No Deal on Cyprus Property Issue

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Legislators in Cyprus adjourned for the summer without a solution to the island's title deed controversy, which has helped spoil the island's once fast-growing international property business.

Even with a recent uptick, property sales to foreigners on Cyprus are down by nearly 76 percent compared to 2008, and almost 84 percent from the peak in 2007, Cyprus Property News reports.

It is estimated that 130,000 properties don't have title deeds. In some cases developers built projects illegally--a scenario that might sound familiar to second home owners in Spain--or the developers took out second mortgages on properties, putting buyers at risk.

Several proposals have drawn criticism, including legislation that would in essence give developers amnesty for illegal building. At this point, it will be October before any proposal can move forward, CPN says.

For years Cyprus was considered one of Europe's hottest second home markets, especially with Brits looking for an alternative to the high prices in Spain. But a variety of problems have made foreign buyers wary, including the title deed issue, developer scandals and efforts by Greek Cypriots to reclaim land in the north taken when Turkey invaded in 1974.

In June 231 properties were sold to foreign buyers, a nine percent increase from June, 2009, according to government data. However, 709 properties were sold in June of 2008. Meanwhile, the Central Bank of Cyprus predicts home values will decline 4 percent in 2010.

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