The num­bers are promis­ing, but have at­ti­tudes changed?

Financial Mirror (Cyprus) - - FRONT PAGE -

Short-term eco­nomic in­di­ca­tors and the econ­omy as such might be im­prov­ing, but if we are not vig­i­lant the next eco­nomic mishap might catch us off guard and de­velop into a full-blown cri­sis again. The real es­tate sec­tor is prob­lem-rid­den. It might be wise that from now on we adopt the suc­cess­ful prac­tices of other coun­tries and change our state tac­tics to repli­cate them. We should se­ri­ously con­sider start­ing from point zero.

A strong ex­am­ple is that of the is­sue of ti­tle deeds. In 2013, the is­sue of about 100,000 deeds was still out­stand­ing.

As part of our mem­o­ran­dum for re­form, the Troika of in­ter­na­tional lenders had set the end of 2014 as the very last date for the is­sue to be re­solved.

2014 is long gone, we are in the mid­dle of 2015 and de­spite a her­culean ef­fort by the state agency re­spon­si­ble for it, the is­sue of around 40,000 to 50,000 ti­tle deeds is still pend­ing.

The main rea­son for this mon­strous de­lay are the wrong pro­ce­dures we’ve been fol­low­ing for decades and which are not will­ing to change to bring about pos­i­tive re­sults.

Each case has to be dragged through a con­sid­er­able num­ber of state agen­cies if the pro­ce­dure is to be fi­nalised. This can take up to 3-4 years, de­spite the fact that it oc­cu­pies quite a num­ber of civil ser­vants.

A com­mon glitch is that in the midst of this lengthy pro­ce­dure, an owner might in­ter­fere with the build­ing (eg. change the struc­ture of a ve­randa), and put the pro­ce­dure on hold.

Even though the Town Plan­ning Dept. of­fered an amnesty in the past to shorten the is­sue of ti­tles, the plan never worked as our at­ti­tude and pro­ce­dures re­mained un­al­tered.

In other words noth­ing has changed.

If we take the UK as our ex­am­ple, we can see that once a build­ing is fin­ished, and be­fore any­one takes oc­cu­pancy, a ti­tle deed is is­sued. The trick be­hind this suc­cess is that checks are car­ried out dur­ing the con­struc­tion pe­riod and not af­ter it is fin­ished. Take into ac­count that a lot of these checks are the re­spon­si­bil­ity of pri­vate sec­tor civil engi­neers.

Hon­estly now, is that too dif­fi­cult for us to fol­low here in Cyprus?

Another ex­am­ple of bad prac­tice is the fact that a good num­ber of com­monly-owned apart­ment build­ings have been left to de­te­ri­o­rate for a num­ber of years and their value has plum­meted.

Another se­ri­ous mar­ket prob­lem is that of ‘trapped’ prop­erty buy­ers who are with­out ti­tle deeds de­spite hav­ing ful­filled all their obli­ga­tions. Out­stand­ing is­sues be­tween de­vel­op­ers and the state have left these hon­est buy­ers in limbo. When the state fi­nally de­cided to tackle the is­sue our honourable Mem­bers of Par­lia­ment de­cided it was time for their sum­mer hol­i­days and de­ferred the is­sue for some time in Septem­ber.

The an­ti­quated rent law is another hin­der­ing block for the real es­tate sec­tor and no­body seems to be in­ter­ested to tackle it. You might also want to add to the list the prob­lems gen­er­ated by ten­ants not pay­ing their rent. Court pro­ce­dures are so lengthy they of­ten cause de­spair. In­stead of court clerks putting pen to pa­per to record pro­ceed­ings, surely the state could in­vest some money to pro­vide them with mod­ern stenog­ra­phy ma­chines and make the sys­tem more ef­fi­cient.

The con­clu­sion is that not only do we lack strat­egy and plan­ning in the real es­tate sec­tor, but we are not even proac­tive, ei­ther. Our tax sys­tem is not well planned. We let prob­lems pile up be­fore we de­cide to act but then again we em­ploy so­lu­tions af­ter we make sure they will not dis­turb the ‘sys­tem’. The num­bers will change, pro­duc­tion will in­crease, but we need an at­ti­tude change at the same time. Pro­ce­dures must change to be­come sim­pler and more ef­fec­tive. What we need is se­ri­ous surgery, not just painkillers.

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