Real Estate Investments in Cyprus – The Ugly

Real Estate Investments in Cyprus – The Ugly

Once again, the justice system in Cyprus displays its customary incompetence and reluctance to do any real work. The archaic laws concerning real estate investments in Cyprus still contain gaping loopholes, allowing unscrupulous developers to steal money from buyers. Thousands of foreign buyers have been scammed by property investors, in a scheme dating back to the 1980’s, with little sign of any attempt to fix the system.

The fraud revolves around Immovable Property Tax, levied on any house with a value of more than 100 000 Euros. This value is assessed against the 1980 value of the ‘immovable property,’ not the final price for which the house was sold. A few of the infamous Cypriot developers realized that this was a chance to ‘cheat the foreigner,’ and overcharge them. They tell the buyer that they need to pay the developer for the taxes they paid on the land, which is true, but base the calculation upon the sale value of the house, not the 1980 value. The laughing developer then pockets the difference.

The new owners of the property try to reclaim their taxes, as they are entitled to, and find out that it is 30 times less than the developer claimed. Unfortunately, the state reverts to type, and does its best to sweep the issue under the carpet, mouthing off that it is not an illegal practice. This fraud continues because the Cypriot system still allows developers to hold title deeds, even when he contract is paid up. Withholding the deeds gives the developer unfair leverage when covering up this extortion.

As stated in the Cyprus Property Magazine, British MEP Nigel Farage, In a recent letter to the Ministry of Justice, asked whether Cyprus was “a rogue state on the fringes of civilisation“. The Cyprus Property Action Group is trying to fight this abuse, but with little success, at present.

According to the Cypriot authorities, no crime was committed, but this is yet another blow for the many honest developers who keep being dragged down by the cheats. All of these serious blows to the Island’s image will result in a TKO if they do not start actually trying to protect buyers, rather than the developers. Real estate investments in Cyprus are already struggling, and continued negative publicity will be the final nail in the coffin.

Developers, lawyers, land registry agents and politicians have all been implicated in this fraud, and the collective arse covering is embarrassing.

At the end of the day, think of it like this:

Would I advise my mother to go on holiday to Cyprus? Yes – it is a great place.

Would I advise my mother to buy a property in Cyprus? No – There is too much chance that she would be scammed out of her life savings.

Sort it out guys – foreign real estate investments in Cyprus are one of the mainstays of the economy, and the continued bad publicity will drive people away.