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Don't be blinded by the sun

Thursday, November 13, 2008

Catherine Deshayes

Last year, a body was set up last year to help foreign investors who had bought property in Cyprus and were facing problems. Fast forward a year and the number of unhappy buyers highlights a major problem with investing in the country...

Yes, Cyprus is hugely popular with foreign buyers and yes, there are a great many positives and plus points to purchasing property there. Dominic Farrell, Editor of Jet-to-Let magazine, has said that Cyprus offers a ‘solid, low-risk investment opportunity.'

However, there are major underlying issues to property purchasing in the country and a recent decision by the Cyprus Government has angered many foreign home owners.

The Government has refused to take action against property developers who illegally demand money from them under the guise of ‘Immovable Property Tax.'

"Immovable property tax is payable by the owner of the property, and details as to payments by the buyer to the seller, regarding this payment, should be detailed or determined in the Contract of Sale between the two parties," said Interior Ministry Official Savvas Ioannou.

Speaking on behalf of the Ministry's Permanent Secretary, Ioannou said, "This is not a matter where the state can intervene, but if a buyer feels that any term in the contract is abusive, this can be examined by the courts in the context of a civil action filed by the buyer against the seller."

The Ministry's response will come as unwelcome news for buyers who have been hoping the Government would do something about the issue. Civil action can take years and is costly.

The Cyprus Property Action Group (CPAG) has highlighted on a number of occasions that the IPT demanded by developers from buyers without Title Deeds can be grossly higher than what the developer pays to the Inland Revenue Department. In some instances it can be 500 times as much, CPAG said.

Now, as many as 2,000 foreign home purchasers who are experiencing problems on the island have been in touch with CPAG for assistance since it was set-up in April last year.

The CPAG report said, "Our findings suggest that the whole property industry, including property law and the planning system, has been grossly slanted in favour of developers, their bankers and the legal fraternity, to the great disadvantage of the buyers and also to the nation's own tax revenues."

It's not all doom and gloom though. The Greek Cypriot and Turkish Cypriot leaders are making steady progress on the issue of governance as part of broader United Nations-sponsored negotiations aimed at reunifying the northern and southern parts of Cyprus.

Special Adviser for Cyprus Alexander Downer said, "This is an enormously important negotiation for the people of Cyprus and inevitably it's going to take time.

"Inevitably the negotiations are going to be difficult negotiations, but they are making progress."

Watch this space.

Picture by janusz

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