Q.: Dear Antonis,
I would appreciate if could advise me on a big problem I
am having with our
developer, I have had a lengthy correspondence with him
over the illegal
payments for IPT tax he charged myself on the sale of
our previous home
and the IPT tax he charged the previous owner of our
present home, a total
of £2900. It is obvious he has broken the law because he
cannot show us
proof of payment to the Cyprus Government, also what he
did charge us was
over and above the rates under the current law,and also
he would not
consent to the sale of our houses until payment was made
He is now
maintaining that all will be settled when the Title
Deeds are issued, we
have been waiting for them for over 18 years, although
he did advise us 18
months ago the Titles were ready. He has had our money
now for nearly 6
Years, Is what he is doing legal and within the law. Your
point of view would
be most appreciated.
Thank you.
Bob Davies
Ayia Thekla
A.: I assume that what you describe as IPT tax is the
annual property tax. This is a never ending problem and
we have covered the subject in our past article, Q+A
column (see our web site). The non issue of the title is
one thing and if I was you I would have checked why they
have not been issued so far. It is correct to say that
because the annual property tax is based on the 1.1.80
value of the property no one knows the value. There are
various formulas adopted by the developers ranging from
20%-30% of the present value. The 1.1.80 value is set by
the Lands Office on the issue of the titles. You must
obtain receipt of your “tax” payment and once the titles
are issued and provided your total real estate wealth as
at 1.1.80 value does not surpass £100.000 you will be
eligible for a refund of the whole amount from the tax
authorities.
Q.: Mr Loizou
I wonder if you can shed a little light on our problem.
We moved into our villa last July, it is located in the
agricultural area of Kathikas. In our contract with the
developer, they agreed to supply all services (water
electric sewage), which to the present date they have
supplied water and sewage. However the electric is
taking some time. We have been promised on numerous
occasions, next week, our the week after, or in two
weeks. We god fed up with the constant bluff, so we
asked the developer for the application number; they
flatly refused to give us it. So we decided to visit the
electric board in Paphos, only to be told that there is
no application in place for our property.
The property is situated about 400 m from a government
road; however there is a well used road right next to
us, could the distance away from the main road be part
of the problem.
We would be most grateful of any advice that you can
give us in this matter, apart from the obvious one, the
courts.
BT Kathikas
A.: What I suspect happened is that the building may not
have a building permit, hence the EAC
connection/application. I do suggest that should you
have a building permit to get the house electrician to
submit an application for electricity supply. It might
take a couple of months to connect but there is no way
that you will never be provided with electricity (if a
building permit in hand).
A.P. Loizou
Q.: Dear Mr Loizou,
Thank you for your informative articles in the Cyprus
Weekly,
We live on a small Complex. I and our residents are
really fed up with being fobbed off regarding our Title
Deeds.
We bought our property in 1993 and our contract states
we would have the Title Deeds within 4 years. We have
constantly been promised year after year that they would
be available within months, however, there is always an
excuse why they can’t be issued i.e. the drawings are
not correct and it is the Land Registry that is the
problem.
I understand that we do not have to wait for the
Collective Deeds, they can be separated – is this
correct?
Regarding Property Tax, which we have paid every year,
as our property was bought for £35.000. Are we entitled
to claim back all the monies we have paid over the
years?
Yours sincerely
Mr Kenneth Goad
A.: The developer can secure what is known a Partial
Certificate of Approval and provided certain parameters
are in place (road works, infrastructure, public green
etc are completed) he can proceed with a partial issue
of titles for those units, which are completed. If you
do not have property worth more than £100.000 as at
1.1.80 (total of all properties that you have in Cyprus)
you are entitled to get a refund once the title deeds
are issued, provided you have deposited your sales
contract with the Lands Office and you have proof of
payment.
Q.: Dear Mr Loizou,
Some weeks ago you mentioned, in request to a question,
that VAT need only be charged once on a house
sale/purchase.
My own house was completed in 1994 on land I purchased
in 1991, presumable long before VAT has reared its “Ugly
Head”.
If, “Heaven Forbid”, I should ever need to put my home
on the market, would the sale now be subject to VAT?
If so, what percentage and how? If for the sake of
argument my minimum reserve price be 200.000 Euros,
would I have to add the VAT % on top of this figure and
at the conclusion pay the tax man the difference?
I will be most interested in your answer, many thanks. I
have only recently been alerted to your columns and find
them both refreshing and most enlightening.
Yours sincerely
A. Hugh Ollerenshaw
A.: My dear friend thank you for your comments regarding
our articles. Sleep peacefully. Your property does not
attract VAT. VAT is applied to those properties for
which a planning application to construct was made after
1.5.04. It applies only once (for those properties which
fall under this category). For those which bought a
property with a VAT when they sell, they will not ask
the potential buyer to pay VAT in addition (but
evidently in the seller’s mind the VAT cost forms part
of this acquisition cost and should the market permits
it, he will add it on the total asking price).
A.P. Loizou
Q.: Dear Mr Loizou
Since I bought my property almost three years ago a
number of issues have arisen concerning the quality of
service I got from the lawyer who dealt with the
conveyancing.
The original plans for the house were not shown or
provided to me until the final payment was made and the
deeds transferred. At that time I decided to invest in
the installation of solar panels to generate electricity
whereupon it transpired that the previous owner had made
structural alterations to the property that had no
planning permission and were, in fact, illegal. In order
to rectify this I engaged an architect who made new
drawings of the entire property and proposed the illegal
parts, which included a car port, to be demolished. The
existing solar panels which have never been connected
due to the illegality of the structure upon which some
of them were put will have to be removed and reinstalled
on another site. I have just received the building for
the new proposals and I am hoping that work will start
very soon.
All the above will, of course, cost me a good deal of
money and my question to you is – do I have recourse in
law against the previous owner for misrepresenting the
property as having full planning permission as well as
the lawyer who failed in his duty to check this out? One
only has to read your column each week to realize that
the legal profession in Cyprus quite often seems to fall
short of what one would expect and I have no wish to
throw good money after bad but I do not see why I should
suffer the cost for the failure of the lawyer to do his
duty and for the dishonest of the previous owner who,
incidentally, was British!
I hope that you will feel able to deal with this
question for me.
Yours sincerely,
D.M. Milton-Head
A.: If you specifically asked for a permit and you got
assurances that it had, yes, I will say you have a case
against the previous owner. Regarding now the lawyer you
have engaged, it depends on what instructions you have
given him. I would expect a lawyer to check for a permit
but in your case since you had a title, he must have
assumed that the permit was OK. Having said that local
people are not particular about illegalities that
happened after the issue of titles, provided of course
they are minor. If in your case the illegal structure
was just the car-port and some other minor things, this
is within the «acceptable» by the market standard (after
title issue). In this case you expect that the solicitor
should check the original building permit, the situation
as is and to relate those to the title – I do not think
that he is at fault because this is not a normal
procedure (all these provided when you bought the
property it had a title). What more can I say,
barbecues, patios, car ports, even a swimming pool are
done after the titles are issued and unless reported the
authorities will not bother!!
A.P. Loizou
Q.: Because you publish from time to time
the “lighter” questions in your Q+A column Ι want just
say this. When I visited Laxia Municipality to register
my dog, the cashier told me of a “funny” story that our
Mr Antonis Loizou has two dogs which are registered as
such Yiannis (John) and Costas (Constantine). My dog
under registration is Jerry – What is the odd thing
about this situation of names by locals?
Harry & Nick – Laxia
A.: It is OK by locals to call their pets by foreign
names, e.g. Max, etc, but when you register them with
the Greek names they get the shock. I have such a great
fun to see the Municipal employees reaction when I
repeat the names, notwithstanding the fact that this is
the 3rd generation of the dogs we have with the same
names. I must tell you about my parrot (Tassos)
Anastasios.
Do not get upset my friend, this is a country not
particularly known for their animal loving attitudes,
but it is improving. Not a real estate question, but I
want to clear the air on other letters of a similar
content as well, which I receive.
A.P. Loizou
Q.: The contractor has delivered the
house to us and we took possession. Since our
possession, we have discovered several problems with the
house, not substantial, but the contractor refuses to
make good because he claims that he is not responsible
for repair after possession. We feel that there cannot
be such a law. Please set our mind at rest Mr Loizou
because we are quite worried.
Jagil & Neo Hamstead
A.: Notwithstanding the fact of your possession, the
contractor is responsible for the repairs that fall
within the maintenance period (approximately 12 months
after delivery), which is so stipulated in the contract.
If there is no agreement as to what is a necessary
repair or not, the supervising architect will decide.
A.P. Loizou
Q.: I have read
the Royal Institution of Chartered Surveyors’ report on
the European Housing Market, which shows Cyprus as
having a 15% increase in house prices. Save Poland,
Cyprus appears to be the second highest rate of
increase. Yet in your recent article in this paper, you
predict “dark clouds” gathering in the Cypriot Housing
Market. Any revision of your predictions Mr Loizou?
Harry & Joanna Lakis
A.: The result of the 15% increase refers to an
advertising Co’s (as they call themselves) statistics.
Prices are moving upwards but in certain areas only and
from what I am aware, this index cannot be adopted as a
bible. When we refer to the housing market, it does not
cover the Russian demand, neither the foreign demand,
but the local market, which represents approximately 80%
of the total transactions. The correct approach for a
price index on a worldwide basis, is the valuations
carried out by professional firms. With our 10.000
valuations p.a. coupled with our estate agency deals,
indicates quite a different situation. Dark clouds are
indeed gathering, not only because of the constant
increase in costs, inflation, the rate of exchange
between Euro-Sterling and at the end competition from
other countries. As an icing on the cake, we will soon
have V.A.T. on building land. These increases do not
relate to the ability of locals and partly the foreign
market to pay. The effects are already with us and the
year 2008/9 will not be as bright as the previous years.
We have estimated that housing prices have increased but
no more than 10% over the year 2007 (in relation to the
year 2006) and with the new taxes and perhaps, new
financing restrictions imposed by the Central Bank, the
situation will be more difficult. We anticipate that for
the local demand prices will not exceed a 7% increase
over the year 2008, but more importantly the rate of
sale will fall by even more. Look at what is happening
to Paphos with hundreds of resale properties and with
developers offering, without asking, a 10% commission to
local estate agents. So the foreign market is also
affected especially in areas where there is a large
concentration of foreign buyers who, perhaps, have
acquired property for resale in the future. If what you
have in mind is investment (rent), opt for the town of
Limassol (as a first choice) and Nicosia (as a second)
where demand is more predictable and stable and in
addition to the foreign demand (Limassol) it has a
strong local market to support a resale, where foreign
buyers are more permanent/business residents, as opposed
to speculative second home buyers.
A.P. Loizou
Q.: I have read through the press that international
tour operators are not pushing Cyprus due to the water
shortage, whereas reading your Q+A column, I have noted
the discussion of some potential home buyers from abroad
leaving Cyprus not out of their choice, for the same
reason. Have you experienced such a trend on home buying
and if you have, what are the price effects on the
prices of homes?
Dalia Alenn
A.: We did not experience any sort of calculable
reduction in foreign demand out of this situation,
although we did experience some negative comments both
from tour operators and some potential house buyers. I
do not feel that the reduction of foreign demand (on
average 6.000 units p.a.) will reach more than 5% out of
this situation. Water shortage is a fact and it will
deter some people, but bear in mind that the Government
is doing something about it so that this situation will
not repeat itself.
A.P. Loizou
Q.: I have read in the press that Cyprus Property Action
Group has teamed up with the property owners
association, in order to have a stronger voice towards
the Government and others. A lot of importance was
placed in the newspaper reports but I have my doubts as
to the effectiveness of the venture – What do you think
Mr Loizou?
Harry Aristotele
A. The two groups are a bid unrelated and the goals of
both associations are as a priority quite different. Any
get together will help, but I doubt as to the
effectiveness of the venture. I would have preferred if
the Property Action Group teamed up with the Developers
Association (impossible bearing in mind that the
Property Action Group has the developers to blame
mainly). The property owners association refers mainly
to wealthy individuals who have large real estate
holdings, whose priority is the abolition of the rent
control act, the reduction of real estate taxation and
whatever it will make real estate more profitable than
otherwise. The Property Action Group has been set up
because of the problems of titles, illegal buildings,
delays in building permit issues etc. I will say the
second group is more appealing to the public (my
opinion).
A.P. Loizou
Q.: I was informed through your column that we will need
a planning permit in order to install a satellite dish
in excess of 3 meters diameter. We have applied for a
permit 5 months ago and we did not have a reply, despite
the fact, as you say, we ought to have had one within 3
months from the date of the application. Shall we go
ahead and install it anyway??
Suzanna Lovely
A.: A difficult question to answer Suzanna. If is just
above the 3 meter diameter and if you have a receiving
signal problem I suggest you go ahead. I would have done
it but bear always in mind that it needs only one report
(most likely it will be forthcoming from a neighbor) to
get the authorities on to you. Yes, it is a minor
illegality but if you experience a problem, you can
always take it down.
A.P. Loizou
Q.: My title refers to a building plot with “non
authorized buildings on”. Does this mean that our house
has no building permit?
Nigel Wellgood
A.: Most likely. On the other hand it could be a house
with a permit but without the building being so
registered with the Lands Office due to the lack of a
certificate of final approval or because nobody bothered
to register it as such. Check with the Lands Office why
it has been so recorded and assess the seriousness of
the situation. It may be that it is a minor red tape
thing or something similar. Unless I know the details I
cannot offer you any solid advice I am afraid.
A.P. Loizou
Q.: We have a house with a title, which according to our
solicitor “everything is OK and we have nothing to
fear”. Yet we wish to construct a swimming pool and we
wait and wait for a permit. Summer is coming up and we
want to have our pool built. Shall we wait for the
permit or shall we go ahead regardless?
Clive & Anna Busden
A.: I cannot suggest to you to do something without a
permit. Ask your architect, should you decide to go
ahead regardless, to keep the required distance from the
boundaries, because it is impossible to make good later
– As an answer I tell you that I have done it myself!!
(no one is an angel, especially when the circumstances
do not help to become one, but on the contrary they are
quite the opposite).
A.P. Loizou
www.aloizou.com.cy
www.aloizou.ro
ala-HQ@aloizou.com.cy
