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Construction cost up 72.9% in 6 years

Nigel Howarth
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According to CYSTAT (the Cyprus Statistical Service) data released on Thursday, the construction cost in Cyprus soared 72.9% in the past 6 years. In the second quarter of 2006, the producer price index stood at 171.2 points against 99 points in the corresponding period of 2000.

Compared with the second quarter of 2005, the producer price index increased by 9.3%.

It is noted that the construction cost includes the material cost, the labour cost and the contractors’ profit.

Sources support that the increase in the construction cost is linked to the price hike on fuel.

The Production Index in the second quarter of 2006 showed an increase of 6.9% compared to the corresponding period of 2005.

Cyprus real estate agents criticize state

Editorial
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The real estate agents have criticized strongly the state for the latest increase in the price of properties, since they believe that it is receives not a negligible sum from the value of sale.

“A study revealed recently that 30% of the value of properties go to the state funds. The only way out is to abolish the transfer duties for plots and cut the capital gains tax from 20% to 10%. These measures will moderate the sum that ends up at the state funds by 8%-12%”, Vice Chairman of the Real Estate Agents Association, Solomon Kourouklides told StockWatch.

Taxation

According to Mr. Kourouklides, the imposition of taxes during the procedure is as follows:

  • Transfer duties paid at the sale of the property, which is 3% for a value of up to £50 thousand and 5% between £50 thousand and £100 thousand.
  • The capital gains tax imposed on the profits of the property sellers, which stands at 20%.
  • VAT of 15% on material and labour costs.
  • VAT of 15% at the sale of the house, unless this is the first residence. In that case, the government returns 10% of the VAT.

Solutions

The property price hikes is the major issue of discussion of the House Commerce Committee in the past two weeks. According to the Committee, the increase in the price and value of properties is linked to the high demand and the low offer. In the next few sessions, the MPs will deal with all the aspects of the issue.

© 2006 Stockwatch Ltd

One Good Deed Deserves Another

Editorial
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LAST YEAR a law was passed that, supposedly, would have made it easier for buyers of apartments to obtain title deeds for their properties, title deeds for which they had been waiting for years. Although the law was hailed as major breakthrough at the time it has proved ineffectual, with big waiting, its only achievement being that it created more business for lawyers and more work for the courts.

Having a title deed issued, as one lawyer pointed out, required legal action against the vendor and the appointment of a third person who would issue title deeds on behalf of the vendor. To be able to take such action special provisions had be included in the purchase contract, which should also have been submitted the Land Registry Office within a specified time period.

We mention this merely to highlight the complexity of the matter and to show how last year’s, ‘breakthrough’ law has done next to nothing to resolve a widespread problem. Buyers are still being strung along by developers, being made to wait for years for a title deed which should, theoretically, be handed over as soon as they have completed the payment for a property.

A buyer would eventually be issued a title deed but this could take between two and 10 years, which is just not good enough. Yet the authorities are not concerned about this perverse situation nor do they see the need top protect buyers. This is because the deeds are eventually issued and very few buyers, if any, have been stitched up by developers. But can the possibility of a developer, who has not issued title deeds to buyers, going bankrupt ever be ruled out? Would buyers ever receive title deeds in such a case, or would the properties they had paid for in good faith, remain the ownership of a bank?

How much wiser it would be if the authorities took measures for resolving the matter before there is such a crisis. The current state of affairs suits only the developers, who avoid paying their tax dues for as long as title deeds are not issued; they could also use the deeds as collateral for financing other projects. As they are not penalised, they have no incentive to ensure the issuing of deeds. They build apartment blocks without securing a certificate of approval from the relevant district office without which no title deeds can be issued – this seems to suit them perfectly.

Speaking to the Sunday Mail, the assistant director of the Town Planning and Housing Department, said the delays in issuing title deeds are caused by two factors – the very big number of applications and the developers’ habit of building apartment blocks before securing a certificate of approval from the relevant district office. The first problem can easily be overcome by the employment of more staff to deal with the workload. As for the developers, the government needs to get tough and there are plenty of ways of doing this – it could impose heavy fines on developers who fail to issue title deeds or build without a certificate of approval. If developers faced a fine of £100,000 every time they ignored the law they would have no choice but to show some respect for the right of their customers.

Copyright © Cyprus Mail 2006

Can Cyprus Cope with a Property Boom?

Editorial
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Sir,

I read with interest your story urging us to “get ready for a property boom” (October 4). Is Cyprus equipped to cope with this new demand for housing and as a result the need for more residence permits and access to healthcare? The current system seems stretched beyond its resources. As an example, my husband and I have been waiting 10 months for our medical cards and immigration documents.

As British citizens, we are of course entitled to health care in Cyprus under a reciprocal agreement; however, seemingly this is not possible until we are in receipt of the aforementioned documents.

Having lived in other countries in Europe it is quite clear that housing prices are increasing throughout all countries, and this would appear to be a normal phenomenon where first time buyers struggle with first homes.

Maybe if deeds were issued more quickly i.e. less than the two plus years it takes now, then money would return to the budget and more people could work within Town Planning Departments, reducing the lengthy waiting times and the bureaucratic procedures that Mr. Christoforou mentions.

Cyprus is a lovely country and my Cypriot neighbours have welcomed us in the same way that we welcomed the many Cypriot people who came to live along side us in London.

Judith McCleary,
Souni

Copyright © Cyprus Mail 2006

Title Deeds Confusion

Editorial
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Sir,

I found your article on title deeds very interesting, because last year with the amnesty announced, we decided that after purchasing our property in 2000, and still no title deeds in sight, we would apply under this new legislation.

We proceeded to fill in all the necessary forms with house plans (as we had made some alterations) and we presented them at Larnaca Town planning. We were asked to pay two amounts, one of £250 and the other £125, which was apparently something to do with the developer, but I’m not sure what.

We were led to believe with the amnesty that irregularities or any illegal alterations would be considered with the amnesty, in order for people to obtain the certificate for the title deeds. However, on Thursday we received a telephone call from town planning, advising us that our application had been rejected as we had exceeded the 10 per cent allowed. At no time were we advised of this and had we have known would never have spent nearly £400 for nothing.

Surely, what is the true definition of an amnesty? The government should have made it clear to all applicants. We were promised out title deeds within two years of purchase and here we are in 2006 still waiting, and the developer still has three more houses to build, which will be for his own family, and also we have since found out that three of the properties built on our complex were built without a licence. The Title Deed situation is like a bottomless pit!

Alexandra Timmis,
Larnaca

Copyright © Cyprus Mail 2006

Cheapest Property in Europe? Maybe Not

Editorial
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WHILE apartments in Nicosia may be cheaper than those in capitals of other EU countries, it does not follow that Cyprus is the cheapest in the EU for properties and real estate, according to chartered surveyor and property appraiser Antonis Loizou.

Speaking on Tuesday before the House Commerce Committee, head of the Land Registry Department Andreas Christodoulou said that when it comes to properties, apartments, houses, and land, Cyprus is the cheapest country in the European Union.

Christodoulou said that the low prices have prompted a great demand on part of Europeans to buy property and real estate in Cyprus – especially in coastal areas like Larnaca, Limassol and Paphos – which in turn will lead to higher prices.A recent Land Registry Department study estimated that the value of land, apartments and detached homes would increase by seven and 12 per cent depending on the area.

But according to Loizou, though it is not unreasonable to say that properties and land are cheaper in Cyprus than in Western Europe, there are many factors that must be taken into account, such as the per capita income and the population size.

“If you go to Amsterdam or Paris, then of course Cyprus will seem cheaper. It would be a joke to go to central Paris and compare it with Kennedy Avenue,” Loizou told the Cyprus Mail.

“You have to go somewhere where the population is the same as in Nicosia,” he said, adding that even Poland would seem more expensive than Cyprus if Warsaw were compared to Nicosia.

Loizou said that a fair comparison would be to find a town in the UK with a population of around 200,000 people, which would be equivalent to the population of Nicosia.

“And then you have to compare the per capita income. In the UK it is about $30,000 per head, while in Cyprus it is about $14,000.

”But for Western Europeans accustomed to high per capita incomes, Cyprus properties may seem an excellent value for their money. With the inevitable increase in property, it is Cypriots who will be left in the lurch.”

Chairman of the Commerce Committee, DISY’s Lefteris Christoforou noted at Tuesday’s meeting that even now, before any further increases, Cypriots were already having trouble purchasing homes.

“Unfortunately, it is obvious the increase in prices is a problem that makes it difficult for working and middle class Cypriot families to obtain their own homes, something that was taken for granted in previous years,” Christoforou said.

Copyright © Cyprus Mail 2006

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