Weak recovery in overseas property sales

Nigel Howarth
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7

ACCORDING to figures released by the Department of Lands and Surveys, 127 contracts of sale in favour of overseas buyers were deposited at Land Registries throughout Cyprus during August compared to the 167 deposited during July 2010 and 93 in August 2009.

Foreign demand for property over the first eight months of the year has been ‘disappointing’ with 1,222 properties being sold compared to the 1,190 sold during the first eight months of last year. This increase of 2.7% is very small considering last year’s exceptionally low sales figures. Some pundits hoped for a recovery in sales during the summer months, but these have been dashed.

The largest increase in sales to non-Cypriot buyers has been in Nicosia, where sales have risen by almost 55%. But Nicosia has been an exception with the once popular seaside towns showing smaller increases and falls in property sales.

Sales of property in Cyprus to overseas buyers
Source: Department of Lands and Surveys

Chairman of the Estate Agents Association of Cyprus, Solomon Kourouklides, said “The negative economic condition in the United Kingdom, Cyprus’ main market, does not allow the purchase of properties by the British, while the drop in the property prices in the UK contributes negatively too”.

According to Mr Kourouklides, the figures stress the need to find new markets for Cyprus apart from the UK and Russia, such as China, the Arabic countries and Iran.

British buyers

Once a destination of choice for British overseas home buyers, Cyprus has fallen from grace as overseas property investors have virtually deserted the island in search of safer places to invest their money.

Mr Kourouklides blames the fall in British buyers on the economic situation in the UK and the fall in UK property prices. But he fails to mention the Title Deed fiasco, developers abusing the island’s antiquated property laws, the ludicrously high mortgage interest rates in Cyprus, and the Island’s tarnished reputation amongst the overseas property buying community.

Furthermore, the case of Ken and Mary Hudson reported a few days ago casts serious doubts on Interior Minister Neoclis Sylikiotis’ statement on Title Deeds last year in which he reported that “the property market in Cyprus is stable and secure”.

Is it any wonder that the Brits are looking elsewhere?

Property sales slump to new low

Nigel Howarth
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6

PROPERTY sales in Cyprus slumped to a record low during August to a level last seen in early 2009, increasing fears that the recovery in the market seen throughout the first half of the year was short-lived.

For a second consecutive month, property sales have fallen even though prices have been dropping. Property developers and estate agents are concerned over the fall and some predict a further deterioration in the market.

According to the latest figures from the Department of Lands and Surveys, the number of property sale contracts deposited at Land Registries throughout Cyprus during August was 554 compared to the 797 deposited during July 2010 and the 642 in August 2009.

The annual drop in sales during August was 14%; 2% lower than the 12% fall in July.

Cyprus property sales 2008,2009, 2010 comparision chart
Source: Department of Lands and Surveys

With the exception of Famagusta, sales fell in all areas. The largest fall (43%) was in Larnaca where sales fell from 135 in August 2009 to just 77. In Nicosia, sales fell by nearly 18% from 173 to 142. In Limassol they fell by 2% and in Paphos by 1.6%.

Although sales have increased by 12% this year, from 5,135 during the first eight months of 2009 to 5,759 during the same period in 2010, some in the industry believe that the slowdown in July and August is ominous.

Worse days to come

According to Stockwatch, most real estate agents are pessimistic for the course of the market, while others believe that it will stabilize.

According to the Chairman of the Pancyprian Association of Real Estate Agents, Solomon Kourouklides, the Land Registry figures confirm their initial forecasts. “The increase in the first months of the year was a coincidence due to the sharp increase in offers. Now the market goes down since we have run out of offers”, he added.

“Last year’s high basis contributed significantly to the August decline”, Business Development Director of Aristo Developers, Iros Miltiadous stressed.

“The market should have shown an increase. We expect to see the course of the market in the next few months”, former District Land Registry officer and real estate agent with Danos & Partners, Panayiotis Argyrou said.

“The figures show stabilization in all cities but Larnaca, where the decline is alarming since there is no reason explaining it”, real estate agent, Antonis Loizou said.

“In the next few months, things will deteriorate further since the economic parameters do not get better. On the one hand, the interest rates are kept high and on the other the cost of living increases. The failure to take a political decision for economic measure contributes negatively too”, Mr. Kourouklides said.

“Until 2011, the property market will go through difficult days”, Chairman of the Pancyprian Association of Land Developers, Lakis Tofarides noted.

“2010 is a difficult year despite the drop in prices”, Mr. Loizou emphasized.

Reprieve for couple in danger of losing their home

Patrick Dewhurst
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15

TWO RETIRED charity workers who faced eviction at the weekend have won a reprieve after nobody turned up to the repossessions auction of their home on Sunday.

Ken and Mary Hudson, both 72, were on the brink of homelessness because the former owner had sold them the flat in Larnaca while he had an outstanding mortgage, which meant the bank retained the Title Deeds.

When the former owner, who formerly ran a kiosk in Larnaca, stopped making payments the bank informed the Hudsons their home would be repossessed.

Had a buyer arrived at Sunday’s auction, the Hudsons would either have been evicted or be forced to reach an agreement with the new owner – despite paying £24,000 Cypriot pounds (€41,200) eight years ago, and being informed by a notary that the property was theirs.

Mary Hudson said yesterday, “We went up to the cafe where the auction was being held – It was full of men playing cards and smoking under the no-smoking signs. We waited for about half an hour but no one turned up.”

After about an hour, Mary said, the auctioneer informed them that he would write a report to say there were no bidders, which would be sent to the bank.

“For now we are safe at home, but nothing has changed legally.”

The no-show means the Hudsons are in legal limbo, with the prospect of eviction with the sale the property looming. However, in practice, this process could now take up to two years, while the case waits to be re-examined. “The auctioneer said it might be a couple of years before the bank looks at it again.”

Asked about their next steps, Mary said that they would write to the Interior Ministry, requesting that they change the law to allow banks to retrieve money from the mortgage payers, rather than from sale of the property to a new owner.

“People have tried to change the law before. If the government did (change the law) it would make a huge difference. It could revolutionise the whole (property) thing.”

Before they do anything else, however, the Hudsons will take a holiday in the mountains to rest after the ordeal.

“We’re going to stay in a friend’s house in the mountains and sleep I think.”

Title Deed mess leaves couple homeless

Patrick Dewhurst
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7
Ken and Mary Hudson
Ken and Mary Hudson (Photo: Cyprus Mail)

YET ANOTHER case of Title Deed misery and unscrupulous property dealers will conclude today, as a retired expatriate couple’s home goes up for auction in Larnaca.

Ken and Mary Hudson, both 72, will now face eviction from and repossession of a flat they bought in 2002, after the former owner failed to meet ongoing mortgage payments and the bank, which kept the Title Deeds, recently ordered repossession.

The Hudsons first came to Cyprus for a holiday in 2000 and “fell in love with the people, culture and community” here. When the opportunity to work for a charity in Cyprus came up in 2002, they returned and bought a flat in Larnaca, where they hoped to spend their retirement.

Mary Hudson said yesterday “A suitable property was found through an estate agent, registered in our name and paid for. We were told that solicitors were not necessary in Cyprus.”

They paid £24,000 Cypriot pounds (€41,200) for the flat, and even received paperwork from a notary to confirm their ownership.

However, shortly after they completed the purchase, they learnt that the bank had retained the Title Deeds because the owner had not completed mortgage payments for the property. Until the payments were completed, the Hudsons could not receive the Title Deeds.

“We were a bit naive I guess, but we were assured that this was not a problem in Cyprus as repossessions were rare, and that it everything would be paid off,” said Mary.

The former owner did not complete the repayments, and so two weeks ago, on August 21, the bank informed the couple their home would be put up for auction today. They immediately hired a solicitor, but under Cypriot law the couple has no claim on the deeds and despite sympathising with the couple, the courts decided the bank could go ahead with the auction.

“We must now find somewhere else to live, as we have no home and feel robbed and let down by a system. It appears to be unjust by making a totally innocent law abiding couple of self supporting pensioners homeless.”

In the meantime, they say, the owner has continued to live in another property that he owns, with no legal obligation to refund the couple.

Asked if they planned to take further legal action against the former owner, Mary said: “No, we don’t have the money to fight a legal battle, and besides, we are both 72 and I have no faith or trust in the democratic departments of the justice system or banks. We’re disgusted.”

Asked about their feelings towards the former owner, she said “He’s a crook, but a Cypriot crook and he’s obviously played the system. We trust in God and we know that in the end evil people don’t profit. As for me, I am not sure if I want to stay in such a corrupt place.”

Cyprus Title Deed mess

Developer to sue over fraud reports

Editorial
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1

K & M FAMAGUSTA Developers Ltd and its director Kypros Kyprianou filed a suit on Thursday against Phileleftheros demanding over €2 million for “written slander and or libel and or damaging lies” for one particular report entitled “Famagusta in Court.”

Famagusta Developers said it reserved its rights to file similar lawsuits against the paper for older reports “while they are determined to take all the necessary measures to safeguard the company’s interests and status.”

In August, police announced the company was under investigation in connection with eight complaints filed against it since 2007 – seven in Famagusta and one in Larnaca.The cases mainly concern alleged forgery, obtaining money and property under false pretences and usurping property belonging to another person.

Police at the time said four of the cases are on their way to court, two are under investigation and two others will not be brought to court on the instructions of the Attorney-general’s office.

Europe rejects call for Cyprus fact-finding mission

Nigel Howarth
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21

In her reply to a call for the European Commission to send a fact-finding mission to Cyprus to investigate the Title Deed problems, Commission Vice-President Mrs Viviane Reding has rejected MEP Daniel Hannan’s request saying that “the Commission has no powers to intervene in this matter”:

Viviane Reding
European Commission Vice-President Viviane Reding

The Commission is aware of the difficulties faced by buyers of immovable property in Cyprus in relation to developer mortgages and withheld title deeds. Under the Treaty on European Union and the Treaty on the Functioning of the European Union, the Commission can only intervene if an issue of European Union law is involved.

As explained in the answer to Written Questions E?6513/08, E?6793/08 and E?0110/09 given by Commissioner McCreevy, the Commission contacted the Cypriot authorities in 2009 asking for detailed information on the situation. Based on the analysis of the reply received, the Commission concluded that the matter falls outside Union law as it concerns the establishment and application of the legal framework governing the acquisition and transfer of immovable properties in Cyprus covered by Article 345 TFEU (Treaty on the Functioning of the European Union).

Since the provisions of the TFEU shall in no way prejudice the rules governing the system of property ownership in a Member State, the Commission has no powers to intervene in this matter. For this reason, the Commission is not in a position to organise a fact-finding mission. The Commission believes that the questions raised by the Honourable Member should be addressed to the competent national authorities in Cyprus.

The draft legislation which is said to address and regulate the issue of title deeds is still under negotiation in the Cypriot Parliament.

The Commission trusts that the Cypriot authorities will adopt legislation on this specific matter in conformity with their international obligations, and in particular, the European Convention of Human Rights.

Further reading: Answer to a written question – Cypriot title deeds legislation – E-4116/2010

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