Home Blog Page 637

Building permits fall for tenth consecutive month

Nigel Howarth
-
0

ACCORDING to the Cyprus Statistical Service (CYSTAT), the number of building permits issued in July fell for a tenth consecutive month as developers anticipated weaker demand.

CYSTAT figures show that the number of building permits authorised by the municipal authorities and the district administration offices during July 2008 stood at 810, compared with 848 in July 2007.

The total area provided for was 329,300 square metres, down 3.1% compared with July 2007.

On a more positive note, the total value of these permits rose slightly, by 1.1% to € 258.7 million.

These building permits provide for the construction of 1,925 dwelling units.

During the period January-July 2008, 5,109 building permits were issued; a decrease of 13.0% compared to the same period in 2007; their total value of these permits fell by 5.6% and their total area by 7.9%.

?he number of dwelling units dropped by 8.2%.

EU calls for halt to sales of Greek Cypriot property in the north

Nigel Howarth
-
0

In Resolution 1628, the Parliamentary Assembly Council of Europe (PACE) has called on the authorities of the Turkish Cypriot community to “put an end to the sales of, and construction on, Greek Cypriot properties in the northern part of Cyprus“.

PACE also called on the Turkish Cypriot community to:

  • “confirm their commitment to reunifying Cyprus, and to refrain from insisting on the existence of a ‘separate state’ in the north of the island“;
  • “consider specific aid to help the Turkish settlers to leave“;
  • “respect point 5 of United Nations Resolution 550 by placing the city of Famagusta under UN administration“.

After months of debating the issues surrounding the island’s division, PACE said that “It reaffirms its strong commitment to reaching a fair, lasting and comprehensive solution for a peaceful and united Cyprus which would guarantee the legitimate rights of both Greek Cypriots and Turkish Cypriots, in full compliance with the values and principles of the Council of Europe“.

Click here to read the full text of PACE Resolution 1628

Immovable property tax & fraudulent practices

Cyprus Property Action Group
-
0

This guide is written using information on the charging of Immovable Property Tax (IPT) by developers, as supplied to the Cyprus Property Action Group (CPAG) by purchasers of property in Cyprus.

It is also compiled by using information from a legal opinion on IPT and the charging practices of developers by Advocate, Partner and Head of Real Estate and Property Department of one of the largest law firms in Cyprus. The legal opinion was commissioned by CPAG.

The Cyprus Property Action Group strongly recommends that buyers do not pay any IPT demanded from them by developers, until the developer provides evidence of what he paid to the Inland Revenue for that individual site, and additionally, what the individual buyer’s share of this payment is. You may wish to share your experiences with CPAG by registering on their website.

What is Immovable Property Tax (IPT)?

This is a legitimate tax raising methodology based on the ‘1980 value’ of ‘immovable properties’ – i.e. land or land with a building(s) on it.

Comment by CPAG – The Immovable Property Tax law based on 1980 values is to most foreigners a very confusing concept which has no parallel in other EU countries. Relying on this confusion, developers ensnare and contain clients in the Title Deed trap. Fully protected by the legal fraternity, they take the opportunity to abuse the law and not only effectively defraud foreign clients, but even more seriously, do so in the name of the Government.

What should buyers pay?

Buyers should legally only have to pay to the developers the actual amount which was paid on behalf of their properties by the developer before Title Deeds were issued, all of which buyers can reclaim from the Inland Revenue. If the Inland Revenue can work this amount out clearly so can the developers.

The law states that: “The obligation of every owner of immovable property in the Republic of Cyprus is to pay annually a tax according to the market value of his property as assessed on the 1st January 1980, known as immovable property tax (IPT) governed by the Immovable Property Tax Law, No. 24/80 (the Law) as amended by Laws 60/80, 68/80, 25/81, 10/84, 33/87, 239/91, 120/02 and 147/04.“

“If there is no relevant provision in the Sale Agreement, the purchaser may not be liable to pay any such tax, although, even in this case, the developer may claim that the IPT paid by him for the particular property was paid on behalf of the purchaser, who had a legal obligation to pay the same, being the person “entitled to be registered as the owner of the property”. See section 2 of the Law, where “owner” is defined as the person who is also entitled to be registered as the owner, whether he was registered as such or not.“

Once Title Deeds are issued to buyers they will find a 1980 value assigned to their property/Deed. By virtue of their property being less than CYP100,000 (€170,860) at ‘1980 values’ (the great majority of properties are less than this) they can apply for a refund from the Inland Revenue for the whole of any legitimate payment made on their behalf by the developer. Until recently lawyers didn’t tell their clients about the refund as at this stage the client will find that the refund is far less than what they paid to the developer.

Sub section (3) of section 7 of the Immovable Property Law provides:

“…. in the event of the sale of immovable property the purchaser thereof may, upon transfer of the property into his name, claim from the Director of Inland Revenue refund of the immovable property tax paid by the vendor for the particular immovable property.“

What do developers actually pay?

Developers pay IPT on the whole of their portfolio which is made up of their individual lands/sites/properties so they know what they actually pay each year for each site and can easily assign this to individual properties prior to Title Deed transfer.

The following are the latest and previous rates and thresholds for paying the tax – remember these are on assessed 1980 valuations of immovable properties.

From 01/01/90 to 01/01/03 (Law 239/91)

On each pound up to CYP100.000 – zero

On each pound from CYP100.000 – up to CYP250,000: 2‰

On each pound from CYP250.000 – up to CYP500,000: 3‰

On each pound over CYP500.000 – 3.5‰

From 01/01/03 to Present (Law147/04)

On each pound up to CYP100.000 – zero

On each pound from CYP100.001 – up to CYP250.000: 2.5‰

On each pound from CYP250.0001 – up to CYP500,000: 3.5‰

On each pound over CYP500.000 – 4‰

Comment by CPAG – As you can see from the IPT rates they are expressed at e.g. 2.5 per thousand (or 0.25% in real figures !). You can also see that there is a sliding scale. Therefore NO developer pays at a rate of 0.4% on his whole portfolio as most of them falsely claim. Some smaller developers will pay at a lower rate based on the size of their portfolios. Some may pay nothing at all.

A simplified example of what a developer might pay:

For a project of say ten houses the developer starts off with a piece of land bought for CYP250,000 with a 1980 value of CYP25,000 for example. He may be therefore paying IPT of less than CYP100 per annum even he is paying on average near the top possible rate of 0.4‰ (4 per thousand). (25,000 x 0.4% = CYP100)

He should declare, once he starts building, the amount of expense he has put into the land each year. Say he spends CYP500,000 on the site in one year, this additional value will be assigned a1980 value by the Inland Revenue, let’s say they assign a value of CYP50,000, giving a new total 1980 value of CYP75,000 for this site. This works out at an Inland Revenue bill of CYP300 for that year for that whole site.

If he sells the ten houses in year two those properties will each have paid on their behalf to the Inland Revenue CYP30 per annum (CYP300 ÷ 10). However, if he sold them for CYP150,000 each he may (ILLEGALLY) charge the buyers at 50% of the purchase price multiplied by 0.4% which means he would demand CYP300 each – ten times too much in this example! – for the years up to Title separation which could be ten or more years.

Once the Title Deeds are separated for the ten individual houses and ready for transfer they might have say, a 1980 value each of CYP20,000 assigned to them and for that year only IPT would be paid at a total site value of CYP200,000 which would give an IPT tax liability of CYP800 – or CYP80 per property, whereas the developer is charging buyers CYP300 each.

Some developers don’t notify the Tax authorities of the expenses of building work and just pay on the 1980 value of the land, often for years, and therefore denying these rightful tax payments to the public coffers. In this case, at Title Deed separation time, a ‘negotiation’ takes place and back taxes and interest is charged on this non-declaration.

For example, the residents on a site developed by one of the largest developers were receiving annual demands for IPT based illegally on 50% of the purchase price.

On researching the facts with the Land Registry and the Inland Revenue IPT department the residents association discovered that the developer was charging the buyers, on average, 500 times too much!

So as you can see the amount developers can obtain from clients under false pretences can be substantial.

What IPT do developers charge buyers?

Most developers charge at an ILLEGAL rate based on 50% of the purchase price and we have even seen clients charged at 100% of the purchase price. They do this by falsely assuring clients that this is approximately the 1980 value and this is what they have paid on the buyer’s behalf to the Inland Revenue.

Note: this ruse is made possible by the Land Registry keeping the methodology for calculating 1980 values secret. If this methodology was transparent then this fraud by developers simply could not be carried out to the same degree.

To quote from some questions and answers regarding our Legal Opinion:

Supplementary Questions (source: CPAG 30/8/07 and opinion 2/10/07)

Could you please confirm the following:

Whether the rate of 4‰ (4 per thousand) used by Developers is legally correct?

“That the rate of 4‰ used by the Developers is not legally correct. In fact there is no rate but a proportion in the sum paid by the Developer as IPT for the land upon which the purchased property has been erected.”

Whether charging 4‰ on the inflated valuation of 50% of the purchase value per annum as opposed to the 1980 valuations and rates is legal?

“Again it is not legal“

That all monies collected under the guise of IPT by Developers must legally be paid to the Inland Revenue as IPT.

“The developer collects, illegally much more than what he pays to the Inland Revenue (see above) but he has no obligation to pay the difference to the Inland Revenue.“

The average additional amount per property obtained under false pretences by developers prior to issuing Title Deeds appears to be around the CYP1,200 mark from the feedback we have had. We understand that this fraud has been going for around 20 years and thousand upon thousands of foreign buyers have been defrauded in this way. In addition, some developers use the same ruse of 50% of the purchase price to defraud on Sewerage Tax (0.35% of 1980 value) and Local IPT (0.15% of 1980 value).

As an example, recently one buyer was asked to pay over €3,000 in IPT to obtain his Title Deeds by one of the leading developers. The buyer researched the matter with the Land Registry and the Inland Revenue IPT office and was told that his legitimate payment should be less than €100 and that he should not pay any more than this.

In this case the demand was over 30 times too much!

What can buyers do to protect themselves from this fraud?

DO NOT PAY the yearly demands for these illegal charges for IPT!

Some of the larger residents associations have already recommended that their members not pay these illegal demands from their developers unless the developer provides proof of what he has paid on the individual site and shows how he has allocated this to the individual buyers. We are not aware of any buyer who has received this information so far despite hundreds of requests!

To quote from the Legal Opinion:

“the purchaser may ask the developer to provide him with evidence on the IPT he paid for the property (land) upon which the purchased property has been erected and pay the share of this property to the IPT paid for such. In other words the purchaser may refuse to pay more than what he will be entitled to recover from the Inland Revenue, without committing breach of his agreement.“

When it comes to Title Deed issuance and transfer, the developer can only legally demand what he has paid on behalf of a buyer as above. However, the developer refuses to transfer the Title Deed until these illegal amounts being demanded are paid – this is extortion!

It should be noted that this communication is usually conducted via the client’s own lawyer who confirms, or fails to deny, that what the developer is doing is entirely correct (or legal).

It should be further noted that the developer (and lawyer) say that the developer has to charge this illegal amount because he doesn’t know the 1980 value of the property. As we have stated earlier the IPT already actually paid by the developer bears little relevance to the 1980 value of the buyer’s individual property. Moreover, at Title Deed transfer time the developer has already paid all the IPT owing on the site as a condition of obtaining the Title Deed separation so he knows down to the last cent what has been paid and could easily allocate this per property.

In addition, he has a separated Title Deed in his possession with the 1980 value actually denoted on the Deed, and, even if the IPT was charged on this basis, the amount requested would still be too much, but would be appreciably less than the amount of money being extorted by the developer.

So what can buyers do in this particular situation?

At this stage therefore the buyer can ask for a copy of the individual Title Deed (some developers accidentally let buyers see this and still extort the illegal amounts) and can offer to pay on that 1980 value basis. The buyer could separately also visit the Land Registry and complete a N50 search form (with English translation) and find out their 1980 value and confront their lawyer/developer with this. They may also wish to have the Inland Revenue IPT office comment at this stage.

Note however that the Land Registry may very well cover up for the developer (we have hard evidence of this sort of thing).

If the developer/buyer’s own lawyer insists that the inflated and illegal amount must be paid, the buyer should put in writing that he is paying the money under duress as he/she wishes to remove the risk of not having Title Deeds. The buyer should then apply for a refund (by completing an I.R. 314 IPT Claim Form) from the Inland Revenue and work out how much has been overcharged. At this stage, contact CPAG for further advice. By the way, our lawyers have informed us that there is no limit on the numbers of years which can be reclaimed (previously they told us 6 years, based on other limits by the Inland Revenue).

When you obtain the small refund you will notice that the only detail on the small official slip is the word ‘refund’ and the amount being refunded. There is no back up detail such as the amount refunded per year or how this refund has been calculated – yet more cover-up!

If the amount is very significant (we have a widow of 83 being asked for CYP15,000 on a property bought for CYP36,000 some 25 years ago) and the buyer is adamant that they will not pay it, please contact CPAG for further advice and support.

However, we can report that some developers, even the largest, have backed down at this stage; others have refunded monies in a few cases. One of our two largest developers has after many years of charging at 50% of the purchase price recently stated to some buyers that they now have a Retail Price Index which can work out the 1980 value.

Even though these developers have the 1980 value on the separated Title Deed they have still told a client who bought in 2002 that they calculate that his 1980 value to be 37% of the purchase price. The client went to the Land Registry and obtained a copy of the TD himself.

Here are their numbers: House purchased for CYP159,000 in 2002

At 50% of Purchase Price illegal annual payment = CYP318.00

At 37% of Purchase Price illegal annual payment = CYP235.32

At 1980 value of CYP17,500 (still too much !) = CYP70.00

With this developer now using 37% instead of using 50% of the purchase price does this mean that cracks are appearing in the ‘illegal charging alliance’?

In summary, given that most developers and most conveyancing lawyers are involved in this fraudulent activity with tens of millions of Cyprus pounds involved over the years, we at CPAG see this as tantamount to organized crime, indeed verging on criminal conspiracy. The Government was alerted 9 months ago in our CPAG Report, with no response so far. The Chief of Police states that his investigations show that no criminal acts have taken place (!) when he was forced to answer our letter as to why the statements to police made by some buyers were later thrown out. And the secret 1980 valuation methodology remains a secret! Not to mention the absence of any detail whatsoever on the Inland Revenue refund slips.

This scam and the other financial exploitations are only possible due to the unholy situation in Cyprus whereby ownership of properties already paid for is not transferred to the buyer for years. Most developers also use these sites to obtain mortgages and should the developer go bust during this time, buyers could find themselves homeless as the lending institution has first call on the property.

CPAG believes that currently, in allowing some of these practices by developers, the Government is failing to protect property rights of the public as called for by Article 23 of the Constitution and also failing to enforce the law.

Finally, we reiterate that CPAG strongly recommends that buyers DO NOT pay any IPT demanded from them by developers, until the developer provides evidence of what he paid to the Inland Revenue for that individual site, and additionally, what the individual buyer’s share of this payment is. You may wish to share your experiences with us in this regard.

Please also register with CPAG if you think you have been forced to pay too much IPT in the past, stating what you have paid and the name of the developer.

If you have bought a property and are currently being charged Immovable Property Tax by the developer, can you please let us know:

  • The amount of Immovable Property Tax you have been asked to pay/have paid.
  • Whether or not the developer provided you with an invoice or receipt for the Immovable Property Tax you paid.
  • The price you paid for the property.
  • The name of the property developer from whom you bought the property.
  • Any other detail or information that you feel is relevant.

by registering the above details for our database.

Please be assured that we will not divulge your name, e-mail address, telephone number or any other contact details to any third party without your prior written consent. (Please refer to our Privacy Policy).

A Guide to Immovable Property Tax and the Fraudulent Practices of Developers by the Cyprus Property Action Group, released October 2008

Golf properties at Tersefanou

Nigel Howarth
-
0

ACCORDING to Overseas Property Professional, a consortium of Cypriot developers known as the Med Group is expecting to receive the go ahead for a €300 million golf resort project at Tersefanou within the next few months.

Known as the Larnaca Golf and Country Club, the development will comprise an 18-hole golf course, with more than 500 properties consisting of:

  • 285 two, three & four bedroom villas;
  • 211 one, two & three bedroom apartments;
  • 40 ‘hotel-style’ rooms in the complex.

There will also be a clubhouse, a village square, purpose built function rooms and spa facilities. Health treatment will also be available on site with minor cosmetic surgery being performed in the resort’s medical centre.

According to the report, the Med Group has signed an exclusive contract with the Professional Golfers Association (PGA) which will manage the golfing facilities and develop a PGA academy on the site. The agreement with the PGA is exclusive to the Med Group and is the only one allowed on Cyprus. By signing the agreement, the golf course will be able to host Ryder Cup games in the future and is expected to be a major selling point for the resort.

The Group has also retained the services of Morpheus Investments as the master sales agent for the project. The firm’s director, Derek Hatton, said that his company is looking to internationalise its sales process and will seek a limited number of “quality sub-agent partners” for the project in Europe, Dubai and South Africa.

Environmental concerns

George Hassapis, CEO of Hassapis Land Developers and a major shareholder in the Med Group, said that the environmental studies carried out on the project would help it stand out from others in Cyprus and Europe.

“Water is a massive concern for us here in Cyprus so we took proactive steps to make sure that the entire resort would fit in with the area and be sustainable, before being asked to do this by the Environmental Agency (EA),” he explained.

“The construction of a desalination plant was part of the requirement to build the resort and we will also have the capacity to sell water to the government to supply the local community should it be needed. We also had to tell the EA what we would do with the excess salt from the project and spent a lot of money to make sure that the water pipeline didn’t affect the local wildlife. This is very important for our sales partners as environmental concerns in Cyprus and around the world are growing. B spending so much time and money on this, we believe it will aid the sales process. Now we have EA approval, we are waiting on the government to decide the appropriate level of taxes to be levied on the project, then we can proceed.”

Read the full article in the Overseas Property Professional.

Postscript

The PGA terminated its relationship with MedGolf Properties in January 2014.

Using our apartment as collateral for a loan etc

Nigel Howarth
-
0

WE PURCHASED an apartment on the ground floor of a three-story block of six and were told that Title Deeds would be forthcoming in no longer than six-years which at the time we thought was fair because we had heard ‘the’ horror stories.

However, what we did not know, because we had never had a property where title deeds came in to question before were the limitations involved in not having them; and so failed to ask the right questions by omission.

For one, we planned to use the collateral of the property, which we own outright to form a small business in Cyprus – but I am informed that as we do not have title deeds this cannot be done?

Secondly, I would like to build a structured awning over the patio area for purposes of sun and rain which eventually we would like to completely enclose and make into a conservatory sitting area (though the latter could take some time), but as we have been here three years, and have another three to wait before we (hopefully) receive the title deeds; another (relative tenant to owner) of a property two stories above ours has said that any of this will somehow frustrate the obtaining of the deeds (and from this I assume she also wishes to oppose it (as she is no oracle or lawyer) – if she can?)

Can you tell me if this is all true / false?

I also beg to ask further that am I right in thinking that as our contract of sale (a legal document) states the that the deeds will be obtained in no less than six-years (and such was an undertaking by not only us, the Developer and the Lawyer) that should they not be forthcoming in due order then it will not cost me further to ‘chase’ them and it remains the responsibility of not only the Developer, but the Lawyer to make good on their promise?

Finally, could you clarify if there will be (and what) charges when I finally do receive the Title Deed from the Land Registry?

Answer

Raising money using your property as collateral

Unfortunately, as you do not have the Title Deeds to the property you have bought, you cannot use it as collateral to raise any form of loan from a Cyprus bank – including one to start your own business. Even though you may have paid for the property in full and have been living in it for many years, you are not considered to be its legal owner until its Title Deed has been issued and transferred into your name.

As the Cyprus banks will not grant mortgages on resale properties without their Title Deeds, this also becomes a problem if you wish to sell. So even if you wanted to sell your home in order to raise the money to start your business, you’d need to find a cash buyer (and you’d also need the consent and active involvement of the legal owner of the property; most probably the developer from whom you bought it).

Making alterations to the property

Before Title Deeds are issued, inspectors will visit the property and check that it conforms to the various planning & building permits issued for its construction. If there have been any planning infringements, such as changes to the external appearance of the property by the addition of a permanent awning, a swimming pool, or garage, etc., then the authorities will not issue a ‘Certificate of Final Approval’ until the infringement has been corrected and the property has been re-inspected to ensure that everything is OK. Note that this ‘correction’ may require the demolition of any unauthorised additions or changes that have been made.

As the ‘Certificate of Final Approval’ is required by the Land Registry before it will issue Title Deeds, any unauthorised additions and changes will result in delays in their production for the property concerned and for all the other properties covered by the original planning application.

If you wish to make some alterations, you need to discuss them with your developer; as he is the legal owner of the property, only he can submit a planning application. If he agrees he will need to submit a revised planning application to the authorities showing the changes. This could be quite expensive as he will need to prepare and submit a set of revised drawings and documentation. The bureaucratic delays involved in getting these ‘cover’ permits, which could be two years or possibly longer if there are problems, will also delay the production of Title Deeds for yours and all the other properties covered by the original planning application.

But once you have your Title Deeds then you can apply in your own name for the changes you wish to make. However, if you decide to break the law by making unauthorised changes and someone blows the whistle, the authorities may instruct you to demolish them. And you would also run into problems if you ever decided to sell.

(But regardless of whether your neighbour likes the changes you wish to make, they cannot object providing you have secured the required permits).

Title Deed delivery date

All of the contracts I can remember seeing contain clauses giving the date by which Title Deeds should be available; these clauses are virtually worthless. Even though your developer and lawyer can do everything in their power to secure the Title Deeds within the time stipulated in your contract, huge bureaucratic delays in the Land Registry mean that the developer cannot be held responsible.

(And if you’ve read some of my earlier ‘Oracle’ columns, you will know that the more nefarious property developers extort money from property buyers using various forms of deception until such time as the Title Deed is registered in the buyer’s name).

Land Registry charges

Yes, there will be charges when your Title Deed is finally ready – ‘Property Transfer Fees’.

If your lawyer deposited your contract of sale at the Land Registry within 60 days of you purchasing the property, these will be based on the assessed market value of the property at the time of your purchase. The assessed market value may or may not be what you paid for it; there is a Valuations Desk at the Land Registry and if they believe you paid less for the property than it was actually worth, they will adjust the value on which your ‘Property Transfer Fees’ are calculated.

Property Transfer Fees are based on a sliding scale as follows:

3% – on the first € 85,430

5% – on the next € 85,430

8% – on the remainder

So for a home costing € 200,000, the Transfer Fees would be € 9,165.60; for a home costing € 400,000, the Transfer Fees would be € 25,165.60.

If your Contract of Sale is in joint names (e.g. a husband and wife), the lower rates are granted to both parties, i.e.:

3% – on the first € 170,860

5% – on the next € 170,860

8% – on the remainder

As a result, the Property Transfer Fees for a home costing € 200,000 in joint names would be € 7,457.

I hope that answers your questions.

Lobby slams property tax scam

Jean Christou
-
0

A GROUP of Paphos expat home buyers who checked with the authorities how much they should pay in Immovable Property Tax (IPT) discovered that their developer was charging them each 500 times too much annually.

According to the website of the Inland Revenue Department, IPT is imposed on the value of the property as it stood on January 1, 1980. Property worth less than €171,000 on that date is exempt from IPT. The rate of charges on the 1980 values in excess of this amount are calculated on a sliding scale from 2.5 per cent to 4.0 per cent, depending on how much the land was valued in 1980 over and above the €171,000.

However, according to the Cyprus Property Action Group (CPAG), unscrupulous developers have for years been charging home owners without title deeds huge percentages on the current value of their houses rather than on 1980 values of the total development, while only paying the state the real amounts.

The difference can run into hundreds or even thousands for each home owner and millions across the property market, CPAG said.

“For example, the residents on a site developed by one of the largest developers were receiving annual demands for IPT based illegally on 50 per cent of the purchase price,” said CPAG spokesman Denis O’ Hare.

“On researching the facts with the Land Registry and the Inland Revenue Department, the residents’ association discovered that the developer was charging the buyers, on average, 500 times too much! The developers falsely assure buyers that this is what they actually pay to the government on behalf of the buyers.”

O’Hare said, however, that it was not always easy for people to find the correct information with government departments.

In another case, he said a couple paid €60 at the Limassol Land Registry to find out the 1980 value of their development. They were part of a group of buyers on an estate near Limassol whose developer was demanding huge amounts of IPT before he would transfer the individual title deeds.

O’Hare said the couple paid the file search fee on May 5 and have visited the Land Registry a number of times over the last five months only to be told that they could not have the information they had already paid for and that they should see their lawyer.

“This failure to supply the requested information is in contravention of EU legislation,” O’Hare said.

CPAG also has a case of a widow of 83 being asked for more than €25,000 on a property bought for €62,000 some 25 years ago. If the woman was in possession of her title deeds she would not be liable for any IPT, but her deeds are still held by the developer.

(Editor’s note. See Elderly widow victim of property scam and Cyprus Immovable Property Tax Law).

In another instance, a developer asked buyers for €1,700 each for IPT when he himself was paying only €25 per owner to Inland Revenue. In yet another case, a developer was charging each buyer €600 and paying €17 per home owner to the tax department.

O’Hare said that in June this year when CPAG met the Minister of the Interior, who is responsible for the Land Registries, he assured them that they should contact him directly for any special cases.

CPAG wrote to the Minister asking for his intervention in order to obtain the requested, and paid for, information for the Limassol-based couple, but received no response to the letter.

“Nothing has yet transpired, while four months later the Land Registry is still in cover-up mode,” O’Hare said.

In January this year, CPAG submitted a report to the government, which was commissioned by the former Minister of Finance on behalf of the government on the IPT issue.

“We described this IPT crime with full supporting legal opinion,” said O’Hare. “Since that time, however, the government have not refuted anything in our report nor have they had the courtesy formally to respond.”

CPAG considers the illegal IPT practice by developers as obtaining money under false pretences, which they say is a crime under Criminal Code 298 and punishable by five years’ imprisonment.

But when a group of home owners recently filed charges with the police in Paphos, in a “one-line response”, the Chief of Police said his investigations showed “no crime had been committed”.

To counter the lack of interest on the part of the police and the government, CPAG has prepared a comprehensive guide to IPT for all property buyers to be aware of their rights and how to deal with developers when they come asking for unwarranted huge sums of money.

The organisation said seeking advice from ‘the experts’ would only confuse home buyers when the law was actually clear. O’Hare said one so-called expert has on three different occasions publicly given three differing amounts people should pay for IPT that included “20-30 per cent of the present value“, “one third to half of the current market value“, and “a third of the value of the property when sold“.

“So which is it? 20 per cent, 30 per cent, one third, a half, and on which basis – present value, sale price, or current market value?” asked O’Hare, who added that most developers charge the rate of IPT on the basis of 50 per cent of current value of a house.

“The answer is simple. None of these – as our legal opinion states they are all illegal, and part of the shameful fraud by developers which has gone on for around 20 years,” he said.

With no response from the government, CPAG says it is now turning to the EU to seek justice.

Copyright © Cyprus Mail 2008

1...636637638...692Page 637 of 692