You missed a point, Mr Min­is­ter

How will the de­vel­oper meet the 2017 dead­line when the plan­ning per­mis­sion alone needs six months or more to ob­tain, in ad­di­tion to al the other per­mits?

Financial Mirror (Cyprus) - - FRONT PAGE -

The last mea­sure for the re­lief on mort­gages and other tax bur­dens, in­clud­ing property tax, is the best, as is the buy­ers now tak­ing full re­spon­si­bil­ity for the property tax.

Through­out this whole process of an abun­dance of mea­sures he in­tro­duced and of course at­tracted for­eign in­vestors due to the changes in the tax regime, you might have missed a prob­lem that seems to linger.

While prop­er­ties were freed from mort­gages and other bur­dens, there re­main the charges set by the mu­nic­i­pal­i­ties for lo­cal taxes and fees for the sew­er­age. As a re­sult, the trans­fer of prop­er­ties has once again stalled be­cause of the tax bur­dens that need to be cleared in or­der for a new ti­tle deed to be is­sued.

So, once again new buy­ers are stuck over taxes whose main ben­e­fi­cia­ries are the own­ers of the units.

As an ex­am­ple let’s see the case of a res­i­den­tial project with 84 apart­ments and ti­tles ready to be trans­ferred from the year 2013, but due to the lack of in­ter­est or a dif­fi­culty to pay for the trans­fer fees, the de­vel­oper is deb­ited with the 39 for which there is no in­ter­est to trans­fer their units.

Even though there is the pos­si­bil­ity of some au­thor­i­ties to al­low trans­fers per unit, they set con­di­tions of when and how the de­vel­oper should pay for the rest. So, while the ten­nants of th­ese units ‘enjoy’ the free ser­vices of the lo­cal mu­nic­i­pal­ity, the fees are charged to the reg­is­tered owner or de­vel­oper. It was wrong not to ex­clude trans­fers from the charges of the mu­nic­i­pal taxes. The sys­tem adopted for the In­come Tax, whereby the own­ers or buy­ers bear re­spon­si­bil­ity for their pay­ment, so should a mea­sure be adopted in this case for the buy­ers to take the re­spon­si­bil­ity.

The non-pay­ment of th­ese lo­cal taxes un­fairly bur­dens the reg­is­tered own­ers and cer­tainly pre­vents to some ex­tent the de­vel­op­ers/own­ers to pro­ceed with the is­sue of ti­tle deeds due to fi­nan­cial dif­fi­culty (apart from the var­i­ous con­sul­tants who will need to be paid, there is the cost of the lo­cal au­thor­i­ties for the is­sue of such deeds). This prob­lem can be solved with a swift Cab­i­net de­ci­sion which will greatly help the sit­u­a­tion.

While discussing the omis­sions of the sys­tem, there are some other is­sues that need be ad­dressed as well.

In­cen­tives – Those that have been granted for projects that see the start of build­ing work by 2017, is also a plus for the con­struc­tion sec­tor. How­ever, the in­cen­tives note that such li­censes should be is­sued within three months. But in prac­tice this is not done and we have cases of six months hav­ing passed and the de­vel­oper is still await­ing per­mits.

So, how will the de­vel­oper meet the 2017 dead­line when the plan­ning per­mis­sion alone needs six months or more to ob­tain, in ad­di­tion to al the other per­mits. The sys­tem whereby such ap­pli­ca­tions are re­viewed by com­mit­tees and var­i­ous gov­ern­ment de­part­ments is the worst that can be. There­fore, if the Min­is­ter was re­view the var­i­ous dates for the ap­pli­ca­tions and the as-yet non-is­suance of per­mits, he will see for him­self that there is a time gap which needs to be re­solved im­me­di­ately.

At the same time, the new in­cen­tives in­clude town plan­ning and zon­ing is­sues re­gard­ing the per­cent­age of com­mon own­er­ship that the Land Sur­vey Dept. it­self had a prob­lem as it did not know how to deal with it. De­spite all the good in­ten­tions of the Di­rec­tor of the Lands Sur­veys Dept. and his as­so­ciates, there is a dif­fer­ence in opin­ion be­tween the Town Plan­ning Of­fice and the Land Sur­veys Dept. So, here too this com­mend­able ef­fort of the in­cen­tives has once again stalled.

The most no­table ef­fort is the re­duc­tion by 50% of the trans­fer fees pro­vided that the ti­tle deeds ex­ist by the end of 2016. On the one hand this is good, but if the pro­ce­dures are be­ing de­layed fur­ther by the au­thor­i­ties, it is rea­son­able to ex­tend the re­bate, de­pend­ing on what ex­tent the owner / de­vel­oper is at fault. While there is a po­lit­i­cal will and a some­what in­crease in the rate of is­sue of ti­tle deeds, the out­dated pro­ce­dures seem to re­main, as a re­sult of which this mea­sure is also de­layed. There­fore, I be­lieve it would be very log­i­cal for the pro­posal to ex­tend the time­frame for the dis­count if this is not due to in­dif­fer­ence or the de­vel­oper’s fault but that of the au­thor­i­ties.

With­out this be­ing the Min­is­ter’s prob­lem to deal with di­rectly, there is also the prob­lem of the release of mort­gages, but for the lenders to release the property for trans­fer now re­quest ad­di­tional in­for­ma­tion. Not only that the buyer has met all the obli­ga­tions, but the lenders seek to es­tab­lish whether the pay­ments were de­posited with the fi­nanc­ing bank. Where in the law is this men­tioned? This is an il­le­gal de­mand while in the case of some projects, in­stead of any re­quest for release of the mort­gage be re­viewed separately of the lenders, they in­sist to re­view the to­tal­ity of the units - which in the case of a project of 80 apart­ments the lenders want all 80 prop­er­ties to be re­viewed one by one. As a re­sult, the trans­fer is de­layed to be­yond the year 2016, when the 50% dis­count on trans­fer fees ex­pires. So, in such cases I sug­gest that any dif­fer­ence in the trans­fer cost be bur­dened by the lender.

A note from the Min­is­ter will help the buy­ers and com­pro­mise the lenders. There is also the pos­si­bil­ity of an ap­pli­ca­tion for the trans­fer through the Land Sur­veys Dept., but with 5,000 ap­pli­ca­tions al­ready piled up and cur­rently wait­ing pe­riod, which ac­cord­ing to the Dept. is 6-8 months, how will the Land Registry be ready to trans­fer th­ese deeds by the end of 2016 in or­der to ben­e­fit from the 50% trans­fer fee dis­count. Per­haps here, the pe­riod for the 50% dis­count be ex­tended, as long as the re­quest is sub­mit­ted be­fore 31.12.2016 and pro­vided that the other terms re­main in force as at the date of the re­quest the lat­est 31.12.2016.

I there­fore sub­mit to the Min­is­ter of In­te­rior our in­dus­try’s con­cerns that re­quire im­me­di­ate res­o­lu­tion and which thoughts are based on real cases for which there are con­crete ex­am­ples.

I con­grat­u­late you, Mr Min­is­ter, for your tire­less ef­forts, but this is a mat­ter that will be­come worse if the imag­i­na­tive steps in­tro­duced by this gov­ern­ment can­not be im­ple­mented be­cause of cer­tain omis­sions and be­cause of the at­ti­tudes some who be­lieve that they are in con­trol of the sit­u­a­tion

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