Cyprus has been dogged by property problems over recent years. Issues with developer’s mortgages being secured on private properties and problems with title deeds have led many people to question buying in the country.
Legislation to tackle these problems is currently being agreed, but a leading expert believes that they may do little to solve the country’s property problems.
Developer’s mortgages
Dr Alan Waring is an international risk management consultant with extensive experience in Europe, Asia and the Middle East and he spoke to Financial Mirror about the Cyprus problems.
One of Cyprus’ main problems is that there are roughly 7 billion euros in ‘developer’s mortgages’ – loans taken out by developers against property they have built – outstanding in the country. Mr Waring comments that “under the present flat market conditions and at least one-third drop in property prices, [this] will deter the authorities, banks and developers from closing existing mortgages and issuing long overdue title deeds”.
Mr Waring points out that the proposed legislation will not be retrospective. This means that the current backlog of buyers of over 130,000 properties (including some 40,000 foreigners) still awaiting their title deeds typically for between five and fifteen years, will receive no protection.
Mr Waring said: “If a developer mortgage exists on the land and the developer goes bust or is unable to service his mortgage debt, the buyer could be subject to bank repossession.”
98% of buyers would not have bought if they had known about the developer’s mortgage
One of the biggest challenges facing the Cyprus property market is that many developers failed to mention the fact that there was a ‘developer’s mortgage’ on the property before sale. Indeed, this fact typically only comes to light when the buyer decides to sell the property themselves, sometime later.
A recent on-line poll by www.news.cyprus-property-buyers.com found that 1,012 (98%) of the 1,036 people who voted would not have bought a property in Cyprus had they known that the land on which it was built was still mortgaged.
So, if you are planning to buy a property in Cyprus, the moral of this story is to make sure you obtain legal advice before the purchase to check out that your property is not subject to such a mortgage. Find overseas mortgages Are you looking to buy property in Cyprus ? Limassol , Nicosia , Paphos , Famagusta , Peyia
Are you looking to rent property in Cyprus ? Limassol , Larnaca , Protaras , Pissouri , Paphos
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