Nigel Howarth: I've never used an estate agent

INTERVIEW. The property market guru, based in Cyprus, says that it's vital that anyone who is considering buying property on the island takes independent advice from a trustworthy person.

Nigel Howarth was born in the UK, but he moved to Cyprus in 2002. He is the author of the very popular book, ‘Buying A Home in Cyprus’, and the founder of the Cyprus Property Buyers website. Combining the two, he shortly became well-known as an independent property advisor.

Alongside his help and assistance he provided to Cyprus property buyers, Mr. Howarth was featured as a property expert on BBC and SKY, as well as appearing in many articles from The Telegraph. He is also the Executive Secretary of the ROTARY Club of Limassol Berengaria Cosmopolitan.

Scala: As a general question, How is Cyprus now compared to 2002?
Nigel Howarth: Cyprus has come a long way since my wife and I moved to Cyprus in 2002. Most significantly the variety of goods and food in the shops following Cyprus accession to the European Union and the increased prosperity it has brought to the island.

Many newcomers to the island have brought their cuisine and there's a plethora of restaurants serving international dishes from around the world. However, much of the 'traditional' Cyprus has gone and the major towns have lost their unique character. Limassol, for example, is very much like any other European Mediterranean coastal town.

Fortunately, many mountain villages have retained their character and are a pleasant escape from the coastal towns with tavernas serving traditional Cypriot food. They're also a welcome cooling escape from the coastal towns during the hot summer months and in some, the traditional way of life continues.

Regarding the property market, which are the biggest and most important changes that happened in the last 19 years?
If we go back to the year 2000 there were just 450 property sales to foreigners (non‐Cypriots) accounting for just 3.6% of total sales. During the peak year of 2007 that number had increased by a factor of 25 to reach 11,281 accounting for more than 53% of all sales.

The increase in sales to non‐Cypriots was fuelled by Cyprus' plans to join the European Union. Prices shot up fuelled by demand and a frenzy of building to satisfy the potential number of foreign (predominantly British) buyers for holiday homes.

But the soaring number of sales brought to light a number of issues, some of which have still to be resolved.

The antiquated bureaucratic processes, which linger to this day, resulted in unacceptable delays in issuing planning and building permits – and Title Deeds.

'Sharp' business practices by lawyers who failed to protect the interests of those buying property and who were, in reality, protecting the interests of their other clients – the developers.

It became clear that property developers had business models that were doomed to fail as they relied on bank loans to fund construction rather than capital from their own reserves. This resulted in many tens of thousands of 'trapped buyers' who were unable to get Title to the property they purchased as the developer had earlier mortgaged the land on which their property was built and who were unable (or unwilling) to repay their debt.

Reports in the UK press and a one‐hour programme on national TV in 2007 brought the many problems to the attention of the British public (much like the recent Al Jazeera 'Cyprus Papers' revelations.)

These reports coupled with the global economic downturn burst Cyprus' property bubble. At its peak in 2007 a total of 21,245 properties were purchased. By the end of 2009, numbers had fallen to 8,170 and by the end of 2013 they had dwindled to just 3,367.

In 2011 the 'communist' government of Dimitris Christofias obtained an emergency loan of €2.5bn from Russia, but left it to his successor Nicos Anastasiades to go cap‐in‐hand to Europe to bailout the island's economy. (The economic crisis resulted from the exposure of Cypriot banks to overleveraged local property development companies.) In 2011 a new 'Specific Performance' came into force that introduced an "assignment" contract.

This contract enabled those who had bought a property for which no Title Deed had been issued to sell the property without being exploited by unscrupulous developers who demanded exorbitant contract cancellation fees before allowing them to sell.

Again in 2011 the government introduced a planning amnesty designed to alleviate problems preventing Title Deeds being issued as a result of planning infringements.

Although the amnesty allowed many people to get Title Deeds despite their property suffering from serious planning infringement, the law prevents them selling or mortgaging the property. Their only recourse is to pay for any remedial work themselves and then sue the perpetrator to recover their costs; an expensive and lengthy procedure.

In return for financial assistance from the European Union, Cyprus introduced the 'trapped buyers' law in 2015. This enabled those who'd been deceived into buying property built on land that its developer had earlier mortgaged to get a Title Deed.

But like the planning amnesty, the law was seriously flawed. Banks successfully argued in the lower courts that the law was 'unconstitutional'. These court rulings have prevented many buyers from getting a Title Deed. (The matter has been referred to the Supreme Court for a ruling and some purchasers are taking their cases to the European Court.)

In 2013 the government decided to introduce a 'Citizenship by Investment', known colloquially as a 'Golden Passport' scheme. The scheme was designed to attract well‐heeled foreign investors to invest in the Cyprus economy to the tune of around €2.5 million (including the cost of purchasing property) in return for Cypriot citizenship and a Cypriot passport. Since its introduction around 4,000 passports have been issued for foreigners and it generated more than €7 billion investment to the island.

Cyprus came under fire from a European Commission report that its 'Golden Passport' scheme and those of Malta and Bulgaria enabled foreigners linked to money laundering and other crimes to obtain EU citizenship.

Matters came to a head in 2020 when Al Jazeera published the 'Cyprus Papers'; leaked government document obtained by their undercover reporters. In October, Al Jazeera released a video revealing how Cypriot lawyers and top politicians were apparently willing to help criminals obtain Cypriot citizenship.

The initial reaction from Cyprus was that the 'Cyprus Papers' were a foreign plot to discredit Cyprus' reputation. (A similar reaction to reports of Title Deed problems in the foreign media in 2009 came from Neocleous Sylikiotis who was Interior Minister at the time.)
It soon became apparent that the 'Golden Passport' scheme was untenable and the government announced that the scheme would be abolished on 1st November.

As we have seen in recent sales statistics, the coronavirus has also resulted in a downturn in property sales and the economy in general. How the property market will fare as we move forward remains to be seen, but I'm sure it's in for a bumpy ride.

Is it better now to invest in a property in Cyprus or it was much safer in 2002?
If someone is wise and buys a property with a 'clean' Title Deed, it's a safe to buy now as it was in 2002.

Although some improvements have been made in the law, there are still many problems faced by those buying off‐plan or buying a completed property that has yet to be issued with its Title Deed. These include encroachment, developers abandoning or failing to complete projects, breaching planning regulations, etc. In such cases it's the responsibility of those who purchased affected properties to pay for all remedial work and then sue the developer to recover their costs.

The planning amnesty rewards the criminal who created the planning infringement (the property developer) by forcing the victim (the purchaser) to pay for any remedial work before they can sell or mortgage the property! Overall, little progress has been made to protect those buying property.

In February this year the European Commission has sent a reasoned opinion to Cyprus for failing to properly implement and enforce EU law on unfair contract terms (Council Directive 93/13/EEC) and unfair commercial practices (Directive 2005/29/EC).

The Commission opened this infringement case in 2013 based on a series of complaints from EU citizens who had bought real estate in Cyprus and had allegedly been misled by real estate developers, banks and lawyers.

The Commission found that the Cypriot authorities were not effectively enforcing either of the two relevant EU Directives. In addition, the Commission found that lawyers are not subject to the rules on unfair commercial practices.

Why is it important for a future buyer to consult a property adviser?
It's vital that anyone considering buying property in Cyprus takes independent advice from a trustworthy person. By independent I mean no connected in any way whatsoever with other individuals and companies involved in the sale.

What are the most delicate situations a future home buyer in Cyprus may face today?
Finding someone who will truly represent and protect their interests throughout the buying process.

If The Telegraph calls you today: "Mr. Howarth, think about Brexit... Is it a good idea for British people to buy a house in Cyprus now?" What would be your answer?
Regardless of Brexit, it is a good idea to buy a house in Cyprus providing it has its all‐important Title Deed.

We know that you bought some land in Cyprus in 1992. As a property owner, it was a good investment? I know that you didn't buy your land to make a business, but as an imaginary scenario, if you will sell it tomorrow will you be able to get a pretty good price for it?
Yes, buying land was (and is) a good investment because, unlike bricks and concrete, land is a finite resource and will increase in value over time.

You live in Limassol District. How is Limassol now compared to 19 years ago? Some people compare this city with Las Vegas or Manhattan. What is your opinion?
I can understand why some people compare Limassol with Las Vegas, the gambling centre of the USA. Limassol will soon become the gambling centre of Cyprus when the Melco Resorts‐style casino opens its doors.

Manhattan is among the world’s major commercial, financial and cultural centres. There is no comparison with Limassol.

Limassol has become far more cosmopolitan over the years. When I joined my Rotary Club in 2004, the members were predominantly Cypriot and British with one member from Germany and Lebanon and two from the USA. Today we have members from Cyprus, UK, USA, Iran, Jordan, Montenegro, Poland, Russia, Serbia, Switzerland and Ukraine. We've also had members from Italy, Hungary, Chile, Lithuania and Norway. It's a mini United Nations.

In 2018 you said to The Telegraph: "More foreigners than Cypriots have bought a property in Cyprus in 2017”. How is the situation today?
In 2019 foreigners accounted for 37% of total property sales (based on the number of property contracts deposited at Land Registry offices.)

If one of your best friends calls you today: "Nigel I would like to buy a flat in Cyprus, somewhere near the beach, and I would like to rent it to tourists. I have 150.000 EUR only. Can you tell me which are the best locations according to my budget?" What would be your answer?
I suggest somewhere at the eastern end of the island such as Ayia Napa, Paralimni, Protaras, where they will get more for their money. I would recommend they buy a small town‐house rather than an apartment or an apartment in a development comprising no more than four apartments.

The problem with apartments and other residential complexes is that the relevant law, the Immovable Property (Tenure, Registration and Valuation) (Amendment) Law of 1993, is unworkable. The problems with expenses to cover insurance, maintenance, repair and management of apartment blocks and other complexes comprising more than four units are well known.

To add insult to injury, if these complexes have swimming pools they are classed as public pools. The law requires these pools to be have an annual inspection and licence, changing rooms, lifeguards, toilets, etc., etc. and cost a fortune to run. It's a ridiculous situation and although the government has promised changes for many years, no progress has ben made.

What do you think about The ONE, Limassol? The tallest building in Cyprus (some apartments are on sale for more than 11 Million EUR)
The ONE tower in Limassol is a spectacular building. It would blend in well in downtown Miami, Dubai, Monte Carlo and Monaco, all of which have hi‐end boutiques, luxury shopping centres with exclusive brands demanded by their multi‐millionaire residents. What has Limassol got to offer its multi‐millionaire residents in comparison?

These high‐rises were targeted at non‐EU citizens wanting a Cypriot passport. Now the 'citizen by investment' scheme has been cancelled following the Al Jazeera exposé, who is going to buy the multi‐million Euro apartments?

Have you ever used an estate agent in Cyprus? It was a good experience?
No, I've never used an estate agent. When my wife and I moved to Cyprus, we sketched out our ideas of what we wanted for our retirement home and commissioned a RICS architect to produce the design and oversea its construction. We sent invitations to tender to seven building contractors. We shortlisted three and after inspecting properties they'd built we awarded the main contract to a small family firm based in Ypsonas. We also had contracts with specialist companies for the mechanical engineering and water treatment works and supplied virtually all of the fixtures, fittings and finishes ourselves.

More about Nigel Howarth:

• Before moving to Cyprus, Nigel Howarth worked as a business consultant for many years. His professional career took him around Europe and to many other parts of the world. He lived in several countries, including; Hong Kong, Australia, South Africa and the Netherlands.
• In 2009-2010 he was the president of the Rotary Club Limassol Berengaria Cosmopolitan.