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BY GEORGE MOUSKIDES
With the continuing international economic crisis, the private sector in Cyprus is intensifying its efforts to turn the property market around. But developers, realtors (estate agents), property valuers and other professionals of the sector feel like they are working alone. Intentionally, I did not include banks in the list of those firms working on the turnaround and feeling the pressure of the economic slowdown.
And while this situation prevails, unfortunately, all we hear from the government are promises, even though some simple things could be implemented that would improve the existing negative situation considerably.
Two years ago the Minister of the Interior, Neoklis Sylikiotis promised that decisions would be made that would improve the whole system related to the issuing of permits connected with property.
So that we don’t offend this Minister completely, we stress that efforts were made, but unfortunately, what was achieved so far was insignificant. And things are going from bad to worse…
For example, the priority of applications for building permits, etc. in the relevant offices is not observed. Justifiably, one could ask, why is all this happening?
What are the decisions, or better still, the measures that should be taken to improve the bureaucratic nightmare today? Here, are some suggestions:
• Title Deeds:
The time-consuming processes that continue to be applied delay the growth of the property sector. There are many properties that have been built and delivered to their buyers more than four years ago, and still no titles exist. These properties are difficult to re-sell without title deeds. We need to find a solution now so that title deeds can be issued in time and reasonably. We were happy to hear recently from the Ministry of Interior that a title amnesty will be implemented before the year end. The next thing we would like to hear and soon is that it has been implemented.
• Housing land with no road access
A solution must be given immediately for enclosed land. In the past there were discussions related to the promotion of complete road networks in housing areas, but these were not promoted, resulting in a number of building plots remaining idle.
• Cancellation of local plans
The decision of the Court to cancel the prevailing local plans caused a pandemonium. The issue of numerous town planning permits is pending and in the affected districts growth is at a standstill. How patient will those who are involved be?
• Taxes
These continue to be excessive and the Cypriot citizen continues paying a poll tax, should he decide to proceed with buying or selling property. The capital gains tax is 20%, the transfer fees 8% and VAT 15%. With regard to the capital gains, the cost of property has remained fixed at the values of 1/1/1980 which punishes the individual property salesperson. The cost is indexed to the inflation table that roughly triples the cost of 1/1/1980 but still leaves a lot of “profit” for the seller who pays 20% tax on it. The excessive taxation gives incentives to buyers and sellers to under-declare transactions and causes all sorts of irregularities.
What is the solution? The state must proceed with revising the valuations so that they reflect current values and not those of 1980. Also, the state must reduce immediately the tax rates on property transactions to give incentives to people to start buying real estate once again.
These are some of the measures that should be promoted as soon as possible. If no measures are taken immediately, in regard to the property sector, everybody involved in the sector, such as property development companies, contractors, banks, valuers, estate agents and consumers – will all be affected negatively.
George Mouskides is president of the Association for the Promotion of Property Development and Director of Fox – Smart Estate Agency.
