Home Blog Page 638

Title Deed delays affect 30,000 non-Cypriots

Nigel Howarth
-
0

ACCORDING to figures released by the Cyprus Land Registry, nearly 30,000 non-Cypriots are waiting for the Title Deeds to their properties.

During the last three and a half years, 4,400 properties have been transferred to non-Cypriots while the transfers of a further 29,949 are still in the pipeline.

Added to the fact that a recent report concluded that sales to foreign buyers account for 3 out of every 10 properties sold in the past few years, there must be somewhere in the region of 100,000 properties in Cyprus waiting for their Title Deeds to be issued.

What causes the delays?

There are many causes for the delays in issuing Title Deeds:

  • Property developers not clearing mortgage debts on the land on which they’ve built properties and which they’ve subsequently sold to unsuspecting buyers.
  • Bureaucratic delays in the Land Registry and other central Government and local Government departments.
  • Planning infringements caused by property developers deviating from the various permissions and permits issued for the construction of their developments.
  • Planning infringements caused by those who have bought property making changes to their property without the required permits.
  • Etc, etc, etc.

Why is a Title Deed so important?

Without a Title Deed to a property:

  • You do not own the property and are therefore unable to enjoy the full benefits of property ownership, including the right to sell or transfer it to anyone you wish without reference to its registered owner.
  • Should you wish to sell, you need to cancel or transfer your contract of sale at the Land Registry enabling its registered owner to enter into a new sale agreement with your buyer. I know some buyers who have been charged more than € 34,000 by the registered owner, a disreputable property developer, for this ‘privilege’. But a recent Court ruling may help to put an end to this despicable practice.
  • Under certain circumstances the legal owner of the property can still raise a mortgage on the land on which your property is built without your permission, even though you may have paid him for it in full.
  • Property developers prey on buyers without Title Deeds by extorting huge amounts of money from them claiming that it is to pay their immovable property tax.
  • You may have bought a property that has been built illegally; as a necessary precursor to issuing Title Deeds is a formal independent inspection to ensure the property has been built in accordance with the Planning and Building Permits issued for its construction. (If it transpires that the property was built illegally, the authorities could issue a ‘Demolition Order‘ resulting in the property’s destruction.)
  • You are unable to raise money against your property and unable to access any of the capital you have tied up in it through equity release loans and other schemes.
  • You are unable to make any changes to the property without the consent and the agreement of the Title Deed holder (most probably the developer from whom you bought it).
  • As the Cyprus financial institutions refuse to grant mortgages on resale properties without Title Deeds, anyone wishing to buy your home must be a cash buyer.

(Some of the Title Deed scams practiced by Cyprus property developers were the subject of a damning documentary by Andrew Winter shown on UK TV in 2007. If you missed the program, watch an 8 minute clip below.)

[youtube=http://www.youtube.com/watch?v=eLUDlI6CSCM&w=470&rel=0]

 

Cyprus property loans surge

David Crowther
-
0

ACCORDING to figures released on Tuesday, property loans have surged by 33%. The loan portfolios of the Cyprus banks grew by 34.86% in August compared with 35.24% in July and 21.9% in August 2007. Loans totalling €49.8 billon were granted compared with €36.9 billion in August 2007.

Consumer loans grew by 38% while business loans, the biggest category, recorded an annual increase of 45%. The loans grew in spite of interest rate increases, which in some cases have pushed up the cost of borrowing by 10 base points.

Unlike some banking systems in other parts of the world, the domestic banks in Cyprus have €6.5 billion more deposits than loans, due to investments by foreign companies.

Cyprus property market: crisis expands

Nigel Howarth
-
0

A new StockWatch survey among twenty developers and real estate agents carried out last week shows that the crisis in the Cyprus property market has expanded. It has started to affect the value of shops and offices as well as plot prices.

The crisis is exceptionally intense on housing properties, where prices have declined up to 25%. Although in the previous survey crisis focused on tourist areas only, the new survey shows that it affects all housing properties in the market.

Sixteen of the total twenty developers support that prices fall. Only one sees that prices will go up and three expect that they will stabilize. Two developers stressed that conditions in Limassol differ due to the interest on behalf of the Russian businessmen.

All twenty developers and estate agents are actively involved in all cities of free Cyprus. The list includes businesses of all sizes, including the big.

Most of the respondents said that shop and office prices fall too, while others see a decline in plots and farms. At the previous StockWatch survey, none of the respondents expected a drop in this type of properties. Almost all anticipated that plot prices would stabilize.

According to a developer, he undertook the construction of a 23-flat complex in Larnaca in early 2008, but none of them has been sold yet. Two more developers said that they have not sold any property in 2008.

One of the developers that participated in the survey said: “The Company has a new flat of 90m2 in Protaras of CYP 100,000. We tried to sell it for CYP 90,000 but it was not sold. We pushed the price down to CYP 85,000, but still nothing. We will be forced to push price further down to sell it“.

A real estate agent from Larnaca said that the crisis does not concern housing properties only, but plots too. “About 5 months ago we were selling a plot in Alethriko for CYP 120,000. Now we are forced to sell it for CYP 90,000“, he noted.

“We are in the middle of a crisis and there’s no room for sentiment. Each one of us will have to push prices down to save his business“, another developer said.

“The market is moving in such a way so as to correct the fictitious property prices, which jumped 40% – 80% in 2005-2007“, a developer said.

According to latest central Bank data, housing property prices grew 15% in 2007 against 10% in 2006, 12% in 2005, 20% in 2004 and 8% in 2003. There are no official data for 2008 yet. These figures, however, concern all properties, while the developers referred to properties for sale.

“Two years ago we sold a property against CYP 50,000 thousand. Now we ask for CYP 200,000 – CYP 250,000. With such prices, how we can avoid a crisis?“, he wondered.

Some of the respondents talked about a depression in the property market with a disproportionate increase in offer, unemployment and loss. Due to the prevailing conditions, certain developers became more restrained. “We are more restrained now. We build fewer flats and houses to avoid stock and bank pressures“, they said.

“We expect things will get worse in 2009. That’s why many businessmen have already reduced their staff. Also, a number of businessmen are not professionals and their activities are not based on strong foundations. Therefore, they are now forced to sell cheaper so at to pay their debts“, they said.

The cooperation between the developers and the real estate agents has been affected too. Some developers say that sell without the agents’ intervention. On the other hand, the real estate agents support that developers offer a 10-15% additional commission to them if they manage to sell.

Cyprus property price correction

Nigel Howarth
-
0

THE Finance Minister, Charilaos Stavrakis, is reported as saying that Cyprus property prices will go through a phase of correction, boosting beliefs that the sector is facing a crisis. “Normally, property prices will be corrected. Although the downturn in the market is expected to affect the public revenues, the government has taken into account this parameter and if recession continues, it will take additional measures“, the Minister said.

Referring to the Land Registry figures, which show a 40% reduction in property sales, Mr. Stavrakis said that the decrease was indeed significant; especially in Paphos and the free areas of Famagusta, where the reduction in sales is at its greatest.

Capital Gain Tax revenues from the sales of property have dropped by 18% over the first 8 months of the year.

Mr. Stavrakis believes that the problem is more acute in the sale of summer homes and second homes in tourist areas by locals and foreigners. “This was more or less expected due to the dependence of the property market on the British market, which is experiencing an economic crisis due to the drop in the value of Sterling“, the Minister explained.

Minister Stavrakis believes that the government’s stronger housing policy, which is expected to cost €25 million more than estimated for 2008, will moderate the downturn in the sector.

The government expects that the activity in the property sector will continue to shrink in 2009. The Ministry anticipates that the capital tax revenues will drop by 6.8% in 2009 against 20% this year.

Aristo sales down

Nigel Howarth
-
0

Dolphin Capital Investors, the company with a sizeable stake in Aristo Developers (Aristo), published its results earlier this week:

“Total home sales booked by Aristo as at 31 August 2008 of €79 million, 37% lower than the corresponding record breaking period of 2007 mainly due to a slowdown in demand by UK buyers.”

(Founded in 1983, Aristo is today believed to be the largest private landowner in Cyprus and the largest holiday home developer both in terms of annual turnover and number of units sold. With more than 1,850 hectares of development land under ownership, over 3,000 holiday home sales over the past five years and a pipeline of approx. 10,000 residential units under planning, Aristo has a strong presence within the real estate development sector in south-east Europe).

Cyprus banks impose stricter borrowing measures

Nigel Howarth
-
0

RISKS lurking in the Cyprus property market are forcing domestic banks to take stricter borrowing measures to limit their exposure. The measures include increased collateral, fewer grace periods and changes in loan payment terms.

The banks already screen property investors, developers and non-Cypriots who want to invest in Cyprus. But things are now much tighter for investments in the seaside towns; particularly in Paphos, where the market is experiencing a higher than average slowdown.

Bank and Coop officials have directed their branches to follow the Central Bank’s instructions and impose the stricter measures, which include:

  • A more thorough investigation of someone’s ability to repay a loan.
  • Increased levels of security offered on the applicant’s behalf.
  • A more in-depth examination, according to the type of loan. (If it is about a property loan, the bank must examine the value of the property, its location and whether or not it is in a tourist area).
  • Tougher lending terms for foreign investors with higher interest rate margins to cover additional risks.
  • Stricter evaluation of company ratings.

Some of the banks are also considering introducing even stricter terms of borrowing for:

  • Client contributions.
  • Grace periods.
  • Loan repayment periods.
  • Loan pricing.

Frozen demand

High ranking bank officials admit that consumers are more hesitant in borrowing due to fears of a deterioration of the economic climate.

“Citizens think twice before making any investment due to the economic crisis. Some expect that property prices will be corrected and will find their real prices“, it was reported.

Moreover, the demand by non-Cypriots for housing loans is almost inexistent.

The lower demand for loans is not yet reflected in the Central Bank’s figures, which show that the loan portfolios grew by 35% in July; their second highest level ever.

1...637638639...692Page 638 of 692