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Construction Methods

Nigel Howarth
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The method used for building property in Cyprus is quite different to that used in many other European countries, including the UK.

The island is situated in a seismically active region of the world and the Cyprus Government requires all property to be built in accordance with strict anti-seismic regulations. – As a result, most property is built using a rigid, reinforced concrete skeleton with a brick infill. In the event of a serious earthquake, the skeleton is designed to remain intact although the brick infill may fracture and fail.

This type of construction is not unique to Cyprus; it can be seen in many other countries that are susceptible to earthquakes.

Although the majority of new property is built of reinforced concrete and brick, other construction methods are gradually appearing. These include:

  • Timber frame.
  • Steel frame.
  • SIP (structural insulated panel).

These properties are cheaper to build and some may have better insulation qualities than their concrete and brick counterparts. However:

  • Their ability to withstand the voracious appetite of the indigenous insect life and the long- term effects of the climatic and seismic conditions has yet to be fully established.
  • Companies using these construction methods are relatively new and, with one or two exceptions, have yet to establish their credibility in the marketplace.
  • The cost of insuring a timber property can be twice that of an equivalent property built using the reinforced concrete and brick infill technique due to the increased fire risk.

If you are thinking of buying a property built using one of these newer construction techniques, make sure that the developer and their builder have proven track records and a long list of satisfied customers.

Buying New Property in Cyprus?

Nigel Howarth
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I was once asked the question “Why are all villas and apartments for sale in Cyprus advertised as being ‘luxury properties’?” I replied “Because if the developer can sell them to unsuspecting expatriates, he’ll be able to retire in luxury!”

OK, it’s a joke and many expatriates have no problems when buying property in Cyprus. However, a significant number run into difficulties of one sort or another.

Property developers

You will be surprised how many people you meet in Cyprus will offer to build you a property. These ‘entrepreneurs’ can be anyone from your airport taxi driver to the barman at your hotel or the owner of the local taverna. Most of them own small plots of land that they are only too willing to sell, complete with a house, to an unsuspecting expatriate. Unfortunately most of them know as much about building a house as I know about brain surgery!

There are also many professional property developers. Some of these build a small number of high quality properties each year, while others build large residential and holiday complexes specifically designed for the overseas investor and expatriate. markets.

Due to the differing levels of skill, professionalism and integrity of those involved in property development, the quality of construction varies greatly. At one end of the scale you can buy high quality, high specification properties that have been built with meticulous care and attention to detail. While at the other end of the scale, you can buy properties that will deteriorate rapidly costing you a fortune to repair and maintain.

If you’re buying a new property from a developer always inspect properties under construction and older properties they’ve built to assess the build quality for yourself – and remember to speak with the owners of those older properties and get their opinion of the developer and his after-sales service.

Cyprus Property and Title Deeds

Nigel Howarth
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Cyprus is one of the few countries in the world that maintains an effective land registry system in which all ‘immovable property’ (a term that relates to land and buildings, trees and plantations, rivers, wells, and all rights relating to land and buildings) is registered.

(The system used in Cyprus is very similar to the one used in the UK prior to its computerisation).

Title Deeds, which in Cyprus are also known as “Certificates of Registration of Immovable Property”, are formal documents that serve as evidence of property ownership. Each piece of immovable property has an associated Title Deed which contains information such as the registered owner of the property, its size, its location and the Lands’ Office reference. Conveyance of this document is required to transfer ownership of the property to another person.

The actual transfer of ownership is carried out by officials at the District Lands’ Office at completion, when the Title Deed is ready and available for transfer. At this time buyers pay the Property Transfer Fees, which are Cyprus’ equivalent of the UK Stamp Duty.

Why bother with Title Deeds?

Many expatriates claim that it is perfectly OK to buy a property without securing its Title Deed. Many of them boast about the money they’ve saved by not paying Property Transfer Fees and completing on their purchase.

So what are the benefits and disadvantages of not having your Title Deeds?

Benefits of not having Title Deeds

  1. On the plus side, you do not pay Property Transfer Fees to complete the purchase and have ownership of the property transferred to your name.

Disadvantages of not having Title Deeds

  1. You are unable to enjoy the full benefits of property ownership, including the right to transfer it to anyone you wish.
  2. As the property is not legally yours, you are not free to sell it to whoever you want without reference to its owner.
  3. Should you wish to sell, you have to come to an arrangement with its owner. This will require you to cancel your contract of sale which will enable the owner to enter into a new sale agreement with your buyer.
    Note that an exorbitant contract cancellation fee is often demanded by the owner to render this simple service.
  4. Even though the assessed 1980 value of ‘your’ property falls below the CYP 100,000 threshold, its registered owner may require you to pay Immovable Property Tax.
  5. Although you may have paid for ‘your’ property in full, its registered owner may still be able to use the property as security to raise a loan.
    If this happens you will find it difficult, if not impossible, to sell the property.
  6. Without a Title Deed you will be unable to use the property as collateral to raise money and unable to access any of the capital you have tied up in it through equity release schemes and other mechanisms.
  7. As the Cyprus financial institutions currently refuse to grant mortgages on resale properties without Title Deeds, anyone wishing to buy the property you have bought must be a cash buyer.

Unfortunately, some people continue to promote the view that Title Deeds are of no value and of little consequence.

Construction Output Accelerates in Quarter 2

Editorial
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Construction output in Cyprus accelerated in the second quarter of 2006 and also rose faster than initially estimated in the first quarter, according to the latest figures from the Statistical Service.

The construction output index in the second quarter reached 138.8 units (base year 2000=100.0), recording an increase of 6.9% over the second quarter 2005.

The index for the first quarter was revised upwards, so that output rose by 4.7%, compared with an initial estimate of 3.7%.

Civil engineering works are racing ahead, without output rising by 26.8% year on year in the second quarter, from an upwardly revised 13.7% in the first.

Building construction slowed slightly, rising by 1.4% in the second quarter after 2.7% in the first.

At the same time, overall construction output prices eased slightly, from an increase of 9.8% year on year in the fourth quarter of 2005 to growth of 9.5% in the first quarter of 2006 and 9.3% in the second. However, within that category, growth of civil engineering output prices accelerated, from 11.8% in the fourth quarter to 15.8% in the first and 17.8% in the second. Presumably the fast growth in output is also putting upward pressure on prices

13th October 2006
Copyright © Financial Mirror 2006

Deadline on Title Deeds Law Extended

Leo Leonidou
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Parliament on Thursday night voted to extend the time period in which the law for the legalisation of a significant number of irregularities regarding immovable properties purchased before March 2005 is in effect.

In an effort to combat the huge delays facing property buyers in the issuance of their title deeds caused by the recent property boom, the government enacted the temporary law 18 months ago, but it was only valid until the end of September 2006.

Lawyer George Couconis, who is a property specialist, told the Cyprus Mail that the most important reason why most of the developers do not take the necessary steps to obtain separate title deeds is that there are irregularities in the construction which they are not interested in rectifying.

“Also responsible for this situation are the town planning authorities and the local authorities, who tolerate this situation,” he said.

“The extension of the time period of the law will enable the legalisation of several irregularities but only to the point of the issuance of a certificate of completion of works – and not title deeds.”

He added that when somebody has not received their deed, legal action has to be taken against the vendor with the appointment of a third party who will issue title deeds on behalf of the vendor.

To be able to take such action, special provisions had to be included in the purchase contract, which should also have been submitted to the District Land Office within a specified time period.
An amendment to the law is being sought by a DISY deputy in an effort to combat the huge delays.

But Ionas Nicolaou’s bill involves no legal action, “which is too time-consuming, expensive and complicated.” He is proposing that, “a buyer has the opportunity to apply to the Land Registry for the deed on presentation of Town Planning’s certificate of approval,” adding that, “in the case of a block of flats, the block must be divided into separate flats, with each buyer receiving a separate deed. As the law currently stands, only the developer can apply for the deeds and not the individual buyers.”

George Perdikis said the extension “will run until January 1 in an effort to come up with a proper solution”.

The Green Party leader said that more should be done to severely punish developers. “If they were threatened with jail, I’m sure they would be more cooperative in issuing deeds.”

Chairman of the House Interior Committee, Andros Kyprianou admitted, “that a number of problems need to be solved on the issue,” noting that a meeting will take place with Interior Minister Neoclis Sylikiotis on Monday.

Copyright © Cyprus Mail 2006

Cyprus Home Price Index – September 2006

Nigel Howarth
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The Cyprus home price index is published monthly by BuySell Cyprus Real Estate, a real estate advertiser.

The company started to produce its home price index in 2004. It shows the movement of prices at which residential properties in Cyprus are sold and is based on an average of around 400 to 500 home sales/month.

When the index started in January 2004, the average residential property price was CYP 77,910. By the end of August 2006, it had reached CYP 92,459 – an increase of 18.67% over the 33 months since its introduction. This equates to an approximate annual growth of 6.79%.

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