Misleading Announcement By The Central Bank Of Cyprus For Unlocking Deposits For A Real Estate (Cyprus property) Purchase

  Article By : Marinos Kineyirou|  Published at : Politis Newspaper| 07-07-2013

Marinos Kineyirou: President of the Cyprus Association of Estate Agent Entrepreneurs -President of the Real Estate Agent Entrepreneurs Association of Larnaca/ Famagusta and Property Auctioneer

Marinos Kineyirou Manager of Marinos Estate Agencies LTD

Marinos Kineyirou Manager of Marinos Kineyirou Estate Agencies LTD


Misleading Announcement By The Central Bank Of Cyprus For Unlocking Deposits For A Real Estate (Cyprus property) Purchase


The Cyprus Association of Estate Agent Entrepreneurs expressed its frustration regarding the announcement by the Central Bank to relax the restrictions on trade, which allows the termination of a fixed term deposit in order to purchase a Property for sale in Cyprus. Specifically, this differentiation is included in the 16th decree issued on 21.06.2013 and provides that the termination of a fixed term deposit (notes) before its specified expiry date is not prohibited, if the amount will be used to pay a real estate purchase within the Cypriot democracy. The conditions are that the payment is paid directly into the loan account of the real estate seller within the same credit institution and this loan should be granted to the seller before the entry into force of the first decree which imposed restrictive measures on transactions.

The Cyprus Association of Estate Agents Entrepreneurs considers the announcement of the Central Bank misleading, since the measure is valid for the same financial institution and does not cover transactions between different financial institutions and that until today the termination of a fixed term deposit was valid for the same depositor in order to pay off existing loans from the same bank. The only difference on the Central Bank’s measure is the opportunity to transfer money between only two of her customers in order to pay off existing loans which were used to purchase a property for sale in Cyprus, after accepting that the seller’s loan was to purchase this property and there are no other available resources for its pay off. That is, sufficient credit balances in a checking/ current account within the same credit institution to cover the payment.

The result for this measure is not a positive development for the real estate purchase since it frees a few committed capitals and does not create conditions for the property market’s recovery. It is a very rare case for an interested buyer to be in the same bank with a seller and it is not offered for transactions between registered real estate agencies and their clients. The basic requirement for the property market’s recovery is to extend the measure of the Central Bank to cover transactions between different financial institutions.

A typical example is the rejection of a customer’s request to buy a property by the Approval Committee of the Central Bank. Specifically, the Association’s customer was interested in buying a property in Cyprus and paying the deposit for that purchase, but the Approval Committee of the Central Bank, through the Hellenic Bank refused to give him his money which he had in a bill and was intended only for purchasing the property, but the act was not completed. More specifically, the buyer requested to stop the continuity of the bill by the bank, because he wished to purchase a property and presented the deed of sale and proof for payment in advance. The Hellenic Bank responded negatively with the assertion that the request has been refused by the Approval Committee of the Central Bank. In a letter on May 10, 2013 the bank informs its customer and buyer as follows:

Dear Sir,

We inform you that unfortunately the application which we have submitted on your behalf to the Approval Committee of the Central Bank, in accordance with the Decree of Restrictive Measures on Capital movements, requesting the termination of your existing fixed term deposits for purchasing a property, has been rejected.

As the Cyprus Association of Estate Agents Entrepreneurs emphasizes, with that money, the seller of the property would have paid his loan in Laiki Bank. Specifically, this customer lost 400,000 euro from securities of Laiki Bank and 100,000 euro in shares. As a result, this customer bankrupted and he needs to sell his holdings to pay the loan. This bankruptcy is due to the Central Bank, and not because of him. These unprecedented measures do not give incentives to revive the Cyprus Real Estate Market combined with the new data in the banking system, the daily developments in the economy and the painful measures taken for its rescue, eventually do not facilitate the property owners who are desperately trying to sell their properties and pay their loans. Despite the decrease in prices observed in real estates, opportunities are lost due to the existing problems mentioned above and as a result sellers and buyers are facing major economic dilemmas. While there is interest by Cypriot investors in purchasing a property for sale in Cyprus, the problems in the banking sector have kept them waiting, resulting in a justifiable decrease in the sales of real estates by 52% in the first five months of 2013.
The acts in the land registry are very few and according to its statistics, just 214 deeds were filed in May compared with the 854 in the corresponding period of 2012, with a decline of 75% due to the non-negotiable and harsh measures adopted by the Central Bank. The great reduction of May reached 52% since just 1512 sales deeds were filed in comparison with the 3167 of the first five months of 2012. Specifically, in Nicosia we had a 90% reduction, in Limassol 71%, in Larnaca 65%, in Famagusta 8% and in Paphos 59%. The association is surprised because by this official information of the Land Registry, no provision has been taken by the Central Bank to rescue the Cyprus Real Estate Market which has been the backbone of the Cypriot economy.  One of the provisions of the Memorandum, are forced sales (mortgaged properties) in public auction. The failure by the Central Bank to release transactions among different financial institutions and not only within the same institution will trap every seller and lead him to the destruction.

The Cyprus Association of Estate Agents Entrepreneurs emphasizes once again that the most secure investment is real estates. Buying a property for sale such as Cyprus villas or Cyprus apartments is a safe investment and the traditional forms of investment (shares, savings, etc.) do not offer anything. The Central Bank must take action to rescue the Cyprus real estate market, because by the solution of its problems will provide direct incentives for the operation of the entire industry as well as the companies that deal with it. The Cyprus Association of Estate Agents Entrepreneurs stresses that the proper handling of a complete plan to revive the Cyprus Real Estate Market will bring change and triggers its resurgence.

Use our comprehensive online Cyprus property finder service to find properties to buy, to rent or to sell. Also, we provide property management services and the latest Cyprus real estate news in the news section of the website. Marinos Kineyirou real estate agents, specialize in the Cyprus property market with exclusive properties in the cities of Limassol, Nicosia, Pafos, Larnaca, Famagusta, Protaras and Ayia Napa.

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