Vil­las to let and le­gal obli­ga­tions

Financial Mirror (Cyprus) - - FRONT PAGE -

I have of­ten writ­ten in this pa­per that one of the best in­vest­ment re­turns are the vil­las to let and AirBnB, es­pe­cially for such pop­u­lar lo­ca­tions as the Fa­m­a­gusta re­gion and to a lesser ex­tent Paphos.

Due to the in­crease of tourist numbers and the lack of beds, this “new” method of leas­ing which on most oc­ca­sions is tax free (not de­clared and quite il­le­gal) en­cour­aged in­vestors and villa own­ers to opt for this type of in­vest­ment, which is quite lu­cra­tive and could show a net re­turn of around 8-10% p.a. based on the value of the prop­erty.

The pre­vail­ing mi­nor prob­lems un­der this new method of let have not sur­faced as yet and it will not be too long that it will be­come a big prob­lem.

The agents are very happy to let out a villa/house, with no ques­tions asked as long as the ten­ants pay (in ad­vance) the re­quired rent. He end re­sult is that the let prop­erty is oc­cu­pied by nu­mer­ous peo­ple (the more peo­ple, the less the cost for the ten­ants), no re­stric­tions are placed (fam­ily, etc.) caus­ing all sorts of prob­lems to the neigh­bours.

In a re­cent case a neigh­bour with loud ten­ants could not have his peace and called the po­lice on sev­eral oc­ca­sions (which they re­sponded to, mind you – strange!). The neigh­bour could not put up with the noise in the next door villa, fowl lan­guage, etc. and hav­ing no re­sponse even af­ter the po­lice came at 3 in the morn­ing, left for his Ni­cosia house!

So that we can pro­vide some tools of pro­tec­tion from the neigh­bours’ ten­ants, I could sug­gest the fol­low­ing:

Let prop­er­ties re­quire a C.T.O. li­cense if let for less than 30 days. If the lets are as such there is a case for an il­le­gal let to be re­ported to the C.T.O. Based on this: Write a let­ter to the let­ting agent and to the owner stat­ing that you will re­port the let­tings as be­ing il­le­gal to the C.T.O. as well as to the In­come Tax peo­ple (the lat­ter will get them scared).

Sue them, both, if no sat­is­fac­tory re­sponse (you must be pa­tient based on the Cyprus le­gal sys­tem – waste of money and time) but seek an or­der of a sort not to let the prop­erty il­le­gally.

This is a good busi­ness and a lu­cra­tive one for in­vestors/agents and oth­ers and in­deed it helps the tourist in­dus­try and by pro­jec­tion the in­come from for­eign cur­rency, but this ar­ti­cle is writ­ten with the in­ter­ests of the neigh­bours and com­mu­nity in mind. Vil­las to let of­fer less cost per per­son than those of the ho­tels and also help the lo­cal es­tab­lish­ments (they have to shop for food and drink, eat­ing out, it helps the restau­rants and bars, the taxis/car hire busi­ness, etc). Based on the Hote­liers As­so­ci­a­tion re­port, around 20% of the for­eign vis­i­tors do not stay in ho­tel es­tab­lish­ments. So out of the 3 mln tourists, about 600,000 opt for vil­las to let. This is a big num­ber and you can ap­pre­ci­ate the pluses and mi­nuses.

Of course this type of let is not unique to Cyprus, but it is world­wide caus­ing re­ac­tions, e.g. from Barcelona and Venice, hav­ing de­clared “no more tourists”.

We re­ceive, as an of­fice apart­ment lets in Ni­cosia for lets with half of the price in the tourist ar­eas, plus a car hire (this is an al­ter­na­tive), but again the prob­lem will re­main. This state of af­fairs will not end but it will in­crease based on the in­ter­na­tional mar­ket trends (as long as we have a short­age of tourist beds).

Not­with­stand­ing nu­mer­ous re­ports on the sub­ject go­ing back 2-3 years and more re­cently, the Paphos Cham­ber has re­cently dis­cov­ered the prob­lem, claim­ing that the Paphian ho­tels suf­fer as a re­sult of the vil­las to let, es­pe­cially dur­ing the off sea­son pe­riod.

In or­der to ad­dress the prob­lem this state of af­fairs must be ex­am­ined both by the C.T.O./In­come Tax/Ho­tels As­so­ci­a­tion and oth­ers.

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