Rising property values in Cyprus could lead to astronomical sewerage charges unless legislation is amended.

In Cyprus, sewerage charges, just like many places across the world, are calculated upon a property’s value. As a result, when a Cypriot property’s value increases, so will the sewerage charges.

Unrealistic Cyprus property valuations.

In 2013 / 14, a nationwide revaluation exercise of property was carried out by the Cypriot Land Registry. This was in accordance with an agreement made by the Cypriot government as part of an economic bailout deal by other member states of the European Union. Unfortunately, many Cypriot properties weren’t re-valued particularly accurately, nor with any degree of consistency, it seems. For example, A Paphos hotel valued at €6.5m in 1980 had been revalued in 2013/14 at €162m, despite an independent bank’s figure of around €40m. This was by no means an isolated incident, and hugely inflated figures of property valuations in Cyprus became widespread. The Immovable Property Tax (IPT) was then due to be levied on these valuations, though the new levies were never essentially enforced, and despite the Land Registry’s updated figures, IPT continued to be paid at 1980’s levels. In a sideways move, Cypriot MPs then voted to scrap IPT altogether.

Cypriot sewerage charges could rise by up to 600%

The abolition of IPT is good news for property owners’ budgets, but murkier problems, quite literally, are in the pipeline. Sewerage rates for property in Cyprus currently vary from between 0.003% to 0.007% of the property's taxable value. So, a house with a taxable value under the 1980's regimen of, say, €60,000 would typically incur an annual sewerage charge of €300. However, after the 2013/14 revaluation exercise, the revised sewerage charge on the same property, now with a taxable value of €400,000 - would be in the region of €2000; an approximate six-fold increase. As a result, MP’s are putting forward a bill for discussion to recalibrate these rates, in order to avoid any unrealistic amounts being paid by property. In an interesting twist to the bill, Nicos Nouris, MP in the Cyprus House of Representatives, suggested that property owners who would not actually state the accurate value of their properties, would be disciplined by having to pay an additional charge than those who had been open and honest. At the time of writing, the parliamentary debate over the issue of Cypriot property values and their associated taxable values is still ongoing.

Stelios Hambis
BA (Hons) Int. Business