamentary group has decided to support them, stating its reservations, in the hope that their implementation will reveal the imperfections that can be amended in order to arrive at the best result.”

Thousands of home owners remain without Title Deeds to their property due to irregularities at the time of construction or changes made later on.

For instance, residents of an apartment block cannot get the deed to their flat if one of the owners in the building turned his balcony into a spare bedroom.

Thousands were also left without deeds, even after paying for their house, because developers did not pay back to the bank the mortgage they took out to finance the development.

Sylikiotis said the five bills aim to regulate the sector and do away with problems of the past.

The two bills (regarding mortgages) currently discussed by the House Legal Affairs Committee provide a way out to buyers while setting safeguards so that buyers who have met their obligations can get the property transferred to their name, the Minister said.

“Buyers can claim their rights through better provisions included in the legislation,” Sylikiotis said.

One of the bills that concerns the sale of land, includes provisions also agreed by the banks “to create a mechanism so that when the buyer pays, their plot is freed and they can acquire the Title Deed,” Sylikiotis said.

As regards building irregularities that do not affect third parties or encroach in public spaces, they can be legalised by paying local authorities a fee.

Those fees will be determined through a general evaluation of properties in an area carried out by the Land Registry.

Title Deeds for properties with irregularities will be issued but they will be accompanied by notes specifying the wrongdoing.

Owners will be able to correct those ‘notes’ by paying the fee or keep the title as is and risk their property valued at a lower price since a potential buyer will be aware of the encumbrances.

Approval of the bills will also fetch much needed revenues for the government as every title costs around €8,000 in Property Transfer Fees.

Over 100,000 Title Deeds are currently pending but not all are expected to be issued at once.

Sylikiotis said the state can issue up to 20,000 titles a year, which means around €150 million in revenues for the government.

Cyprus developer Alpha Panareti named in MEP question

DEREK Roland Clark, MEP for East Midlands region has raised a question in the European Parliament concerning a complaint alleging misrepresentation and fraudulent dealings relating to property in Cyprus.

Question for written answer E-001031/2011
to the Commission
Rule 117
Derek Roland Clark (EFD)
 

Subject:       Properties in Cyprus

I have received a complaint about alleged misrepresentation and fraudulent dealings concerning new properties on Cyprus. A constituent of mine stands to lose very significant amounts of money and he quotes the dealings of an agent, Alpha Panareti, and a major Greek and Cypriot bank, Alpha Bank.

It would seem that other people are involved in this affair and are losing money. I wish to enquire as to whether this matter is known to the Commission and, if so, whether any action is being taken.

Further reading

Properties in Cyprus written question to European Commission E-001031/2011

Recourse and redress for citizens defrauded by property investment schemes in other Member States written question to European Commission E-002885/2011

Property problems in Cyprus: Alpha Panareti written question to European Commission E-003397/2011

About Derek Roland Clark

Derek Roland Clark is a British politician and Member of the European Parliament for the East Midlands region. He is a member of the United Kingdom Independence Party, first elected in 2004, and subsequently re-elected in 2009.

He is a retired science teacher.