General Meeting

01 August 2006

MINUTES

 

Committee Members:                            Peter Davis

                                                David James

                                                Patricia James

                                                Marian Stokes                                              

Minutes                                                 Sheila Vango 

The meeting was opened at 7.45 pm by Marian Stokes, who welcomed all members and guests in attendance. She went on to offer apologies from Connie Larson and Nigel Watson. She introduced the guest speaker, Mrs Balkiz Oztemir who would be speaking to us later about the construction industry.

Administration

Marian apologised for the late notification of today’s meeting (no notification in the local papers) but was glad to see so many had turned out. She went on to say that she would give us a run down of the events over the past two months, since we had met last.

Permissions to Buy

There is some real movement here now, with PTB coming through on a weekly basis. However, it would appear that many solicitors are neglecting to tell their clients (despite taking large sums of money to oversee the process) and in some instances upon inquiry people are finding out that their PTB were passed months ago. Once again she says the recent approvals seem to be for late 2004 –so if you have not heard, check it out yourself. The Ministry of the Interior sits on the main cross roads when approaching the centre of Lefkoşa on the hospital road. If you turn left on the slip road and park on the left by the school, you walk though the school yard, turn left back towards the main road and the Ministry (Içisleri Bakanlğı) is on your left.

Valuation and Transfer of Deeds

Now that PTB are coming through, the emphasis shifts from problems surrounding access to properties through late finishing or lack of essential services, to be issues regarding border disputes, tax payments and builders who cannot/will not transfer the title deeds.

Tax

There was a good guide to taxation published in the Cyprus Times during May and as far as we are aware, that still applies. Once the Land Registry (LR) has valued your property, the taxes have to be paid by buyer and seller. The buyer is responsible for 6% tax on the valuation – but you can opt for a one-off discount of 3% discount). There is a LR charge of about 10ytl to have new deeds issued in your name. If you bought from a private seller (less than 3 properties a year sold) he/she is due to pay 3.5% of valuation. If a professional seller, the rate is 6.25%. A professional seller is also responsible for 5% VAT which is payable to the Inland Revenue. It is interesting to note that the transfer tax is due when the deeds are transferred, but VAT is payable within a month of the property being completed (definition appears to be – when handing over the keys) by the professional seller. Wonder how many adhere to that one! If a builder tries to tell you that he cannot pay his taxes and he wants you to pay them – report him to the police! This is becoming an all too frequent event as PTB come through, just when folk think the last hurdle is finally here – more problems emerge. Be strong say NO and mean it. If you cough up, he will just do the same to the next person and the one after that etc. Stop the rot, call his bluff!

VAT

Disputes are emerging over VAT – the rule of thumb is that if you buy a loaf of bread in the supermarket – VAT is included in the price you pay. If your contract does not say who is paying the VAT - it is reasonable to apply the same maxim. Again stand your ground on this one.

Property Protection

Marian has been told lately about a mechanism whereby you can protect your property prior to the deeds being transferred into your name. The process is called IPOTEK and is the equivalent of a mortgage or charge which is registered at the LR. Her understanding is that both parties (the land owner and buyer) must consent to the Ipotek and must attend the LR together. Also, neither party can remove it without the knowledge and consent of the other party.  Once a property has and Ipotek placed on it that property cannot be sold to anyone else, mortgaged or otherwise encumbered. It is cheap to do and if you have an honest seller, why should they object to putting their name to such a document. We shall endeavour to find out the full procedure and post details on the information page of the site.

Granada TV

Following on from initial contact by Granada TV to the website, a film crew visited the island last week to report on the consumer issues surrounding the purchase of property in the TRNC. Marian wrote to the PM’s private secretary to alert them to the fact that the crew would be filming many of the cases that the group have brought to the governments attention and pointed out this would be a wonderful opportunity for the government to show how they are working with us to resolve many of the issues that are impacting the housing sector. She also visited the Construction Association and told them the same thing – the result – nothing. The programme was made with no input from either party. Once again the TRNC will be shown in a bad light as people like to feel that if they are investing in another country, that their rights will be protected in that country. Every missed opportunity to show that the TRNC as a forward thinking, proactive country damages the housing market abroad. The programme is scheduled to be shown in August.

 

Marian then went on to introduce out guest speaker for the evening Balkiz Oztemir.

Balkiz Oztemir, Architectural Engineer

Balkiz thanked the group for the opportunity to speak to us tonight and went on to give us a short précis of her background. She is a Turkish Cypriot who went to the USA in 1986 for her education where she specialised in Construction. She went on to work within the States mainly around the Phoenix area, where she was involved with many major projects in a growing city where planning was a major part of the job. Before a single brick was laid, consideration would have to be given to the land, the impact on the environment, the existing infrastructure etc etc. She decided to return to the TRNC with her husband as it is the country of her birth and she felt she had something to offer, with the knowledge and experience she had gained. She hoped she would be welcomed into the construction industry here, or maybe she could join the university and teach others all she had learnt. She was fortunate enough to secure a job with one of the largest construction companies here and set about working in the same manner as she had always done, only to find that her practices and those of the company rarely matched. After 5 months it became clear to her that she was never going to see eye to eye with the way things got done and left to set up her own project management company.

Her particular forte is project management and it quickly became clear to her that the basic steps of costing a job were woolly at best – many builders here do not carry out a full cost analysis before starting a project, so have no idea of what costs to expect or how to monitor progress and spending against a budget. She was also concerned about the land issues here – not Greek v Turk – but the site maps used which are very old (1950’s) and are drawn to a scale of 1.2500 – this means for example that every dividing line is the equivalent of 5 mtrs! This leads to land disputes much later in the project – usually at valuation when some unlucky people find that their property is constructed on someone else’s land.

So she quite quickly realised there was a wide gap between what went on in the construction industry in the States and the TRNC and decided to look into why this should be and what could be done to quickly bridge this educational gap. One of the links that quickly came to light once she commenced her research was the link between emerging and existing construction markets and there relative global positioning in the ‘corruption’ stakes. Since 1993 a private group has surveyed 102 countries annually, to monitor corruption among politicians and businesses. Obviously the TRNC has never been surveyed as it is not a recognised country, but as we are governed by Turkey it is not unreasonable to align ourselves with it’s ranking. The lower your countries number the lower the incidences of corruption. Finland is the least corrupt country in the world – Bangladesh the worst. Turkey – whom the TRNC is closely linked legally ranks 69, the Republic of Cyprus is ranked at 30 and the UK at 10.

The next interesting correlation was the industries in these countries that contributed the most to Gross National Product – that is, the higher the industries contribution to the countries wealth, the higher the instances of corruption within that industry, whether it be child labour, unsafe working conditions, to bribes and kickbacks. Here in the TRNC the construction industry contributes 20% to the wealth of the country.

To start a construction company here in the TRNC you must have an architect and an engineer – many of these are sleeping directors – they are not involved in the day to day running of the company. Good construction starts with a full site survey, the type of ground that is to be used and the type of construction that will go on it – even in an estate of identical houses, each one is unique to the ground it sits on. In Cornwall for instance, no house is build (or existing house sold) without a mining survey done. Here in the TRNC the land, in many cases, is simply cleared and any irregularities of terrain are simply bull dozed or built up so that a level building area is achieved.

Many construction companies do use experts for some of the work that requires a degree of expertise in that field, electrics for example – but the labourers used are mainly from obscure parts of Turkey, many who have no knowledge of indoor plumbing, central heating, or electrics. Even then, electrical contracts go out to tender, whomever can quote the best price wins and then that person sub-contracts to another (at a lower price) and the end result is the utilisation of poor quality materials to enable the ‘last’ man to make a profit.

As a project manager, she encounters all sorts of difficulties when visiting a site, there is rarely a site foreman on site, or an engineer in an office with site plans and work schedules. Many of the labourers she talks to are not from the TRNC and communication with them is hopeless as they have some remote Turkish dialect. Without a schedule of work she often visits to find something has gone wrong and then has to start a round of talks to get things rectified, whereas if she had prior notice that, for example, the foundations were going in she could be on site to oversee the operation.

Sadly, the perception of the construction industry amongst the young is poor – and this is a phenomenon worldwide. Who builds houses in UK – the Irish, in Germany – the British, in France – the Albanians, in the ROC –the TC’s, no one seems to build in their own country! For those of us who have been here since the opening of the border – this is evidence by the number of TC craftsmen who cross each day to work in the South. However, in every country there are those who go into the management of such industries as that is were the wealth is – yet many are money men only – former waiters, shop owners etc who see the construction industry as a growth industry and a path to riches.

As with every country with an emerging economy, regulations will eventually tighten up on sharp practices and good business practices will come to the fore. However, as Balkiz pointed out – we come from a country with a ranking of 10 where we are cosseted by the nanny state, we have numerous rules and regulations that safeguard our interests without us having to even think about them (Trade Description Act, building regulations, Land Registry regulations, mortgage safeguards). So culturally we have no conception of the gap between UK at number 10 and turkey at 69, we visit countries like the TRNC and fall in love with the country and it’s people without giving due consideration to matters such as these. She was not offering up her research as an excuse for the problems a lot of the group have encountered, but an explanation of why things go wrong, as these are the realities that lie unseen and undiscovered in the background until much too late.

Balkiz then took questions from the floor.

Q: Surely the TRNC is being very short-sighted then by not sorting the construction industry out if 20% of its wealth emanates from that area?

A: This growth has only been evident for the last 4 years. Prior to that in the period 1974 to 2002 the TRNC managed without it. The culture here is that we would just manage again! Yes short- sighted.

Q: What can we all do now?

A: Promote what knowledge you have gained as a group to assist future buyers, highlight the pitfalls, make people think hard and long before making this decision. Keep up the pressure, it is the only way things will change.

Q: Can you explain the difference between the Muhtar and the Mayor – who do we approach with our problems?

A: The Muhtar is a very powerful man; his responsibilities are much the same as they were years ago when villages were much smaller communities. He is there to sort out local problems and to act as a verifier, by that I mean that I had to get a letter from the Muhtar to verify that I am my child’s mother. You have to get a Muhtar letter to verify that you live in your house when you apply for residency. He has no fixed rates of business, but has to accept what you can afford to pay him.

The Mayor is responsible for the micromanagement of the municipality. He has an open office policy every Thursday in Girne and you can go there and tell him of your problems, he has to take your issues on board.

There is also a Department of Development in Girne and you can go there and see the manager and ask him what plans are in place to get water, electric, telephone, main sewerage or roads to your property.

Q: I fail to understand why the many decent TC’s we talk to, do not get angry about the plight of many of our members and support us by turning up to these meetings to offer advice as you have done or bringing pressure to bear – can you explain why?

A: Again I think it is a cultural thing, the TC’s are very laid back – for goodness sake we do not protest about the state of our hospitals or schools! I, personally, and I stress personally, do feel strongly on certain matters, but it is fair to say I have lived in a very different culture for a lot of my formative years.

Q: On a similar theme – the increase in GNP brought about by the construction industry does not appear to have filtered through into improved services for the local people, as you say better schools etc. There have been improvements to the roads but this money comes from EU funding. Does nobody in authority question this?

A: Turkey seems to have spotted it yes, as they cut back on our funding, but you are right there is no people’s movement questioning these things.

 Balkiz then retired from the meeting. She was warmly thanked by those who attended for her frankness and insight into an emerging economy.

Marian rounded up the meeting with a brief update on AGA. There is nothing to report, the work that was going on in Çatalköy appears to have ceased. There are no more public meetings and those wishing information need to join Larry Smiths bulletin board. She spoke briefly to Mert Güçlu (solicitor for GR) who simply said he had nothing to report. Gary Robb is still in the TRNC but the promised progress seems to have been thwarted.

The meeting closed at 9.30 pm.