Cyprus property: Headed for disaster, again?

 
We have hardly managed to surface above the water and taken a breather, and already the government has returned to the days of generous pay rises to public sector workers, as a result of which the greedy unions have awoken again who are now asking for wage hikes (despite deflation) of up to 6%. And as if that was not enough, the government’s new budget forecasts a payroll increase of 20 mln euros. What is the logic behind all this?
There seems to be some sort of auto-destruct competition, with all parties involved, driven by their personal ambitions and greed. It seems that senior officials, especially in the central bank, earn more than EUR 200,000 a year, while other commissioners and government officials earn just as much, which is at least 30% more than the President himself.
What I see as ‘self destruct’ is evident in the following:
• Abolition of property tax;
• Increase in the exemption of VAT on homes;
• Non-implementation of VAT on land;
• Reduction of transfer fees;
• Reduction of capital gains tax;
• Freezing the privatisation plans and abolition of civil service reform.
We now have a parliament where the 56 members said that stupid and “heroic” ‘No’ back in March 2013, and to-date none of these ‘heroes’ has apologized for their mistake to allow the haircut on deposits, that subsequently destroyed the economy. These same smart alecs rejected the bills that would have helped in the pivatisations of state assets and restructuring of the civil service, and without realising it, also reduced their expense accounts (which during parliamentary discussion revealed ridiculous payouts, such as nights out at bouzouki joints). Now, they have decided to revisit the matter so as the reinstate their juicy expense accounts, in order to fix the mistakes of the past and look after their own pockets.
So, with this level of quality of deputies and career politicians, how can we possibly hope for a better future of our economy?
The economy should be safeguarded as a national interest, and not a personal one, as it is the basis for attracting foreign investors, and mainly in the property market. So far, we had served as a good example to our international lenders and the EU, showing that we introduced self-discipline, but how can we proceed by returning to the disastrous mistakes of the past?
We got the first salvo last week, when we were cautioned for our liberal visa/passport scheme. Were we that foolish to think that we could get away with it and no one would notice?
The sale of visas for EUR 300,000 started initially with Chinese property buyers in Paphos. Anyone could declare the investment of that amount, whether for a single-bed apartment or three-bedroom, and we would say that it was all the same. Until the Chinese investors also realised they were being duped, and at one property show, staged a demonstration with embarrassing banners.
I had warned at the time of the crooks in the market and was obliged to resort to the Chinese embassy in order to warn their citizens when buying property in Cyprus.
I had also warned of the commissions of up to 20-25%, which when calculated on a sale price of EUR 300,000, some 100,000 euros was returned in the form of “promotion expenses.”
Similarly, the passports scheme with investments of EUR 2 mln (including a home worth EUR 500,000) needs close monitoring to see where the money ends up, that is to say if money is returned to the agent in one way or another.
The Minister of Interior is right to talk about crooks, but this is what happens and it would not be wrong for a 1% fee be charged to the sellers (seeing as EUR 1.725 bln was raised) for a proper audit.
These two schemes for visas and passports are what has been driving property demand, as far back as 2007.
But the EU is monitoring the situation and they will probably impose on us to abolish the scheme or at least limit it, which will have a chain effect on the economy.
The fragile property market is hanging from a thread, which is basically the level of tolerance of our EU and lender partners. So, we need to revisit the whole package in order not to b faced with new sanctions or harsh conditions, where our all-clever MPs will say their heroic ‘No’ once more, and send our economy into the abyss, again.
But who, then, will dare react and suggest changes? The banks, that are benefiting from fees charged on borrowers, or the lawyers and accountants who charge exorbitant fees, or our industry, or even the state that has earned some EUR 4 bln from property deals in the past few years alone?
Who truly loves this country?