Home Blog Page 678

Buying Mortgaged Property in Cyprus

Nigel Howarth
-
0

Question

Hi Nigel,

I am in the process of buying an off-plan Cyprus property from a developer and the lawyer acting on my behalf has advised me that:

“The bank which has a mortgage on the project will issue a declaration confirming that the separate Title Deed issued for the property will not be burdened with the existing mortgage which is currently filed on site.”

Is this OK? I have read accounts of people having their homes sold to pay back the bank and I’m concerned this may happen to me.

Answer

It’s a common practice for developers to mortgage the land on which they’re building to ‘kick start’ the development.
You need to proceed with caution. As the bank will not issue a declaration until separate Title Deeds are issued, you are at risk if the developer goes bankrupt or if the bank calls in the loan in the meantime. Bear in mind that it can take many years to get your Title Deeds in Cyprus; I know of people who have been waiting more than 20!

What your lawyer needs to do is obtain a “release” from the bank stating that the part of the property you’re thinking of buying is free of a mortgage. In addition, you must ensure that the “release” is given when you sign of the Contract of Sale, or you may find it’s not issued.

If your lawyer is unable to obtain a “release”, do not proceed with the purchase.

Cyprus Building Permits Reach 14% of GDP

Editorial
-
0

The value of building permits authorised in Cyprus rose by 8.3% year on year in January to October, to reach CYP 1.18 bln, or 14% of likely GDP in 2006, according to our calculations.In the same period the number of building permits rose by 8.3% and the area of permits rose by 3.8%.

By far the biggest concentration of value is in residential buildings permits, worth CYP 1.0 bln. Of this, more than half (CYP 526 mln) is accounted for by single houses. These rose in value by 5.4% compared with Jan-Oct 2005.

However, if it is value growth that you are after, then the hottest place to be is in the niche markets. The 8 “residencies for communities” authorised in Jan-Oct 2006 were valued at only CYP 1.9 mln, but climbed 355.5% in value compared with those authorised Jan-Oct 2005.

Similarly, the 31 “cottage apartment complexes”, valued at just CYP 28.9 mln, climbed 273.8% in value compared with those authorised in 2005.

Among the large categories, the biggest growth by value has been in residential apartment blocks, up by 10.8% to CYP 300.4 mln, and residential/commercial mix apartment blocks, up by 17.9% to CYP 55 mln.

Authorisations of office buildings have fallen steeply, by 41.1% in value and 25.8% in number.

After a strong start civil engineering has also fallen in value, although the number of projects authorised is still 45.6% higher than last year. Civil engineering projects probably relate mainly to the long overdue upgrades of Larnaca and Paphos airports.

Copyright © Financial Mirror 2006

Construction Cost up 3.9%

Nigel Howarth
-
0

According to the Cyprus Statistical Service (CYSTAT) data released on Friday, the Building Material Price Index in November 2006 recorded an increase of 3.9% to 133.68 points against 128.65 points in the corresponding month of 2005.

The higher increase was observed in the price of electro-mechanical products (+5.1%) and the industrial products (+4.8%). Also, the price of timber, stones and quarries and the chemical products showed an increase of 3.2% and 1.8% respectively.

On the other hand, the price of oil products fell by 3%.

In January-November 2006, the Building Material Price Index surged 5.04% compared to the corresponding period of 2005.

Copyright © 1999 – 2006 Stockwatch Ltd.

Beach Properties – Care of What you Own

Antonis Loizou FRICS
-
0

We are writing this article because there is a big confusion regarding what property owners of beach properties actually own. The seaside plots may be affected by the seashore protection zone. This zone, which is indicated on the official plans, sets a distance from the seashore line (approximately 300 metres) within which you cannot erect any structure.The word structure, includes items such as a pool, a kiosk, pavements, patios, fencing etc etc. It is an area of land which belongs to you, you can use the building density in the remaining unaffected plot, but it is an area which can be used only as a garden. If the plot/affect of the seashore zone is such, that you cannot exploit your ownership to its full extent, then you might apply for a relaxation to the local planning authority. If the authority is in agreement, then you will need the permit of the Council of Ministers. It is a difficult and lengthy process (it takes 2-3 years) and you must have a very good reason for the authorities to be persuaded to grand such a relaxation. It is certain that a relaxation will not be given for a pool, nor underground structure and not even a car patio (within the seashore zone).

Another item to consider is the area between the beach house plot boundaries and the seaside. This area, which you might use as “your” garden, in fact it is not in your ownership. In addition to the area affected by the seashore protection zone, the remaining area (towards the beach) may have been ceded from the privately owned plot, as a public green. If you buy a beach property, make sure that this public green area is not included in the deal, because we know that unaware buyers experience otherwise. This illegal inclusion of public green, as part of one’s garden, is more evidently seen in the Larnaca coastal line. We have noted one developer who includes in the square meterage of the plot for sale, the public green area which he himself has signed off for the public use!!

For these reasons when you buy a beach house/building plot, make sure that you clear the situation and do not adopt that what you see on the ground is/will be yours. The question remains however, whether the public green which is usually in front of one’s property, it can be used by the authorities to build something. The answer is that since the area falls within the seashore protection zone, then nothing can be built. It has become quite common, however, for the authorities to build a seaside walkway, placing benches etc, but nothing more. We have noted that in Limassol, for example, a number of kiosks has been erected, which we expect that they will become (illegally) into small cafes in the future. In this particular example in Limassol, these structures do not block anyone’s view and one could even argue that this is an improvement. If it happens under other circumstances however, bear in mind that the Government cannot do what it does not allow for its citizens (European Court decision).

Seaside house prices have shot through the roof over the recent years. Limassol prices are in the region of £7.000/m² (apartments, new, around £2.500/m².), Larnaca around £2.500/m². and for the Protaras area £3.000/m². Paphos has no seaside properties from which we can provide you with an indication, but should anything appears in the market we expect no less from £4.000-£5.000/m²ts. The prices quoted refer to new properties within the development areas and within the urban development locations. Remote beach areas have a much lower value and depending on the beach quality it will vary from anything between £1.500-£2.000/m² – all prices depend on quality and facilities provided. This trend of high prices has been caused primarily by the foreign market, since locals do not have the financial ability nor the inclination (being a holiday home) to pay a price which amounts to a “large” fortune. This situation is expected to get worse with prices moving upwards, be it not at the same fast rate as it was in the past and it will very much depend on the availability of the foreign demand. It is certain that Cyprus’ coastal line becomes shorter and shorter as development takes place, creating, thus, an increasingly monopolistic element of value.

By Antonis Loizou, FRICS – December 2006

Copyright © 2006 Antonis Loizou & Associates Ltd. All rights reserved

Structural and Routine Defects

Antonis Loizou FRICS
-
0

It is normal when someone acquires new property that he gets a guarantee for defects for a period of 12 months after delivery.

Although not stipulated, in most/all contracts, the Cyprus common law sets out that the developer is liable for ever for the structural stability of a building (other things being equal e.g. earthquake, bad maintenance etc).

What is a structural defect, is a defect which appears on the structural frame of the building, on which the whole structure is supported. So, subsidence of the foundations is considered as being a structural defect, as is the deflection of the beams, subsidence of floors etc. etc. These structural defects must not be confused by what it is more known as a routine defect. That is cracks on walls (unless they are caused by the foundation/frame subsidence), rising damp, decoration and maintenance items etc and even including rainwater coming in through the roof it will not be considered as being a structural defect.

Usually houses which are more then 2-3 years old, the structural frame has had the time to settle and any movement/defection in the frame will show (be it not always). For this reason, subject to your lawyer’s advice, even if your contract does not stipulate the structural stability, the developer should be liable. The question arises when you buy the property as a resale not from a developer and for these cases we suggest that you ask the seller for such a guarantee (the seller could obtain a back to back guarantee from the builder) but this is a difficult item to enforce. What we must stress to you is the use of licensed contractors in case you decide to build your own house. Depending on the class of the contractor, he can build so many square meters of building. So low scaled contractors, may not be in the legal position to build a house for you. In these cases and should the contractor is acting illegally (as well as you being the principle) we do not think that you can sue him for bad workmanship if something goes wrong, because you have done an illegal act together. So, do not place your 100% decision on the tender price only. Surely a defect may be caused not only by the contractor, but by the architect, who has designed the building, either by not producing details, or by providing the wrong detail in the plans/or even due to the lack of supervision/improper supervision. We must say that at this point of time with the rush to get on, on the “gold mine” train of real estate development, the quality of building is not what it used/should be.

During our structural surveys, we have noted at one house at Tala that the pool has actually moved down the hill, another pool at Paralimni has actually tilted, whereas another building at Peyia has evident cracks on the building’s frame, indicating either movement and/or lack of proper design/execution. In these and other cases, do not expect necessarily that you will be covered by your insurance of the building, because you might find that there are exclusion clauses for which you have never dreamed of!! In a recent case, the insurance company refused to compensate an owner for “flooding”, damage due to water coming into the house from the veranda drain, because it claimed that the veranda drain was wrongly designed!

We must repeat our previous article by extending our warning that, like a car, a building needs a constant monitoring and maintenance. If you see rising damp, a crack on the external pavement, the woodwork rotting etc, please get on to it and try to solve the problem, because it can get worse and we can assure you that if you meet the problems at their initial stage, the repair bill will be lower than the routine service charge of your car, but if you leave it for later you might find that the cost to put things right will be more than the value of the car!!

Having said all these, in actual practice, can you actually find the small and reliable contractor who can carry out the repair/maintenance of your property? Not easily and we can say that for foreign people is particular who do not have the “local know-how” might be a nightmare.

Copyright © 2006 Antonis Loizou & Associates Ltd. All rights reserved

Holiday Home Buyers Return to France and Spain

Editorial
-
0

British holiday home buyers are returning to the traditional locations of France and Spain when looking for property, according to a new survey.

The two countries, which have long been popular holiday home destinations, made up 55 per cent of all currency transactions for buying property, according to the latest study from currency specialist HIFX.

In recent years, France and Spain have had to deal with competition from newer hotspots in the Eastern Bloc, according to HIFX, but the countries seem to have made a resurgence.

According to the study, the number of enquiries for property purchases in newer hotspots such as Bulgaria, Morocco, Dubai and Cyprus either remained the same or went down.

“Despite a fair amount of dabbling by investors in some more exotic locations, old time favourites France and Spain are still the first choice for British buyers looking for a holiday home or retirement home,” said Mark Bodega, marketing director of currency specialists HIFX.

“With the markets in both countries having slowed down over the last 12 months, we are seeing some really good bargains coming up, and it seems that many canny Brits have also spotted this and are beginning to return to these traditional overseas markets in increasing numbers.”

Copyright © 1998-2006 Holiday Lettings Ltd

1...677678679...691Page 678 of 691