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Monday
Oct312011

Update: Another Eurozone Country Bites the Dust

The title-deed fiasco that is unraveling the tottering banks of Cyprus and the country’s finances gets more complicated—and more fascinating—with each additional piece of information. So, in response to my last post, Another Eurozone Country Bites the Dust, Nigel Howarth in Cyprus emailed me some more horrid details on just how screwed up the situation is.

Dear Wolf,

The Land Law of Cyprus has its roots in the old Ottoman Land Law (the Ottoman Empire ruled Cyprus from 1571 until 1878 and it then became British Crown Colony in 1925). But it also contains elements of the land laws from Greece, America, and the UK.

The system of land registration was set up by the British. Lord Kitchener was sent to Cyprus just after 1878 and spent three years mapping the Island—and he went on to become the Director of the Land Registry.

Public servants account for 10% of the Island’s population. They effectively have jobs for life. There is no incentive for them to work hard—they all get excellent annual reviews and a Cost of Living Allowance. I believe the equivalent position in the private sector pays 30% less.

An EU survey carried out last year revealed that 94% of Cypriots who responded believe that corruption is widespread (survey, PDF).

I have been to the planning departments and the Land Registry on several occasions. They are chaotic! I applied to have my house added to my title deed last November and it arrived in the post last week.

The title deed problem, which is currently preventing the issuance of deeds to some 130,000 properties, results from three sources:

Developer mortgages as you point out in your article. No one is prepared to admit the scale of the problem. This is the key concern for those who have bought property here who have been duped by developers, real estate agents, and lawyers. The economic situation has resulted in a dramatic reduction in sales, which means that developers cannot repay their loans. The upshot is that some developers have gone into liquidation, leaving buyers to the mercy of the banks.

Planning infringements. No one knows how many properties are affected as the Planning Authorities do not have the information. They have no computerized system for managing planning. The government has announced a Town Planning Amnesty that it hopes will alleviate the problem by ‘legitimizing’ some infringements.

Bureaucratic delays. They are a problem certainly. However, they are not the fundamental cause of the problem, but they do contribute to the delays.

It’s not only the foreigners who get screwed. Cypriots get screwed as well—possibly to a greater extent.

I am grateful to you for spreading the word about the property issues here. It will put many more potential buyers on their guard.

Kind regards,

Nigel Howarth
Independent information & advice for Cyprus home buyers and property investors
http://www.cyprus-property-buyers.com

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