A title deed dilemma continues to haunt the Cyprus real estate market, discouraging potential foreign buyers. Then on top of that there is also the prospect of a property tax hike, which is further aggravating market troubles. Thousands of untitled Cyprus properties are in jeopardy, with little progress on proposed deed legislation. See the following article from Property Wire for more on this.
Property owners and potential owners in Cyprus are facing a series of gloomy news as attempts to sort out the island’s long running title deeds disputes are delayed and an expected recovery in the real estate market is failing to materialize. The Cyprus government has been unsuccessful in its attempt to introduce the five bills designed to accelerate the issue of Title Deeds by the end of the parliamentary session so nothing will move forward now until after the summer recess.
Yiannos Lamaris, the House Interior Committee Chairman, said the bill is unlikely to go before parliament before October at the earliest. It is estimated that around 130,000 properties on the Mediterranean island do not have title deeds as they were either built illegally or are subject to second mortgages taken out by developers.
A year ago Interior Minister Neoclis Sylikiotis announced a series of amendments to the law to alleviate the problem but there is intense frustration that it is taking so long to action the new rules. Industry commentators believe that global headlines about the title deeds fiasco and stories about property owners having their dream homes demolished has contributed to a serious decline in the number of international buyers.
Critics also believe that the new laws will just gloss over the problem as they amount to nothing more than an amnesty for developers who have ignored planning laws and taken out mortgages on properties they have then sold to unsuspecting buyers. As a result buyers have no title deeds and risk losing their homes if the developer can’t pay the mortgage or goes bust.
Although the latest figures show a slight improvement in the number of foreign buyers they are still way below norms. Data from the Lang Registry shows that overall sales were up 9.6% in the first half of this year compared with the same period in 2009.
But the picture is patchy. Sales are mostly increasing in Nicosia and Limassol but in Larnaca, a popular location with foreign buyers they have fallen by 3.5% and are down 0.7% in Paphos.
During the first six months of this year, 231 contracts in favor of foreign buyers were completed and although this is up 9.6% on last year it is 76% down on 2008 and 84% below the peak in 2007.
According to real estate insiders many potential British buyers are put off by the title deeds fiasco and refuse to consider a new property. There is also concern about the Cyprus government’s plans to raise an additional €80 to €100 million in taxes from property owners in efforts to combat the recession.
On top of this ratings agency Moody’s has downgraded the deposit and debt ratings of the Bank of Cyprus and the Marfin Popular Bank. Its says that this is partly due to the fact that ‘the country’s real estate market, which is a significant component of the banks’ loan books, remains a risk area with unclear growth prospects and weak demand’
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.