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Media Watch 2004

27 March 2004
Source: Times
Author: Michael Theodoulou
Comment: The following article appeared in the Times of London on 27 March 2004.
Britons could lose homes if Cyprus is reunited
"All these people who are rushing now to buy property at what they think are reasonable prices from non-owners will be in trouble sooner or later"

BRITISH buyers are driving an unprecedented property boom in northern Cyprus, where prices are among the lowest in the Mediterranean.

Most know that they are taking a calculated risk by investing in the internationally unrecognised Turkish Cypriot state ahead of the island’s possible reunification next month. Few realise that they could lose everything.

“We’re selling complete apartment blocks, building sites — it’s absolute madness,” one British estate agent said.

Many people are buying homes that have yet to be built, with some placing deposits before even visiting the island. A house that sold for £65,000 at Christmas would now cost £10,000 more. Many estate agents speak of even greater appreciation if there is a Cyprus settlement, which would end the north’s long isolation. But Britons seeking a slice of paradise at a good price in the area immortalised by Lawrence Durrell in Bitter Lemons are stepping into one of the most emotive and complex aspects of Cyprus.

The majority of houses are sprouting on land that 163,000 Greek Cypriots were forced to abandon when Turkish troops invaded northern Cyprus in 1974 after a short-lived Greek-inspired coup in Nicosia.

As far as Greek Cypriots are concerned, British buyers are dealing in stolen goods. “These people who buy land from non-owners run a big risk of losing their money,” Alecos Markides, the former attorney-general, said.

A UN Cyprus settlement plan sets out complicated rules to compensate former owners, or in some cases to restore their homes and land to them.

“Britons are taking a big risk and it’s a real possibility that some of them will lose their properties if the provisions of the Annan plan as it is at the moment are enacted,” a senior foreign expert on the UN plan said.

Reputable agents have told buyers to steer well clear of areas that could be rezoned as Greek Cypriot, where pre-1974 owners could reclaim property directly. Most Britons believe that the only risk they may face is paying compensation to the original owner for the land that the house was built on.

“I’m happy to take a calculated risk,” Tom Steele, a 58-year-old builder from Sunderland, said. He is spending £95,000 on a three-bedroom bungalow still under construction as a retirement home in the village of Ayios Epiktitos, renamed Catalkoy by the Turkish side. He has budgeted another £25,000 for possible compensation.

The Foreign Office’s website gives warning that the possibility of a settlement “could have implications for those considering buying property”. Buyers are advised to seek independent legal advice before taking the plunge. Most estate agents acknowledge a risk factor but many suggest that it is worth taking. “The amount the properties are going to go up by (if there is a Cyprus settlement) will far exceed, we believe, that you might have to pay in any compensation,” another British agent said.

Uncertainty is rife. High- level negotiations on the UN settlement plan are due to conclude within days, but the deal must be approved by a referendum on both sides on April 20.

The plan’s property provisions are aimed at securing the fairest possible settlement for displaced Greek and Turkish Cypriots, while also offering some security to foreigners on forcibly abandoned Greek Cypriot properties. Those who meet the conditions should be able to either keep the house or receive compensation for their investment if the original owner is reinstated.

However, the plan contains a provision to discourage the speculation already under way. This effectively leaves little security for anyone buying a house on Greek Cypriot land after December 31, 2001, especially if a building permit was not issued before then.

Most Britons are buying on Greek Cypriot land that the self-styled Turkish Cypriot state gave as compensation to Turkish Cypriots displaced from the south of the island after 1974. Many may be able to keep their homes, provided the property was first assigned at least ten years ago to a displaced Turkish Cypriot who had property of equivalent value in southern Cyprus. They may also seek title deeds if they made a “significant improvement” to the property before the end of 2001.

However, buyers who get to keep their home may also find that the amount required in compensation for the land it is on greater than they bargained for. Calculations will be based on a similar plot in southern Cyprus, where prices are much higher.

The biggest threat to British buyers may come if the current drive to reunify Cyprus fails. In that case, The Times can reveal, Greek Cypriots who fled northern Cyprus are preparing legal action against Britons using their properties.

If successful, claims could be made against property owned by the Britons back home, Mr Markides said. “All these people who are rushing now to buy property at what they think are reasonable prices from non-owners will be in trouble sooner or later.”"