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Property chief elected new head of Cyprus bank

David Crowther
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THEODOROS Aristodemou, the founder, Managing Director and Chairman of Aristo Developers Plc Group of companies, has been elected the new Chairman of the Bank of Cyprus.

In a closely fought contest he beat his rival, the former Finance Minister Michalis Sarris, by a single vote. Aristodemou received the vote of 9 members of the Board; Sarris received 8 and there was 1 abstention.

According to a report in the Cyprus Mail, former Finance Minister and World Bank-affiliated Sarris was the only contender for the post, but then Aristodemou entered the arena, upping the ante of yesterday’s AGM.

Aristodemou, who was already a member of the Bank of Cyprus board, heads Aristo Developers Limited, Artha Developers Limited and Artha Estates Limited. In the past he served as Chairman of the local Chamber of Commerce and Industry of Paphos, as Chairman of other organisations and as a member of the Board of Directors of the Cyprus Telecommunications Authority and of Cyprus Airways. He is also the Vice-Chairman of the Cyprus Chamber of Commerce and Industry.

2008 property sales down 30 percent

Nigel Howarth
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THERE was a 30 percent reduction in sales of property in Cyprus during the first four months of 2008 compared to previous years, the House Commerce Committee was told yesterday.

The statement was made by the deputy head of the Town Planning Department, Christodoulos Ktorides, who added that £370 million were received in transfer taxes in 2007. Ktorides said the possibility was being examined of reducing the percentage of transfer taxes, which are currently on a scale of three to eight per cent.

Committee Chairman Lefteris Christoforou of DISY called for specific measures in order to reduce the price of houses as well as the taxes imposed. He added that his committee had decided to invite the Interior and Finance Ministers to their next meeting to explain the government’s policy on the issue.

“Most countries’ constitutions say that the state must ensure its citizens are provided with homes, as a social benefit, in the easiest possible way,” said Christoforou, adding that his committee had tired of repeating its concerns over issues, such as high VAT and transfer tax rates.

Finance Ministry Spokesman Stavros Michail explained that the government’s main priority was to prepare a concise housing policy, before examining the various taxes that are imposed.

He added that the 15 percent VAT imposed for property purchases was part of Cyprus’ commitments to the EU.

The committee will continue examining the issue in two weeks’ time.

Copyright © Cyprus Mail 2008

Another report, this time from Stockwatch, paints a less depressing picture:

Property sales down 17%

Property sales in the first quarter of 2008 declined 17%, boosting estimates that the sector has slowed down.

According to Land Register figures released on Tuesday, the total value of property sales in the first three months of the year fell to €794 million from €956 million in the corresponding period of 2007. Similarly, sales drooped to 4,143 from 5,202.

The figures concern the transfer of title deeds and include acts that possibly occurred in the past few years.

The slowdown in the property sector is also observed via the state’s revenues from the capital gains tax paid on the goodwill of the sold properties.

In the first three months of the year, the revenues from the capital gains tax fell 5% to €90.9 million from €96 million in the corresponding period of 2007.

The figures are in line with those presented by the Developers’ Association Chairman, Lakis Tofarides to the House Commerce Committee. According to Mr. Tofarides, “several factors have affected the property sales in the seaside areas such as Larnaca and Ayia Napa. Nicosia has not been affected at all. The customers in Limassol have been replaced by the Russians”, he concluded.

© 1999 – 2008 Stockwatch Ltd.

And the Financial Mirror reports:

Cyprus property sales dive 17%

Cyprus property sales registered a 17% Year-on-Year reduction in the first quarter of 2008 according to data from the Cyprus Land Registry.

The value of property deals transacted in the first quarter of 2008 reached EUR 794 mln compared to EUR 956 mln in the same period in 2007 for a 17% decline. A similar decline was registered in the number of successful deals, which in 1Q08 tumbled 21% YoY to 4143 from 5202 in 1Q07.

The data confirm the widely held belief that the booming property sector, which had become the driving force supporting the Cyprus economy has entered a period of slowdown. The Chairman of the Cyprus Property Developers Association, Lakis Tofarides during a briefing at the House had warned that property sales had in fact declined by 30% with Larnaca and Ayia Napa areas the worst affected, while Nicosia was faring better, as its mostly supported by locals. The influx of Russian buyers had in part cushioned the impact in Limassol, while results in Paphos were mixed.

A slowdown in the property sector is certain to have a dire impact on state finances, which in recent years on the back of a booming property sector have shown an incredible improvement, moving from constant deficits into a surplus.

The fiscal surplus of Cyprus in 2007 stood at EUR 250.6 mln (CYP 146.7m) vs. a fiscal deficit of EUR 212.7 mln (CYP 124.5m) in 2006, according to data compiled by the Financial Mirror.

The reversal in deficit was the result of higher direct (EUR 2.23bln: +42% YoY) and indirect taxes (EUR 2.92bln: +19.5% YoY). Total revenues in 2007 reached EUR 6.88 bln (CYP 4.03bn) recording an increase of 10% YoY, whilst total expenditures were up by just 3% YoY to EUR 6.62bn (CYP 3.88bn).

In the first quarter of 2008, the capital gains revenue declined by 5% to EUR 90.9 mln from EUR 96 mln in 1Q07.

Cyprus building permits continue to fall

Alan Lawton
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THE number of building permits issued for the construction of property in Cyprus continues to decline.

According to the Cyprus Statistical Service, CYSTAT, the number of permits authorised during January and February 2008 stood at 1,401 compared to 1,551 In January and February 2007. These provided for the construction of 2,812 dwelling units compared to 3,331 in the same period last year.

Compared to January and February 2007:

  • the number of building permits issued has fallen by 9.7%;
  • their value has decreased by 1.5%;
  • the number of dwelling units for which permits have been issued has fallen by 15.6%.

Building permits constitute a leading indicator of future activity in the construction sector.

Still waiting for Cyprus justice

Alan Lawton
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CYPRUS property developer Costas Papaioannou was arrested and remanded in custody for five days on suspicion of obtaining money from buyers with intent to defraud. He was subsequently released two days early ‘on medical grounds‘.

At the time, the case was reported in the newspapers and the victims of the alleged fraud were looking forward to an early settlement. But that was almost two years ago and the four British families that filed the complaint are still waiting for the Cyprus justice to get its act together.

One of the families involved in the alleged fraud has reported that around seven court dates have been set but that each time the judge, Androulla Pougourou, has put back the case to a later date. The next one is scheduled for 27th May and they are hope there will be no further delays in getting justice.

One of the blocks in which some of the families bought apartments has only recently managed to acquire water and electricity, so at least they are now habitable at long last!!

CID investigators believe that Papaioannou began two separate projects in 2004, in which he bought land in the Paphos villages of Yeroskipou and Chlorakas, planning to build apartment blocks.

The suspect is suspected of receiving over £250,000 to build apartments in the Paphos district that were never completed because he failed to receive building permission.

Papaioannou then allegedly fled the island and was only arrested after news of his return.

Update 27th May, 2008

One of the buyers involved in this alleged fraud has sent me the following update:

Costas Papaioannou was in court again this morning – the case has been deffered to 6th June for sentencing.

So maybe we now have a result depending on how soft the judge Androulla Pougourou will be as she was attempting o throw the case out as she thought the poor man had no criminal case to answer!!!!

Once we have a criminal result against him then maybe, just maybe our civil case will come to the fore.

Here’s hoping.

I wish them and the other families involved every success.

Further updates will be posted as the case against Papaioannou progresses.

Resale property scam warning

Nigel Howarth
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Further cases of the ‘resale property scam’ have come to my attention involving a number of Cyprus property developers.

In all cases, the ‘agent’ selling the property on behalf of the original buyer was the developer. And in both cases, the sale price reported to and handed over to the original buyers was significantly less than price paid by the ‘new’ buyer! Where does this extra money end up? I’ll give you three guesses!!!

This scam occurs as a direct result of the unacceptable delays in issuing Title Deeds. Sometimes these delays are due to Government bureaucracy and in other cases they are due to developers dragging their feet. In some cases I know of personally, people have been waiting for their Title Deeds for nearly 30 years; these problems have been the subject of a damning Channel 4 documentary.

Because the original buyer does not have the Title Deeds, he is not free to sell the property on the open market – even though he may have paid for the property in full and may have been living in it for many years.

Without Title Deeds, the buyer must come to an ‘arrangement’ with the person in whose name the property is registered; invariably this is the property development company from whom they bought the property. Sometimes, this ‘arrangement’ alone can cost the original buyer many thousands of pounds in ‘contract cancellation fees’ extorted by the developer – and many of the developers charge a further 5% sales commission.

This resale property scam is very lucrative for the unscrupulous property developers!

How does this scam work?

Imagine that you’re trying to sell your property and you have come to an ‘arrangement’ with the developer to sell it on your behalf as described above.

After many months of waiting, you get a call from the developer “Good news Mr Smith” he says “I have someone interested in buying your house and they’ve offered €210,000. I don’t think we’ll be able to get any more for your house; the market’s very slow at the moment. Would you like us to accept the offer and proceed with the sale?”

Relieved that the developer has finally found someone to buy your house, you reply “The offer isn’t as much as we were expecting, but if you don’t think we’ll be able to get a better offer, we’ll accept the €210,000”.

(But in reality what has happened, unknown to you, is that a buyer has offered the developer €320,000 for your house).

  • The developer gets you to sign a “special power of attorney” document or a “sale agreement”, enabling him to sell the property on your behalf for €210,000.
  • The developer pays you €210,000 (less his 5% commission and ‘arrangement’ fee).
  • The person buying your house signs a Sale Agreement with the developer for €320,000.

You have been defrauded out of €120,000, which ends up in the developer’s back pocket!

How do you avoid the scam?

  • Do not sign any special power of attorney documents or sale agreements with the developer.
  • Engage the services of an independent property lawyer to handle the sale on your behalf. If that lawyer does the job properly, they will get a copy of the Sale Agreement between the developer and the person buying your house to check that everything’s OK and above board.

You may need to instruct the lawyer to get a copy of the Sale Agreement – as Jim Murphy MP – the UK’s Minister for Europe has warned “There have been – and still are – cases where dishonest estate agents and lawyers have knowingly taken advantage of the unwary”.

Wealth warning

There are a number of Cyprus property developers who operate a ‘closed shop’, which prevents home owners from selling their property on the open market. These developers insist that ALL sales of ALL their properties are handled by their company.

If you’ve bought a property from one of these developers and wish to sell it, make sure you use an independent property lawyer to handle the sale on your behalf – otherwise you risk being defrauded out of thousands!

YOU HAVE BEEN WARNED

Property protest during President Christofias London visit

Alan Lawton
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Expatriate property buyers frustrated by the inept Cypriot judicial system are to protest at London’s Alexandra Palace on May 18th where the President of the Republic of Cyprus, Demetris Christofias, will address a gathering of the Cypriot community at 3pm.

Problems suffered by property victims range from the non issuing of Title Deeds, structural faults, illegal building and developers extorting money under the guise of Immovable Property Tax and Property Transfer Fees. Many victims are resident in Cyprus but will be represented at the protest by their offspring who may inherit the problems drawn up by unscrupulous lawyers.
[youtube=http://www.youtube.com/watch?v=AIwM0pCiq9w&w=470]
Fronting the protest is Conor O’Dwyer 38 from Surrey who bought a house off plan in Cyprus in 2005 and has since entered in to a lengthy legal battle. O’Dwyer says “Crooked developers and lawyers in Cyprus act with impunity. My developer has kept all my money and managed to sell my house to another family despite my contract being lodged at the Lands Registry. I have been physically assaulted twice by the developers; the last was in January 2008 when I spent six days in hospital. Every month my lawyer chases the authorities for a criminal investigation into the reselling of my house and every month it’s the same. It’s stuck at the local level”.

Conor O’Dwyer details his plight on his on his website www.lyingbuilder.com and on YouTube where he “names and shames” the developer and all lawyers involved.

The Cyprus Consul General’s response

A reporter from the London Daily News spoke with the Consul General of the Republic of Cyprus Mr Evangelos Savva in London, who commented on the plight of Conor O’Dwyer:

“this is the first case we have ever heard of physical violence being used. I underline and categorically state the majority of cases have never had problems in buying properties in Cyprus. The rule of law is respected and we are a law abiding nation. We condemn any actions involving violence and await the decision of the Attorney General in Cyprus on this matter.”

The Cyprus Mail Report

Saturday’s Cyprus Mail also contained an article about Conor’s planned protest in London.

 

Cyprus Mail reports Conor O’Dwyer’s planned protest

Thos wishing to join the protest should contact Conor via his website at www.lyingbuilder.com

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