Home owners in Cyprus who have been affected by the country’s title deed fiasco over many decades are a step closer to the situation being resolved with hopes high of a recovery in the listing market.
Laws to ensure that title deeds are passed directly to buyers must be in place by the end of this week as demanded by the European Union, the European Central Bank and the International Monetary Fund.
Failure to do so would mean that the country will not receive the next instalment of its €500 million euro crisis bailout and it will be welcome news for thousands who still have not received the deeds to their homes that were built years ago.
The Council of Ministers has approved a new law which is now on its way through the Cypriot Parliament. Not only will it help those who have never received title deeds it could also be a stimulus to the country’s struggling listing market.
To help boost real estate investment, the government has unveiled a number of major incentives benefitting buyers and sellers. Anyone buying listing in Cyprus from now until the end of 2016 will qualify for a 50% discount on the listing Title Deeds transfer fees tax.
There will also be no capital gains tax when those who buy in this timescale want to sell in the future, a saving of 20%.
Agents are hopeful it will lead to more enquiries from overseas buyers. One, Ideal Homes International, has seen a rise in interest from British buyers. ‘UK buyers are particularly excited about what they can get for their money, given the strength of the pound so far this year,’ said director Chris White.
‘Cyprus’ historical relationship with the UK means that there are many aspects of life there that UK buyers feel comfortable with, everything from similar legal systems to driving on the left. Contracts are written in English and everyone speaks English too, which creates a sense of familiarity for UK buyers,’ he explained.
He pointed out that people considering retirement in Cyprus are encouraged by the country’s many tax incentives and in particular by the fact that private pensions are taxed at just 5%. The tax environment is also beneficial to those looking to open a business in Cyprus.
The listing market on the Mediterranean island is improving after years in a downward spiral. According to official figures from the Department of Lands and Surveys, the number of listing sales in Cyprus rose by 22% in July when compared with a year earlier. In Paphos, which is very popular with British buyers, the number of sales was 30% higher than in July 2014.
But the market does have a lot of recovering to do. The latest Cyprus listing index from the Royal Institution of Chartered Surveyors shows that during the second quarter of 2015 the Cyprus economy showed some signs of stability but unemployment remained at a historical high level and given prevailing economic conditions and the turbulence in Cyprus’ banking system, there were few transactions during the quarter although volume was higher on a year on year basis.
The index recorded listing price falls in most cities and asset classes, with significant falls being recorded in Nicosia and Larnaca. ‘Nicosia is clearly feeling the impact on the government and banking sector, the two sectors who dominate the local employment market, whilst Paphos and Famagusta are progressively bottoming out,’ the report says.
Across Cyprus, movements in listing prices appear mix as residential prices for flats fell by 0.4% and 0.3% for houses. The biggest drop was in Larnaca with flats down 1.2% for flats and houses down 3% while there was a rise of 0.6% for houses in Nicosia.
Rental values across fell quarter on quarter by 0.3% for apartments and by 2% for houses. Compared to the first quarter in 2014, rents dropped by 3% for flats and 2.9% for houses.
At the end of the second quarter of 2015 average gross yields stood at 3.8% for apartments and 1.9% for houses.
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Source: Property News Spain