The European Union, European Central Bank and International Monetary Fund have combined forces to place pressure on Cyprus to immediately implement laws ensuring title deeds are passed directly to property buyers after purchase.
For decades, Cyprus' deeds fiasco has left owners of newly developed property without title deeds to their homes, leading to disputes over ownership and in some cases losing their homes altogether.
Due to increasing pressure from British buyers of Cypriot properties in the last few years, Cyprus is having its hand forced to resolve the situation immediately, or the country will not receive the next instalment of its €500 million euro crisis bailout.
In 2008 in the immediate aftermath of the financial crisis, 50,000 British buyers in Cyprus petitioned Britain's 72 MEPs to put aside political allegiances and work together on their behalf to obtain title deeds for properties purchased from developers in previous years.
The scandal came about as developers failed to inform potential buyers that the title deeds for their homes would be withheld for an unspecified time and that the land on which their property was built was in fact mortgaged by the developer and not purchased outright.
The consequences for buyers meant increased liability to property charges, a burden of huge legal fees and many were left unable to sell property to recoup losses. In some cases, developers declared bankruptcy and were then unable to transfer title deeds and full legal ownership to buyers before settling any mortgage debt on the land. Despite buyers paying for their homes in full, without legal proof of ownership there was simply no legal recourse available to them.
Title deeds are passed directly to buyers
The new laws ensuring title deeds are passed directly to buyers were to be in place by the end of last week, as demanded by the EU, the ECB and IMF, much to the relief of the thousands of investors who have still not received the deeds to their homes that were built years ago.
The Cypriot 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 but it will also bring essential stimulus to the country's struggling property market.
The government has unveiled a number of incentives set to benefit buyers and sellers and boost real estate investment. Anyone buying property in Cyprus from now until the end of 2016 will qualify for a 50% discount on the property title deeds transfer 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%.
Estate agents in Cyprus anticipate more enquiries from overseas investors on the back of the legislative changes. Ideal Homes International has seen increasing 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.
The Cypriot property market still has some way to go before recovering from the country's economic misfortune in recent years. However, now there is more legislation and incentive in place for overseas buyers in Cyprus, sales are picking up. According to figures from the Department of Land and Surveys, the number of property sales in Cyprus rose by 22% in July when compared with a year earlier. In Paphos, which is very popular among British buyers, the number of sales was 30% higher than in July 2014.