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Misrepresented property and conflicts of interest

Nigel Howarth
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YOU may have read my interview with Kate in the Cyprus property protesters take to the streets article. Kate and her husband were visiting Cyprus to see what progress was being made on their holiday apartment in Peyia and I met them both at the protest meeting.

During the interview, Kate told me that “MRI introduced us to a lawyer in Paphos who they said was very good. But the latest plans we have seen for our apartment are completely different to what we agreed to buy and it’s much smaller. I spoke with her (the lawyer) and said that we wanted our money back. She just shrugged her shoulders and said ‘this is Cyprus and that is not possible’. I’ve now been told by someone here this morning that she’s the developer’s girlfriend. How can she be acting on our behalf?”

Since publishing  that article, many people in a similar situation have contacted me seeking information and advice on what to do.

Changing lawyers

If you are faced with a similar situation, my first piece of advice is to change your lawyer.

It goes without saying that a lawyer who is the girlfriend of the developer has a conflict of interest! This appears to be in breach of section 21 of the Cyprus Bar Association’s ‘Code of Conduct Regulations‘ and section 3.2 of the ‘Code of Conduct for European lawyers‘. So in addition to changing your lawyer I recommend that you write a letter of complaint to the Cyprus Bar Association; contact details and the procedure for submitting a complaint may be found on their website.

If you wish to change your lawyer you must first settle your account and conclude all business with your existing lawyer before approaching another. According to the regulations, a lawyer must not advise the client of another lawyer without that lawyer having given their written consent. Clearly, if you have concluded your business with one lawyer they cannot complain to the Bar Association if you seek advice from another.

Lawyers do not like losing their clients and I believe that some of them have been known to make verbal promises to their clients to discourage them from leaving; it seems that such promises are often conveniently ‘forgotten’ at a later date. I advise you to ensure that any ‘promises’ made to you by any lawyer are confirmed in writing and signed by the lawyer concerned.

Another problem you may face when changing your lawyer is that your present lawyer may try and charge you to release your file. In this situation you should write a letter of complaint to the Cyprus Bar Association.

Finding independent lawyers

The British High Commission in Nicosia has published a list of English speaking lawyers who may be able to offer advice. You can view and download that list of lawyers by clicking here.

Property sizes

The second piece of advice is to check the size of the property.

Approved plans for all developments and properties being built in your area should be available at local Municipal offices for your inspection. (In a recent report the ombudswoman, Iliana Nicolaou, said that Municipalities that refuse to disclose information about planned development projects to interested citizens are breaking the law).

As we know, some developers start construction work before their plans have been approved and the required building permits have been issued. Faced with this situation, you’ll need to visit the construction site and take measurements of the property.

Kate’s apartment was much smaller than her and her husband had been lead to believe. Small variations of 1% or 2% in the quoted sizes of properties are inevitable. However, differences of 24% or 30% can hardly be considered ‘small variations’.

According to the Cyprus Law CAP 224, section 38H

The area of a unit consists of the covered area surrounded by the outer walls of the unit and the covered and uncovered verandas and the covered and uncovered balconies of the unit are included therein. Where common walls exist between units or between a unit and a jointly owned property, the area of the walls must be distributed equally among the units.

If you consider that a property you have bought has been misrepresented regarding its size, I recommend that you seek independent legal advice on how to proceed.

If you wish further information or advice on this matter may contact me by clicking on the blue and white envelope button below this article.

Finally, I urge anyone who is thinking of buying property to read and take heed of the British Foreign & Commonwealth Office advice on purchasing property in Cyprus.

Cyprus tourism and property to get state aid

Nigel Howarth
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FOLLOWING an extraordinary session of the Council of Ministers, President Demetris Christofias announced new measures to boost the Cyprus economy. At an estimated cost of 300 million Euro, the measures are targeted at helping the ailing property construction and tourism sectors.

To assist the construction industry President Christofias announced a number of measures. These include a new loan plan for low and middle income families (see Low cost property developments in Cyprus), the building of new refugee estates, projects for social care and the construction and repair of school buildings. The cost of these measures will be around 245 million Euro.

To help the tourist industry, the President announced measures totalling 51 million Euro. These include the abolition of the overnight stay fees that hoteliers pay to the local authorities, the lowering of aircraft landing charges, a reduction in the rate of VAT from 8% to 5% for overnight hotel accommodation and the implementation of a plan designed to strengthen local tourism.

Northern Cyprus property exhibitors banned

David Crowther
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DESPITE rumours circulating the industry, the new licence holder of the A Place in the Sun Live exhibition, APITS Ltd, has told Overseas Property Professional (OPP) that Northern Cypriot exhibitors would remain banned from exhibiting at the show.

“We have a duty of care to our visitors and until there is some clarification in this part of the world, Northern Cypriot exhibitors will not be permitted to attend,” said APITS MD Andy Bridge. “We are taking this view at an informed level from the Association of International Property Professionals (AIPP) and there will be no further decision made from APITS until the outcome of the Orams case and even then it will only be inline with the wider legal view.”

Southern Cypriot developer and APITSL exhibitor Aristo welcomed APITS decision and said it would only boycott the event if a decision to allow North Cypriot exhibitors in the future wasn’t properly communicated.

“If we were to book in any APITSL show knowing that there would be no company from the Northern occupied area of Cyprus taking part, and then we saw companies from the occupied area at the show, we would express our displeasure to the organizers and inform them that this would be the last time that we would take part in their shows,” said Antonis Pisharas, overseas marketing manager for Aristo. “Since 82% of land in Northern Cyprus belongs to Greek-Cypriots, it is obvious that these so called estate agents and property developers from the North will try to sell properties which are build illegally on Greek-Cypriot land. For this reason we believe that the expo organizers should not allow these people to participate at their shows.”

Nowhere to exhibit

Since the short-term departure from the UK exhibition scene of the Property Investor Show, Northern Cypriot property professionals have been left with no major show to exhibit at in the UK until its Autumn expo in September – which is believed to be going ahead.

“This is compounded further at the moment as the poor Pound – Euro exchange rate is keeping Northern Cyprus attractive over other destinations in Europe at the moment,” said Jamie Lester, MD of agency North Cyprus International. “APITS are not giving the public what it wants. Homebuyer said that it was a commercial entity and did not involve itself in the politics of the exhibitors. Also, the hall at APITSL is definitely not squeaky clean. There are many companies from other destinations in the wider industry that have been involved in scandals, yet North Cyprus continues to be excluded. This is a big blow for the TRNC.”

Bridge added that the general point of view in the industry was against allowing TRNC exhibitors and reaffirmed that it would not be seeking to make a commercial gain from the temporary withdrawal of Homebuyer Events.

“There will be an impact on Northern Cypriot companies, but nothing has changed,” he said. “The general industry perspective is that there is some liability and we would be lacking in our duty of care to our visitors if we accepted TRNC companies. It is true that you can’t vet everyone in an exhibition hall, and clearly we are a commercial operation which wants to make as much money as it can, but APITSL is a high-profile consumer brand and we would not want to jeopardise this, or ignore the responsibility that comes with this association.”

The next APITSL event will be held at Earls Court Exhibition Centre and will run from April 3rd – 5th 2009, and the autumn 2009 event will be at NEC Birmingham from October 2nd – 4th 2009.

© www.opp.org.uk

Cyprus property companies on brink of bankruptcy

Bejay Browne
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Abandoned construction site near Paphos
Abandoned construction site near Paphos

DEVELOPERS and contractors from the Paphos area are in dire straits as a result of the recession, it has been reported. Many companies are on the brink of bankruptcy as hundreds of their properties are unsold and the banks are refusing to help them out with new loans. Some company bosses complained that they could not even cover basic running expenses, which would make lay-offs inevitable, sooner rather than later.

Businessmen, mayors, deputies and ministers from the Paphos area met on Saturday to discuss ways of applying pressure on the government to speed up planned projects for the area, as they felt the recession had already arrived.

The district should be allocated amounts that reflected its contribution to economic development rather than its population, the group said. It also wanted banks to abandon their tight credit policies and give loans to businesses and individuals, as at present nobody could buy or sell properties.

When companies are recording high profits, as contractors and developers had been doing in Paphos for the previous six or seven years, their owners are all committed to the free market. As soon as there is an economic slowdown and they are faced with the prospect of losses they decide that it is the state’s responsibility to help them out.

Admittedly there is a problem for many companies, but this has a lot to do with the irrational expansion of the last decade, when they were working on the absurd assumption that demand for holiday homes would keep rising. Even if there was no credit crunch, developers would at some stage face problems because of an excess supply of holiday homes. Development could not have continued indefinitely at the ridiculous rates of the past few years.

In this respect, banks are also to blame for not restricting credit facilities to developers. Now the banks’ main priority is to maintain their liquidity and to ensure that developers are making their loan repayments, rather than to give money for more construction. As for housing loans, even if the banks were offering them, it would be questionable if there would be any takers because people will be waiting for prices to fall.

The slashing of prices for holiday homes is the only way forward for Paphos. The way things are, developers’ only real option is to cut their losses by drastically cutting prices. A 20 to 30 per cent cut in the old prices, which were too high, could stimulate some interest from people and get the stagnant property market moving; at lower prices, the banks could also become more willing to offer housing loans to buyers.

This is the only way to get the property market moving again because the boom period of the past is over for good. No matter how many public projects are undertaken by the state in the Paphos area, these would make little difference to the stagnating property market.

Copyright © Cyprus Mail 2009

Low cost property developments in Cyprus

Alan Lawton
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THE general manager of the Cyprus Land Development Corporation, Stelios Markides, has said that the organisation is planning to build 500 additional low cost properties in Cyprus and to buy land from property developers during 2009 and 2010.

In statements made after the House Finance Committee, which examined the Organization’s budget for 2009, Mr. Markides said that 251 units will be delivered in late 2009. A further 2,000 applications for the purchase of land via the Corporation are still pending.

“The Corporation has been instructed by the government to hasten the procedures for the launch of new projects. The budget for 2009 provides for the construction of 287 housing units, while a new planning has been submitted with a new method“, he said.

Adding that “The Corporation has also reached the final stages for the purchase of 60 new housing units to a land that belongs to property development companies. The purchase price in which the Corporation is interested ranges from €1,200 to €1,300 per square metre“.

Mr. Markides said that the projects concern 80 – 100 units in Paphos, 150 in Nicosia municipality, 150 in Limassol and smaller numbers in Larnaca and Famagusta.

The regions are from Astromeritis to Dali for Nicosia, Erimi, Asomatos and Ayia Fyla in Limassol, Tsada, Anarita and Pegeia in Paphos, Liopetri, Xylofagou, Avgorou and Sotira in Famagusta and Aradippou, Larnaca and Meneou.

Referring to the income criteria, Mr. Markides talked about the proposal submitted to the Interior Ministry for the increase in income criteria, while an upward revision is also anticipated.

(Established in 1980, the Cyprus Land Development Corporation assists medium and low-income families to acquire their own home by dividing land and constructing dwellings that are offered for sale at reasonable prices and payment terms).

What about the Ayia Napa golf course and marina?

Editorial
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DO YOU have any information about the licence which was supposed to have been given for the construction of a golf course in the Paralimni area? This project has been continually delayed and many obstacles put in its path by both Governments.

After more than twenty years it seems that the Ayia Napa golf may finally be approved, but this has come too late to help many of the business here.  The hotels have been in trouble for many years and cannot fund the cost of building a golf course. And is there any news of the Marina promised for the Ayia Napa area?

Both the new and old governments have focused their attentions on the West coast of Cyprus, from infrastructure, to Golf Courses, Marinas, and the East coast has been left to struggle on.

Every year those of us in the Famagusta area are forced to close down our businesses because there is no business.  We sign on for Social benefits for 6 months and hope that next year will be better.  These benefits will be deducted from our pensions. The old people cannot live on today’s pensions so how will we in 20 years time?

The property market problems in the Famagusta area started to show themselves in mid January 2007, did anyone care to mention this?  The building trade started slowing down in May and came to a halt mid year 2008 no announcement was made – what about the 30,000 people living in the Famagusta area, are we non existent!

Where are the government spokesmen for the Red Soil Village people?

Do we not contribute to the economy what are the future plans for our existence?

Ms A S
Famagusta area

Editors reply

I can understand your frustration at the current situation – projects announced in Cyprus can take many years to materialise.

Ayia Napa marina

In September 2007 the local media reported that a consortium of private companies was planning to build a marina in the Louma area of Ayia Napa close to the Ayia Thekla church. The reports said that the marina was planned to have a capacity of 600 boats of which 360 will be on the water and 240 will be docked on the pier.

In the latest news on the project, reported last month in the Cyprus Mail, the cabinet was expected to approve a five-member steering committee to overlook the marina project.

Lefteris Christoforou of DISY was especially critical of the delays saying that “This unfavourable treatment of free Famagusta has been going on for years,” he said, calling on the government to finally speed up efforts to build the marina.

AKEL’s Stavros Evagorou agreed. “The construction of the Ayia Napa marina reminds me of the scenarios that took place with the airports, which took 17 years to materialise,” he said.

Golf courses

The government plans that a total of 14 golf courses will be built by 2010, including the three that are already in operation. Four courses will be built in the district of Limassol at Ayios Ambrosios, Paramali and Fassouri, two in Polis Chrysochous, two in Paphos and three in Ammochostos-Larnaca.

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