Number 10 replies to Cyprus petitioners

Nigel Howarth
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EARLIER today, those who added their names to the Number 10 e-petition urging Gordon Brown to put pressure on the Cyprus Government to protect property rights received a reply from the UK Government.

The petition

“We the undersigned petition the Prime Minister to exert pressure on the Government of Cyprus to protect property rights in Cyprus in compliance with Article 17 of the EU Charter of Fundamental Rights.”

“Cyprus is mis-described as having a property registration and ownership system based on the British Legal System. In fact it’s based on archaic Turkish law which allows the removal of property ownership rights from both Cyrus and foreign nationals. It works like this: The developer builds a property, sells it, is paid in full and releases the property without providing final title deeds. They are only issued by the local authority if the developer applies for completion and has met all of the planning requirements for the project. Until they are issued the developer can use the land as collateral for further loans! The Cyprus Land Registry figures show there are 29,949 transfers of Title Deeds to foreigners still pending and are only being issued at the rate of 1,600 a year! Lots of UK citizens, many of whom are ex-service personnel and pensioners, are at risk of losing their home if a developer goes bust, or simply chooses not to repay loans on the building land! It is unjust!”

The UK Government’s response

Thank you for your e-petition.

The Government sympathises with the problems being experienced by property owners in Cyprus.

This issue affects both Cypriots and foreign nationals living in Cyprus, and the Foreign & Commonwealth Office highlights it in its Travel Advice (www.fco.gov.uk).

We have also made a number of representations to the Cypriot authorities to make clear our concerns and have been assured that the Cyprus government will introduce legislation to speed up the issuing of title deeds, although unfortunately, this legislation may only apply to future cases.

Our High Commission in Cyprus will remain engaged in supporting British citizens on this issue and will continue to meet regularly with action groups formed by British nationals such as the Cypriot Property Action Group.

Minister boldly goes where no-one has gone before

Editorial
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THE NEW legislation aimed at speeding up the issuing of Title Deeds with the ultimate aim of a clearing a backlog of 100,000 is an ambitious project that will not necessarily be successful. At least the Cyprus Interior Minister, Neoclis Sylikiotis, is prepared to have a go at it, in stark contrast to the Ministers of previous governments who refused to touch it.

The prevailing view was that it was preferable to pretend the problem did not exist, as everybody appeared to be happy with the situation. Buyers did not have to pay the transfer tax (eight per cent on the value of the property if it was worth more than €170,000) or the final instalment to the buyer for the issuing of the Title Deed. In a way, the system suited many buyers, especially if they intended to live in the property.

Some deputies took up the issue however, a couple of years ago, and tried to come up with some legal arrangement that would open the way for the issuing of Title Deeds. Nothing came of the initiative because this was a complex issue that required the involvement of several departments and the drafting of detailed regulations. There had to be regulations for dealing with violations of building permits and the issuing of final approvals by the Town Planning Department, without which approvals no Deed could be issued.

All these matters would be tackled by the proposed legislation drafted by the Interior Ministry, assuming that it is approved by the House of Representatives. It would open the way for many property owners to secure Title Deeds. An owner of a flat penalised for building violations by the developer, or other owners in the same block, would be able to have a Title Deed issued for his property. Someone who has violated his building permit would pay a fine and final approval would be issued by the authorities.

It is ironic that these measures would not be much help to the foreign property buyers who had campaigned for action. The Title Deeds of many foreign buyers are held by the banks as security for loans given to developers and there is nothing the government could do about this as this is considered a private contractual difference between the buyer and developer that could only be settled in court.

Sylikiotis said that he hoped the backlog of 20,000 cases at the Land Surveys Department would be wiped out by the middle of next year, thus clearing the way for the issuing of more Title Deeds. This urgency has been dictated by the poor state of Cyprus’ public finances and the government’s desperate need for funds. Whether it will be successful remains to be seen. The Ministry has done all it could, but there is a suspicion that only people who were planning to sell their property would be prepared to pay the transfer taxes and possible fines to have a Title Deed issued. The rest might not be in a big hurry to get their Title Deeds.

Copyright © Cyprus Mail 2009

Less than one in five has Title Deeds

Nigel Howarth
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A RECENT mini-poll conducted on-line by the Cyprus Property News revealed that less than one in five (17%) of those who have bought property on the island have their Title Deeds, while more than four out of five (83%) are still waiting to have their Deeds issued.

Title Deed Survey - Results
Title Deed Survey - Results

The reasons for the problems in obtaining Title Deeds are well known:

  • Developers mortgage the land on which they are building to help fund their development projects. This mortgage results in a claim being lodged at the Land Registry that effectively prevents Title Deeds for properties built on mortgaged land to be issued until the debt has been cleared.
  • Developers dragging their feet by delaying the completion of construction projects and their tardiness in submitting paperwork to the authorities that would enable them to progress the issue of Title Deeds.
  • Bureaucratic inefficiencies and delays in central government departments, such as the Land Registry, and local government planning departments.
  • Infringements of planning law and regulations due to:
  • Developers building illegally, without securing the required permissions and permits before starting construction work.
  • Developers deviating from the plans approved by the authorities and for which permissions and permits have been issued. For example, by changing the design/layout of their developments, exceeding height restrictions and by building more properties than those approved by the planning authorities.
  • Those who have bought properties adding a garage, a swimming pool, enclosing balconies, and making other changes to the property without securing the required permissions and permits.

Such infringements of the law and planning regulations prevent Title Deeds being issued for the properties concerned until the matter has been resolved with the authorities.

Readers will be aware that the Minister of the Interior, Mr Neoclis Sylikiotis, is planning a building amnesty allowing certain infringements of planning law and regulations to be authorised – on payment of a fine by the transgressor.

For the latest poll to discover how long buyers have been waiting for their Title Deeds, go to the Cyprus Property Magazine and check out the ‘Have Your Say’ poll in the right hand column.

Paphos timeshare touts get violent

Bejay Browne
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TIMESHARE touts in Paphos are being forced to defend their reputation after a number of reported instances involving violence towards the general public.

“I told this chap I wasn’t interested in buying timeshare in Paphos, but he wouldn’t leave me alone,” one man told the Sunday Mail. “He pushed me from behind so that I tripped up. I’m retired and the whole experience was very frightening.”

Timeshare or holiday ownership can either mean a form of part “ownership” of a property or the legal right to use a particular property, depending on the terms dictated in the contract. Most touts approach holidaymakers and use lottery cards – on which everyone is a winner – to entice people. They then take them to a specified place to collect their so-called ‘prize’ and get them involved in the property presentations.

Established holiday ownership companies in Paphos include Karoushi, Leptos and Panareti, but they don’t necessarily use touts on the street. Leptos, for example, sell their holiday ownership internally.

One woman who wished to remain anonymous contacted the newspaper on behalf of her friends who were recently assaulted by a Paphos tout.

“Two of my friends, who are both pensioners in their sixties, were visiting the island for the first time recently. In their last week they were approached by a timeshare tout,” she said. “They clearly indicated they were not interested, but the tout insisted on pestering them again. He was British.

“He followed them across the road and assaulted one of my friends by kicking him from behind twice and the tout took a swipe at him knocking his glasses off.”

The victim and his wife went to Paphos police, who were “extremely helpful” and drove them around to try and identify their assailant. But the man was not to be found.

“This is a disgraceful memory for them to take home. They are spoiling it for everyone.”

Aggressive timeshare touts were recently reported to be hassling guests inside top-class hotels along the Paphos seafront in a desperate attempt to drum up new business.

“We’ve had numerous complaints from hotel guests and visitors to Paphos who said they would never come back,” said Nassos Hadjigeorgiou, the tourist manager of the Paphos regional board of tourism recently.

One Paphos tout, Peter (not his real name) told the Sunday Mail: “I know a few people who will do whatever it takes, as we have targets to meet. I wouldn’t ever be violent; for one I don’t agree with strong-arm tactics, and also it’s not going to get people to go to the presentations, is it?”

Peter admits to having seen guys “getting a bit verbal before“, but has never witnessed actual violence.

“If these stories of old people being assaulted are true, I think it stinks,” he said.”It’s just going to make the job harder for the rest of us, and we all have to earn a living. I think if there are reps on the streets behaving that way, they should be forced to go home.”

Brendan Surgenor, CEO of a Paphos-based company, CALSK investments, specialising in holiday ownership said: “It’s disgusting that occurrences such as these happen, and then we all get lumped in together.”

Surgenor has a 20-year history in the timeshare industry, including in Greece, and has been operating in Paphos for four years as the CEO of a company involved in holiday ownership

“My OPCs – off property canvassers – all wear CALSK t-shirts and badges to identify them,” he said. “I believe that this is as it should be. The operatives shouldn’t have anything to hide and must behave in a proper fashion.”

Surgenor believes ‘timeshare’ to be an outdated term, and now refers to the practice as holiday ownership.

Countries such as Spain, the Canary Islands and Malta are policed and controlled, and Surgenor believes this approach is more professional.

“To be honest, I sacked a couple of my operators earlier in the year because they didn’t meet my standards. I don’t tolerate any of them to be aggressive, and most have more than a decade in this line of work, so they are experienced in dealing with the public.”

Surgenor pointed out that if would-be touts appear reluctant to wear an identity badge, it would lead him to believe they may have something to hide.

“I’m trying to clean up our image, and as we take one step forwards, terrible incidents such as these see us take six steps back.”

Surgenor says he wants to try and ‘police the trade, in any way I can’ and emphasised that there is now an agreement in place between most of the holiday ownership companies in Paphos, which sees bad operators put on the plane home, never to work on the island again.

A spokesman for the Cyprus police said that all cases of assault are taken very seriously, adding that,”we will get rid of these people from Paphos. They are causing many problems, and some of them have been very aggressive in the past. It ‘s giving Paphos a bad reputation with the visitors, and these touts must remember they are not above the law.”

Some officials have complained that there was a problem of inadequate numbers of police officers available in Paphos to help stamp out touting.

Copyright © Cyprus Mail 2009

Has McCarthyism come to Cyprus?

Nigel Howarth
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I WAS pleased to read that the Interior Minister, Neoclis Sylikiotis, plans sweeping changes to property law to help put an end to the Title Deed fiasco. But the Minister is deluding himself if he thinks there is some sort of conspiracy going on between the “malevolent” foreign press and those with ‘ulterior motives’.

The Government of Cyprus, quite rightly, warns people about buying Greek Cypriot owned property in areas of the island under Turkish occupation.

But as soon as someone mentions there are problems associated with buying property in the free areas, it’s all a conspiracy by those with ‘ulterior motives’ to divert attention from what’s happening in the north or to help Cyprus’ competitors in the overseas property market.

Has McCarthyism come to Cyprus? Does the Minister truly believe there are ‘Reds under the beds’ in his own back yard trying to destroy the island’s economy?

How can reporting the truth be malevolent? If you were deceived and misled by a crooked company, wouldn’t you warn others to prevent them falling into the same trap?

The Minister’s statement “property investment is much safer in Cyprus than anywhere else” simply isn’t true!

For more than 10 years I’ve been helping people avoid and overcome the many problems when buying property. I know of many who have lost literally hundreds of thousands of pounds as a result of the conmen operating in the property industry and legal profession. Others have suffered nervous breakdowns, strokes and other health problems. Stressful situations have caused marriages to break-up and lives to be destroyed. The Minister’s statement “property investment is much safer in Cyprus than anywhere else” simply isn’t true!

The Cyprus government has known about the problems and the efforts of those who have been mislead and defrauded for some considerable time.

At the end of 2007, and at the request of the then Minister of Finance Dr Michalis Sarris, the Cyprus Property Action Group (CPAG) prepared a report for the Cyprus government. Entitled “Cyprus Property Pitfalls – a Time for Action“, it detailed the problems faced by Cypriot and non-Cypriot property buyers together with suggestions on how those problems could be resolved.

After their meeting with Dr Sarris, CPAG were confident that the Cyprus Government would be willing to discuss the issues and work towards resolving them.

However, more than 18 months have now passed since the report was delivered and the current Government hasn’t even shown the common courtesy of acknowledging receipt of the report, let alone shown any willingness to discuss the problems. Subsequent letters appealing to President Christofias have also gone unanswered.

If you approached the Government for help and were met by a wall of silence, wouldn’t you start canvassing the local and foreign media, foreign governments and the European Union for their help and support?

With the support of the many property buyers who have contacted them, this is precisely what CPAG has done. It seems that the only way to get things done in Cyprus is to name and shame – or block the highways with tractors and lorries.

More than eighteen months ago, the CPAG report presented to government concluded:

“The future of the Cyprus property industry has reached a crossroads. Unless the authorities act quickly to remedy the situation, the damage caused to Cyprus’ good name and reputation could have far-reaching consequences. At the very least, the financial repercussions resulting from the drop in foreign revenues from property sales, and tourism, could be catastrophic for the island’s economy.”

Regrettably, the honest property developers are suffering the ill effects as is the Cyprus economy.

But still those honest developers and the government continue to do nothing about the rogues and conmen who plague the property industry and who tarnish Cyprus’ good name and reputation.

Cyprus law reforms are not a cure-all

Charles Charalambous
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ALTHOUGH the property industry has welcomed the radical reform of the whole system for approving and registering built property and issuing title deeds, questions remained yesterday as to how many individual title deeds will not be issued because of a developer’s inability to pay off mortgages on the land.

“A market that is slow and illiquid will not be improved by legislation. It needs a solution to the fact that there are developers who are over-extended and banks that are over-exposed,” a senior banking source told the Cyprus Mail yesterday.

“There are good developers, who haven’t bought expensive land over the last two years and have limited their borrowing to what they can service. On the other hand, there are those who have bought land expensively, have borrowed too big a proportion of their funding needs, are less professional and can’t complete their current projects. There is no legislation which can solve that problem“, the source said. “We have been prudent in our lending, but some banks have not“, he added.

Savvas Georgiades, Aristo Developers’ Finance & Operations Director, said: “Generally, we welcome the proposed legislation as a positive step forward“, adding: “We believe that a simplification of the whole process will help enormously.”

On the question of outstanding mortgages, Georgiades said: “We have always made proper provision for paying our obligations out of sufficient operating capital. I don’t know which other developers might have over-extended themselves, but certainly there will be a problem for some to pay off their debts, given the slowdown in the market.”

He said as members of the Land Developers Association, Aristo did not think there was a large problem.

“We like to think that some 90 per cent of titles are being blocked by bureaucracy rather than a developer’s inability to repay mortgages“, he said. “Unfortunately, there are companies which have not been financially responsible, and have left some buyers exposed.”

Georgiades said the system in Cyprus “is not fundamentally bad. It just needs updating. The sudden expansion of the market over the last ten years or so has meant that the system did not keep up, which has resulted in today’s problems,” he said.

There are currently around 130,000 units (houses, flats, hotels) without title deeds, while only 20,000 applications for title deeds have reached the Land Registry. This represents a lot of uncollected revenue for the state in terms of tax and duty on transfers and other costs.

Finance Minister Charilaos Stavrakis said last week that the state collected a total of €700m in revenues from property sales in 2008, while the forecast for 2009 was less than half that amount.

Sylikiotis has outlined a number of legal proposals designed, among other things, to tackle the problem of property-buyers who cannot sell because they do not have the title deed.

The new proposals include the introduction of a completely new system for issuing title deeds which will be divided into three categories, as well as penalties for developers who for their own reasons delay applications for title deeds.

The current drafts of the legislation provide for the relevant government departments to move the process forward on their own authority. They will also be able to impose fines in cases where owners cannot show good reason for failing to meet their obligations, thereby preventing the issuing of title deeds in the name of buyers who have met all their obligations.

Asked to what extent the new legislation would protect a property owner from being pursued by a bank for non-payment by a developer of a mortgage Land Registry Head Andreas Christodoulou said that this would be a private legal matter.

“The law or the state cannot force developers to pay off their mortgages. In a situation where a house-owner is being pursued by a bank for non-payment of a mortgage on land, it’s up to the house-owner to go to court“, he said.

Christodoulou did not underestimate the scale of the task: “There will be difficulties and problems, but we will gradually solve them. Before we took this initiative, no developer was approaching us to solve the title deeds problem. Now, we are in contact with 25,000 developers and are tackling the problem.”

One of the proposals is to create a three-tier system of title deeds, though ministry officials acknowledge they are not certain whether the system will pass legal scrutiny.

The first type of deed will be a “complete” title deed, of the kind currently being issued. The second type, referred to as an “incomplete” title deed, will be issued with an appendix noting any unauthorised minor extensions or modifications that go beyond the issued permit, or in cases where it is not possible to identify the property boundaries for which a single unit of the whole project has exclusive rights.

The obligation to correct these “exceptions” would be determined on a case by case basis, working on the principle that whoever is to blame for the exception will have to correct it.

Town-planning Head Christos Ktorides said that owners of properties with an “incomplete” title deed will still be able to mortgage or sell them. Christodoulou also said that the Attorney General has been asked to clarify what happens to the obligation to correct any exceptions in the case of a property being sold before they are corrected.

The third type is being called the “limited” title deed, which will also have an appendix recording substantial unauthorised changes or extensions. Owners of property with this third type of deed will not be able to sell or mortgage their property, but Christodoulou said that the new legislation aims to ensure at least that “there is no danger of anyone losing their property“.

On the plus side, the proposed legislation offers more scope for differentiation. Ktorides said that if for example two units out of an 80-unit development only qualify for a “limited” title deed, henceforward the other 78 units will not be burdened by this non-compliance.

Copyright © Cyprus Mail 2009

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