During these difficult times that we are experiencing and the non positive prospects of the year 2010, for all of us, who deal in real estate, either professionals / developers / investors / buyers and others, Christmas appears to be a welcoming brake. It will give us time to relax, forget for a short period of time our difficulties and hope for the best in the future. Wining and dining, getting together with friends and family, is a way out of this situation, but how long will this last?

Nevertheless a short holiday from this situation will give us all, time to consider our circumstances for the future. We wish to submit a positive note and with special reference to our foreign residents/investors, we repeat ourselves, do not panic. Keep a cool head and look at the positive side of things, at least, regarding the real estate situation in Cyprus, with special regard to the loans that we are all under.

• As a generality, we suggest that local financiers do not take legal action against defaulting borrowers, since they will have a problem themselves if they do this. What are the Banks going to do with a repossessed property, if there is no demand for it? Better to charge interest on delayed payments, on defaulting buyers for which they can make a rescheduling rather than having recorded “non performing loans” and admit failing of repayments, since in this case it will be indicated as a loss in their books.

• Repossession procedure takes a very long time, something like 3-7 years(+). So even if the bank charges interest at 7% (delayed payments can reach up to 12% interest, but at the end banks will negotiate to around 7% as a settlement) one hopes that prices will improve or the market/business will be better at the year 2010-2011. So instead of selling out with “a loss” of 20%-30%, a 7% p.a. charge can be, in theory, affordable.

• How can a bank proceed with a forced sale, if you have no title deed? (one of the advantages of not having one). The Lands Office can only force sell if one has a title (there are other parameters as well, such as the appointment of a receiver etc, but not all banks have such a proviso in their loan documents).

• If you let your property to a tenant (of a building which was completed before 31.12.09) then the tenant becomes a statutory one, protected as such by the Rental Control Laws, hence the sales value of let properties, under these circumstances, is reduced considerably, perhaps, depending on the rental passing, by as much as 50%. So will a bank forceclause on a property which has such a restricted value? Having said that, care is needed so as not to be accused for fraud (it needs careful handling) by letting out a property prior to a forced sale.

• The international economy is improving and for the foreign buyers, who are mainly from U.K., the situation is also showing signs of improvement. Hopefully by the year 2010-2011 a revived interest will appear for Cyprus real estate and the present sales, having to compete with “opportunities” that now exist at discounted prices, these opportunities will not be there. Also, bearing in mind that no new projects are now being built, the situation will improve due to the reduced supply.

• The title deed situation by that time (2011) will more or less find its route for a solution and with this problem behind us, one hopes that it will not be a major obstacle for sales in the future.

• Etc etc

Dear readers, we wish to inject a glism of hope for the future. We know that the Banks will increase the pressure during the year 2010, threatening letters etc and for which foreign people in particular, take these threats particularly seriously and they are worried, causing them psychological and other distress. Surely we do not suggest to ignore them and think that the future will be lovely. But, do not panic. Locals do not pay particular attention to such letters, knowing the difficulties involved in a repossession and sale. A deposited contract with the Lands Office has a lot of advantages, one of which is the difficulty involved in foreclosure on mortgages.

This is one of the last articles of this year (2009) and we wish to offer you hope for those who are in difficulty. Being Christmas, forget your problems (easily said that done we must say) but it is not the end of the world. You have claims and rights yourselves and use them, especially in this country (some people are accusing Cyprus for being not in accord with the E.U. – thank God for it). Place in the back of your minds the debts/mortgage problems and have a good holiday and God is great, do not lose your hope. We and this paper will be here to help those deserving, who are in difficulty and to the extent that we can we will offer our advice.

Happy Holidays..

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