Filenews 22 May 2022 - by Vassos Vassiliou
Turkish Cypriot properties in areas where rents are high will be available for exploitation with offers, while non-refugees enter the game of exploitation, especially when no interest has been shown by refugees. These include properties the repair of which requires large sums of money.
The above are included in the new approach of the Ministry of Interior for "modernization, management and definition of criteria for the disposal of Turkish Cypriot properties, the area of which occupies 10.4% of the territory of the areas controlled by the Republic".
According to a recent presentation of the plan, among other things, properties will be exploited and restored and the investment by private individuals will be recognized and its depreciation will be ensured.
Moreover, a system of eligibility and points of the applicants is introduced and the disposal of premises or land is also interconnected with the applicant's property in the occupied areas. It also takes into account the financial capacity of the applicant to utilize the property he/she requests.
The suggestion for the assumption of responsibility for ensuring the static adequacy, maintenance and safety of the house by the tenants is also considered important, something that will apply to the new contracts.
In order to dispose of housing, at least one member of the family must be a refugee and the family's real estate in the areas controlled by the Republic will be taken into account. Income criteria will also be taken into account. Moreover, the applicant or members of his/her family must not have applied to or benefited from the Compensation Committee of the occupied territories.
The above are some of the measures that are listed in more detail and below and are promoted after decades of mismanagement of Turkish Cypriot properties, which at times reached the limits of looting from which private individuals benefited at the expense of taxpayers, who annually supported the management fund with about € 8 million. The aim is to modernise the management of Turkish Cypriot properties by differentiating the criteria for their disposal.
However, the fact that they are to a large extent already exploited by refugees, who live in about 5,000 Turkish Cypriot houses, as well as the fact that almost all of them are exploited through lease agreements, shows that miracles cannot happen, although at the end of existing contracts the properties can change hands until the Cyprus problem is solved, if and when it is dissolved, and over time to increase the revenues of the state, which sustains these properties.
Recently, presenting the government's new approach, the Minister of Interior, Nikos Nouris, also reflected the prevailing situation by highlighting:
>> The weaknesses/inadequacy of the existing model of management and concession of Turkish Cypriot properties.
>> The need for the legislative regulation of a series of issues concerning the management of these properties.
>> The presentation of a comprehensive package of suggestions and proposals for the modernization of their management and the criteria for their disposal.
As the presentation shows, the number of contracts concerning Turkish Cypriot properties is 20,621. Their value (based on the value of the 2018 General Valuation of the Cadastre) is estimated at approximately €6.1 billion. The total annual rent of the Turkish Cypriot Properties based on the budget of the Property Management Fund amounts to approximately €5.05 mil. (for 2021).
These properties, by category, consist of:
*23% are permanent residences.
*6% holiday homes.
*14% professional premises.
*43% agricultural lots.
Regarding arrears to the Management Fund, in 2018 they reached €8,597,379, in 2019 €18,512,900 and in 2021 €8,304,953.
The largest part of the revenue received comes from the rents of professional premises (open spaces rents and rents of Vakoufika properties).
Debts to the Fund are estimated to exceed €8 million. in recent years, demonstrating, according to the information, the shortcomings of the computer system and the lack of organization and staffing of the Management Service.
According to the update, total revenues in 2019 amounted to €14,470,776 of which net revenues were €8,070,776 while €6,400,000 was a government grant. In 2020, total revenues were €14,946,128 of which net revenues were €7,596,128 and government sponsorship €7,350,000. In 2021, total revenues amounted to €16,031,501 of which €8,531,501 was net revenue and 7,500,000 were state sponsorship.
KPMG's main findings
A study by KPMG on the current property situation showed that:
-The rent collected is disproportionately low compared to the amount of rent set by law.
-The majority of buildings are in poor condition, mainly due to old age and inadequate management.
Regarding the current status of the Turkish Cypriot Property Management Service, the following arise:
-Weaknesses of the Computer system.
-Anachronistic Strategic Planning.
-Labyrinthine procedures due to the generality and/ or ambiguity of the Regulations.
-Problems of organizational structure and understaffing of the Service.
-Absence of a structured framework for the training of staff.
For the Turkish Cypriot Property Management Service itself, the following assumptions arise:
-Absence of a meritocratic institutional framework for the fair and equal treatment of beneficiaries.
-Violation of the terms of the contracts by existing tenants of Τurkish Cypriot properties.
-Non-recognition of the right of inheritance to legal holders of T/C properties.
-Non-rational use of T/C properties granted for professional purposes.
-Inability to select the beneficiary applicants with clear, objective and measurable criteria.
Management legislative framework
The legislative framework governing the management of Turkish Cypriot properties, the procedures for their assignment, the competent bodies (Advisory Committee / Special Committees) and their responsibilities, are the following:
-On the management of Turkish Cypriot properties Law 139(1)91 to 2018.
-The Turkish Cypriot Property (Management and Other Issues) (Temporary Provisions) Regulations of 1993 to 2003.
At the same time, it is noted that the Law of 1991 and the regulations that were enacted, it is commonly accepted that they did not lead to the required rationalization of the management of the Turkish Cypriot properties.
Appropriate actions
Among the regulations promoted by the government are the modernisation of the financial management of Turkish Cypriot property and the way in which the competent service operates. At the same time, the rationalization of the concession procedures and the rational exploitation of Turkish Cypriot properties, especially those located in special areas, are promoted. It is also proposed to introduce new legislation and regulations for the proper management of Turkish Cypriot property.
Provision is also made for the granting of rights to refugees who own Turkish Cypriot property.
Management service proposals
The Turkish Cypriot Property Management Service proposes the following legislative amendments:
-Establishment of inheritance rights and transfer of a license for the use of refugees who own Turkish Cypriot residences.
-Assumption of responsibility for ensuring the static adequacy, maintenance and safety of the house by the tenants (will apply to new contracts).
-Concession of Turkish Cypriot properties for which no interest has been shown by refugees, to non-refugees.
-Legislative regulation of existing practices.
-Creation of a more meritocratic system for the selection of beneficiaries.
-Development / restoration of property.
-Streamlining rent-setting policy.
-Recognition of investment on the part of the lessee for restoration / restoration ensuring its amortization.
-The management / concession of Turkish Cypriot properties located in special areas through a tender.
-Introduction of a system of eligibility and crediting of applicants with clear, objective and measurable indicators.
-Legislative regulation for categories of employees who are not covered by the existing regulations.
-Interconnection of the available residence with the composition of the applicant's family, so that there is a targeted housing concession and the needs of the refugees are served more effectively.
-Interconnection / Premium of any privately owned property located in the occupied areas.
-Provision of business premises/ Open spaces.
-Introduction of an eligibility and crediting system through the introduction of measurable indicators during the evaluation of requests. The financial capacity of the applicant to finance the cost of his professional activity on the requested Turkish Cypriot property will be taken into account, so as not to burden the Guardian's Fund or to leave the property unexploited due to the inability of the applicant to develop it by the designation of specific areas, which have special characteristics (Special Areas) in which the concession of properties will be made through a bidding procedure.
-Introduction of a system of eligibility and points when assessing the applications for the concession of agricultural land.
-Setting a ceiling on the area of Turkish Cypriot land that is granted to beneficiaries, for agricultural use.
-Interconnection and premium of the applicant's property located in the occupied areas with the land that is granted to him.
-The lease of plots of land for agricultural use in Greek Cypriots that already have a share of the affected piece of land in a new context of disposal of residences.
The measures include the setting of a ceiling on the area of land to be allocated to beneficiaries for agricultural use.
>>Present by tendering procedure
A new form of concession of properties (auction) is introduced, which are located in specific areas with special urban planning, economic, commercial and / or other characteristics.
These areas will be characterized as special, following a recommendation by the Director of the Department of Town Planning and Housing to the Guardian of Turkish Cypriot Properties, on the basis of the special urban, economic, commercial and / or other characteristics of each area.
According to the text of the presentation, the introduction of this arrangement will contribute to:
1. the rational management of properties of high value (based on the economic / commercial and / or other environment of the area).
2. the reduction of the costs currently borne by the Guardian for the support and maintenance of Turkish Cypriot properties that remain unsold due to the high cost required for their full restoration.
3. the development of land areas located in central geographical points for the benefit of the entire region.
4. the creation of new opportunities for the development/business activity of beneficiary refugees.
5. The extrication of the Guardian from the problematic and non-rational existing practices of property management.
6. the harmonization of the Guardian's policies with the provisions of the legislation concerning the development of property for the benefit of the Turkish Cypriot owners.
>>Determination of the amount of rent
The policies promoted to rationalize the management of Turkish Cypriot property include:
-Determination of the amount of rents for the Turkish Cypriot properties per category / residences, agricultural, professional.
-Define a single economic policy and streamline the rent setting policy to remove existing distortions (in particular in the lease of agricultural land) and ensure equal treatment of refugees.
-Elaboration of studies and works ensuring the static adequacy of Turkish Cypriot properties.
Implementation of studies and projects to ensure the static adequacy of Turkish Cypriot properties (residences).
>>For farmers and stockbreeders
As far as the disposal of agricultural land is concerned, a proposal is submitted that it be granted to refugees who practice the profession of farmer or stockbreeder.
Beneficiaries will also include refugees with household incomes with incomes that do not exceed the reasonable living expenses set by the competent authority and are owners of land in the occupied areas.
Beneficiaries will also be non-refugee professional farmers and/or stockbreeders whose significant part of their agricultural land has been occupied or is inaccessible due to the Turkish invasion.
>>Reported benefits
The following benefits are expected from the implementation of the new policy:
-Upgrading of the rights of refugees who own Turkish Cypriot properties.
-Savings from state budgets and channelling them to other refugee programs.
-Enhancing transparency, meritocracy and fairness for the benefit of both refugees and the wider society.
-More efficient management of both the property and the finances of the Fund (e.g. increase of the Fund's revenues and therefore greater benefit for the refugees as a whole).
-More rational and fairer distribution of Turkish Cypriot property to refugees.
