Filenews 13 April 2023
A circular of the Ministry of Interior puts an end to the phenomenon of acts of indirect subletting of Turkish Cypriot properties, with acts under the table, which operated to the detriment of the State and to the benefit of the refugee owner of the property and the person to whom it was granted for professional exploitation purposes.
The circular was deemed necessary by the Minister of Interior, Constantinos Ioannou, on the one hand to prevent such phenomena, with the tolerance of the state and on the other hand to comply with the positions repeatedly expressed by the Auditor General, highlighting specific examples of speculation in his reports.
The circular, dated March 26, 2023, states that the issue should be handled based on the given position of the Auditor General, that actions should be taken in accordance with the provisions of the decision of the Council of Ministers, in such a way as to avoid possible phenomena of conciliation.
Therefore, the circular adds, the practice of granting Turkish Cypriot properties with the consent of the existing tenant, to another beneficiary, should not continue, despite the potential benefits in relation to the collection of the amounts due.
It is noted that in the context of the transaction (with the tolerance of the state) any outstanding issues in rents and so on were settled by the original owner to the Management Service.
According to the circular, in these cases, the properties will return to the possession of the Management Service and will be published, along with the other properties available for concession, on the website of the Service, in order to serve the principles of transparency and fairness. It is also noted that the process of subletting did not allow other potential interested parties to show interest in the property that would change hands. Finally, the circular states that an alternative mechanism should be ensured to enhance the recovery capacity of the amounts due.
One of the cases of sublease raised by the Auditor General and which was literally eye-opening, was that of the Kyrenia Nautical Club, which subleased for 30 years premises granted to it in Moutagiakka, receiving a total of €350,000 and paid the Guardian of Turkish Cypriot Properties a rent of only €615 for the whole period.
The said premises, which were located in the premises of the Nautical Club, were rented to a refugee who used it as a restaurant, although according to the license granted to him on 22/7/1982, he was not given the right to sublease.
As stated in the Auditor General's report for the year 2014, the total monthly market rent for the Turkish Cypriot land on which both the restaurant and the facilities of the Kyrenia Nautical Club are located, as estimated by the Department of Lands and Lands, amounts to €3,000.
Finally, a new contract was agreed with the Nautical Club, effective from 1/7/2015, with a rent of €1,500 per month (which is the market rent only for the restaurant) with the right to sublease the restaurant, provided that the sublessor will receive the approval of the Guardian.
Known case of subletting in Mackenzie
Another case, which also concerned the Auditor General, concerns some premises built in the Mackenzie area of Larnaka. As indicated by the Auditor General, beneficiaries to whom the State has granted the premises, sublet them to non-beneficiaries by collecting significant amounts that the State lacks.
The land on which the premises in Mackenzie were built belongs to EFKAK and was divided, at the expense of the state, into 17 plots, 14 of which were granted by the Municipality of Larnaka to beneficiaries of displaced persons, who in 1987 built, based on plans of the Department of Town Planning, leisure centres, at their own expense as well as from loans granted to them by the Public Loans Fund. The initial lease agreements were signed on 1/1/1987, (i.e. before the enactment of the Turkish Cypriot Property and Other Matters Law 139/91) between the original tenants and the Municipality of Larnaka, which was referred to as "holder entitled to possession" for a period of 33 years, with the right to renew for an additional 10 years and with the condition of prohibiting their subletting.
According to the Auditor General, seven of the original tenants of the 14 leisure centres have subleased the premises arbitrarily and in violation of the terms of their contract with Larnaka Municipality to third non-entitled persons, receiving monthly amounts significantly higher than the rent they were required to pay to Larnaka Municipality.
The Auditor also notes that a number of the final managers/users of the 14 leisure centres and the 3 empty plots are not refugees, contrary to the relevant legislation. Eventually, they were managed by a guardian, although the subleases were not terminated.
