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Cyprus property association president on the record

Nigel Howarth
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EARLIER this week George Strovolides, president of the Cyprus Land & Property Owners Association (KSIA), was interviewed by Rosie Charalambous on CYBC Radio 2. With so many banks and builders in trouble, are we going to see such a slowdown in the construction sector that some of the mortgages held by banks will claimed if developers go under?

The Title Deed problem has been going on for many years, including a celebrated case of a developer in Limassol dating back to the 1970s – the buyers of those properties are still waiting for their Title Deeds. It has been estimated that as many as 100,000 people are affected by the problem.

Mr Strovolides said that lessons from the past have not been learnt. Something has got to be done now, “assuming that it’s not already too late“. If measures are not taken and there is a significant downturn in the market and developers find themselves in dire straights we are going to have “a very severe problem“.

Currently the law allows property developers to mortgage people’s homes to finance their next project. This creates a very dangerous situation if there is a downturn and property prices tumble.

Could people lose their homes?

Rosie asked “If the global downturn continues the way it’s going, inevitably there are going to be bankruptcies?”

“Yes, yes” replied Mr Strovolides. “And if we are talking about 100,000 outstanding cases, clearing the backlog is going to take a bit of time – and the question is do we have this time?” he added.

Rosie asked “Can you see the possibility that if one or to of the big developers do get into severe financial difficulties that people could lose their homes.”

“I am afraid it is possible” replied Mr Strovolides “This could happen.”

Problems with lawyers

Mr Strovolides went on to say “There is another problem with solicitors; in many cases there is a clear conflict of interest as these are solicitors suggested by the developers themselves. They cannot safeguard the rights of the buyer but rather they have an incentive to safeguard the rights of the developer which is completely wrong.”

“We are starting a round of meetings with developers, with the Bar Association to push them to put their houses in order. This is what has to be done“.

Planning amnesties – are they enough?

On the subject of planning amnesties Mr Strovolides said “The Interior Ministry did try to have a (planning) amnesty some years ago, but it didn’t quite work.”

Adding that another amnesty would help some “but that is not enough. I’m afraid we have to hit the problem on all fronts to ensure that the impact of the financial crisis is not catastrophic.”

Is there any hope?

Rosie asked “Do you really hold out hope – it has been a problem for 38 years or more?”

Mr Strovolides replied “You have to keep up the pressure. Once it’s clear that everybody involved wants to do something about it, it will be for the benefit of Cyprus“.

What about ‘the system’?

“Unfortunately, the system is such that we have created the opportunities for the fraudsters to do their thing – because of the relaxed attitude in handling this issue.” Mr Strovolides said, adding “but hopefully things will be different“.

Click here to listen to the whole of the interview between George Strovolides and Rosie Charalambous.

Cyprus property owners association calls for action

David Crowther
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THE Cyprus Association of Property Owners (KSIA) has added its voice to those calling on Government to resolve the Title Deed problems.

Speaking yesterday at the Annual General Meeting of KSIA its president, George Strovolides, said that the problem is serious with more than 100,000 people without Title Deeds. “This unresolved issue is dangerous and more regulation on the market will benefit all sides,” he said.

Mr Strovolides has brought the problem to the attention of Interior Minister Neoclis Sylikiotis and has also been in touch with the Cyprus Land & Building Developers Association and the Cyprus Bar Association about the issue.

There are more than twice the number of Cypriots than non-Cypriots without Title Deeds – and they are also becoming increasingly worried about how they will be protected if the credit crunch hits the property sector. Developers have often mortgaged and re-mortgaged the land on which their homes have been built and in the event of developers becoming bankrupt, banks have the right to claim these homes to settle the debt – even though buyers may have paid for them in full.

Editors note

As the law currently stands, property developers are allowed to offload their unpaid mortgage risk onto unsuspecting property buyers; in the event of bankruptcy they have nothing to lose. As they have already received payment for the property, the only people to lose out are the unfortunate buyers!

Cyprus property sector facing long recession

Nigel Howarth
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It seems that the Cyprus property sector will experience a long period of recession and things may deteriorate over the coming three years. Antonis Loizou made his forecasts on the current situation in a recent interview with Stockwatch and emphasised the fact that prices of tourist properties have already fallen by as much as 20%.

Mr Loizou’s forecasts for the property sector are similar to those of hundreds of other businessmen surveyed by Stockwatch over the past few months – and conflict with forecasts prepared on behalf of BuySell that say there is an increase of 10% per annum.

Mr Loizou has one of the largest of historic databases in the domestic property market and his statements to Stockwatch came after the publication of the Cyprus Central Bank’s predictions that the growth rate will fall to 2% in 2009, the lowest since 2003.

He expects that the recession will be longer and deeper than predicted, saying that: “Since the estimates referring to a crisis will come true, in 2009, possibly in 2010 and probably in 2011, prices will drop as those who have borrowed will not be able to bear the burden“.

Mr Loizou said that property developers had frozen their new projects and stressed that “You must be lunatic to build at the current stage since the banks do not lend and a significant number of properties remains unsold“.

Commenting on reports that up 20,000 Cyprus property industry workers face job losses he said that “Dismissals have already started in the seaside towns“.

You cannot polish horse manure

Nigel Howarth
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EVERYONE knows there is a massive problem in Cyprus with unscrupulous property developers exploiting loopholes in the islands archaic laws to make huge profits for themselves.

Exacerbated by intolerable bureaucratic delays in central and local government departments, the “Title Deeds-cum-fraud mess,” as one commentator recently referred to the problem, affects tens of thousands of Cypriot and non-Cypriot property buyers. Land Registry figures announced in Parliament less than two months ago revealed its true extent:

Over the past three and a half years, 4,440 properties have been transferred to non-Cypriots, while the transfer of a further 29,949 properties are still in the pipeline. You don’t need a degree in mathematics to work out that it’s going to take the Land Registry nearly 24 years to transfer those remaining 29,949 properties if their past performance is anything to go by!

And when you consider that non-Cypriots only make up around a third of those buying property in Cyprus you begin to appreciate the scale of the problem!

Some property developers tell buyers that it may take 2, 5 or even 10 years to get their Title Deeds. This is being somewhat ‘economical with the truth’. True, they may get their Title Deeds in 2, 5 or 10 years, but on the other hand they may have to wait 12, 15, 24 years or even longer!

Over the years successive Interior Ministers have made vacuous announcements that the Title Deed problem would be tackled, yet nothing’s been done. In 2005, for example, the announcement that property buyers would be armed “with an arsenal of weapons against unscrupulous property developers” turned out to be nothing more than an empty promise.

I had hoped that the current incumbent, Neoclis Sylikiotis, would have taken a more pragmatic approach to resolving the problem than his predecessors. But he seems to believe that a ‘quick-fix solution’ is all that’s needed to resolve the “Title Deeds-cum-fraud mess”.

According to local media reports Mr Sylikiotis’ solution is that “buyers will pay for their property directly to the bank and separate Title Deeds will be issued for each property in a block or group of houses, irrespective of any town planning or bank problems faced by the developer. In this way buyers will get separate Title Deeds for their property whether or not a Certificate of Final Approval has been issued for a whole block or for a project.”

The Minister has also announced plans for a Town Planning amnesty. This, he hopes, will enable those who cannot get their Title Deeds due to planning violations to obtain the all important Certificate of Final Approval (a necessary precursor to issuing Title Deeds).

Fantastic news – or is it?

The new law will (hopefully) result in Title Deeds being issued much quicker. Good start Mr Sylikiotis, keep up the good work!

But how do the new laws help the thousands of people in the “Title Deeds-cum-fraud mess”? The Town Planning amnesty may help a few, but if the results of previous amnesties are anything to go by, it’s unlikely to have a significant impact.

You may recall the case of former President of the Republic, Glafkos Clerides. Five years ago he bought a home in Menou that was built ten years earlier and which is suffering from ‘planning irregularities’. Two years ago, Mr Clerides applied under the amnesty hoping to overcome the planning issues that were delaying the issue of Title Deeds; he has yet to receive a reply. Both Mr Clerides and his daughter Katy, a DISY deputy, are lawyers. Neither has been able to resolve the problem.

And of course planning amnesties do not stop illegal building; they have the opposite effect. They merely encourage unscrupulous property developers to continue breaking the law – safe in the knowledge that no action will be taken against them.

There may be health and safety implications associated with buildings that have been constructed illegally. Is the Government going to compensate those who are injured as a result of living in a property with ‘planning problems’?

Does Mr Sylikiotis’ intend to take action against unscrupulous developers who extort money fraudulently from buyers claiming it is to pay ‘immovable property tax’? The simple answer is no. An official from the Interior Ministry recently stated: “This is not a matter where the state can intervene“. Doesn’t the state’s refusal to take action against these fraudsters make it an accomplice in their crimes?

Do the new laws mean that the Cyprus Government will guarantee those who have been sold mortgaged property will not lose their homes if the bank forecloses on the developers’ loans? There has been no mention of the Government making any form of guarantee. But as the credit crunch bites deeper you can be certain that those who have been duped into buying mortgaged property face an ever increasing risk of losing their homes.

Has the Government any intention of enforcing article 10 of the Streets and Buildings Regulations Law, Cap. 96, that makes it illegal for anyone to occupy a building unless it has been issued with a Certificate of Approval? Apparently not. The reason, or so I’ve been told, is that there is no penalty for breaking this law.

You cannot polish horse manure

Mr Sylikiotis needs to appreciate that he cannot polish horse manure. His attempts to clear up the Cyprus “Title Deeds-cum-fraud mess” by fiddling around with the island’s archaic laws (many of which are totally ignored by unscrupulous property developers) will have little effect.

To resolve the problems once and for all:

  • Those who have bought property must be fully protected against losing their homes through the actions of unscrupulous developers.
  • Finally, those guilty of extorting money from property buyers under false pretences must be brought to justice and those who have been defrauded must be compensated for their loss.

I sincerely hope that Mr Sylikiotis has the intestinal fortitude, moral courage and commitment to resolve the problems. Whether he’ll be remembered as a hero or just another hot-air blowing politician remains to be seen.

British MPs and MEPs take up title deeds crusade

Jean Christou
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BRITISH MPs and MEPs have expressed their shock and concern over the title deeds scandal in Cyprus, and some have already taken the issue up with the government and the EU.

“I find the accounts, which I have received of this chain of events scarcely credible,” said Nigel Farage MEP, the leader of the UK Independence Party and Co-President of the Independence/Democracy Group in the EU assembly.

In a letter to the Cyprus Justice Ministry, Farage added: “Is Cyprus a rogue-state beyond the fringes of civilisation?  Does it have no laws, no impartial courts and no responsible government?  How could this practice of retaining title-deeds, after the sale of a property, be condoned in a state, which pretends to be worthy of the name, and is not merely a bandit-stronghold?”

Farage said he had received so many complaints alleging “the same extraordinary practices,” described in so many different ways, that he felt obliged to write to the Ministry for their comments.

Farage’s response was one of several received following the launch of a lobbying campaign by British home buyers under the umbrella of the Cyprus Property Action Group (CPAG).

The campaign has reached all the way up to British Prime Minister Gordon Brown and the House of Lords, where the answer to a written question by Lord Jones of Cheltenham is pending reply.

The buyers are worried that the global credit crunch could affect developers in Cyprus, most of whom still hold the title deeds to the buyers’ homes. If a developer were to collapse, the banks would have legal right of foreclosure.

There are around 30,000 foreign buyers in this position, and another 70,000 or so Cypriots. CPAG wants a guarantee from the government similar to the one recently put in place for bank deposits.

Seeing no movement on the part of the government, Britons have taken their fight to the UK and the EU.

Replies to lobbying letters were received from several other MPs and MEPs, who said they had received many similar complaints from British buyers in Cyprus.

Struan Stevenson, MEP and Vice-President of the EPP-ED Group and Conservative Member for Scotland, said that event though it was not a ‘European matter’, “we are in the process of compiling a dossier of all the similar cases we have received as a warning to people about the pitfalls involved in setting up businesses or homes abroad.”

Stevenson said he had also written to DISY MEP Ioannis Kasoulides enquiring about a particular case. Kasoulides told him he had received almost identical letters from other British MEPs.

“He [Kasoulides] claims that no companies have faced risks of bankruptcy,” said Stevenson.

“He added that it is true that title deeds are issued with a delay of a couple of years and should be agreed in the selling contract. The delay is due to heavy bureaucracy in the Planning Bureau due to the issue approvals. He finishes that buyers should always be careful with what sort of contracts they agree with.”

Caroline Jackson MEP also said in a letter to one buyer that it was not a European matter.

“I think it is unlikely that there is any action that the European Commission can take to intervene in Cyprus,” Jackson’s letter said. “However, I understand that you are concerned and I would be happy to clarify the Commission’s position on this issue by tabling a written parliamentary question to the Commission on your behalf.”

Robert Kilroy-Silk, an independent MEP, said he also had received other letters and had written to the Cyprus High Commissioner in London. He was awaiting a response, he said.

Mark Prisk, MP in the House of Commons, said he had not been aware of the problems of property owners in Cyprus and had written to Britain’s Minister of State for Europe Caroline Flint asking her to respond as to what action was being taken to ensure that British property owners in Cyprus were not put at risk.

Copyright © Cyprus Mail 2008

Qatari Diar Real Estate and Cyprus sign deal

Alan Lawton
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EARLIER this month, Qatari Diar Real Estate Investment Company and the Cyprus government signed a Memorandum of Agreement to undertake feasibility studies and land evaluation for a new project in Nicosia, Cyprus.

This new project will be located on 25,000m2 of a prime site in Nicosia and will be a mixed use development.

The project will include a 5-Star hotel, luxury residential villas and apartments, retail space and office buildings. It is destined to become a major tourist destination, aimed at sophisticated investors and tourists from around the globe.

Speaking at the signing, Ahmed Al-Mazrouei, DCEO of Qatari Diar said:

“Qatari Diar are delighted to have signed this Memorandum of Agreement. We believe that this project highlights the strong relationship between our two countries and we look forward to working in Cyprus on the development.”

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