Cyprus-Forum.com

[magikthrill]

well as alex put it "its the price of paying something that is not rightfully yours"

however what happens to these occupants if they dont pay the property? where will they live? i mean dont get me wrong i agree they shoouldnt be living there in the firs place but we're all human beings here.

[Alexandros Lordos]

however what happens to these occupants if they dont pay the property? where will they live? i mean dont get me wrong i agree they shoouldnt be living there in the firs place but we're all human beings here.

Magikthrill, I like the way your reasoning is going ... it is practical-mided and humane. I don't have an answer off the top of my head, but an answer does need to be found ...

[magikthrill]

thank you alexandre. i owe it all to this forum .

i have though a little about it and there are some options

a) TCs who owned property in the south would only pay the difference between the value of their current property and that of the one in the south. If the property in the south is abandoned and neglected then its present value can be calculated from its original value using an average interst rate cost.

b) If the difference remains extremely high this is where Turkey would come in and starty paying up for the TCs. As far the settlers if Turkey finds it more economically beneficial they can choose to bring them back.

c) If the GC who owned the property has great sentimental value attached to the property then maybe they can work something out with the TC owners. Of course in such a situation there must be practical bureacuracy where both residents/families can achieve peace as soon as possible.

Now the question lies in who gets their land back and who gets compensation???

Peronally I believe that the way the scale works is TCs and GCs and then settlers. Therefore, all GC refugees who's property is inhabited by settlers (of any time!) will have the choice to get their property back and then if they choose to not accept it will be compensated (either from the settlers or Turkey)

Now Im not sure how it would work for properties inhabited by TCs. What I mean is I dont think GCs will vote for a solution that says "all refugees will receive compensatino unless: the current resdients cannot afford the property or they can work something out with an agreemtn" and at the same time i dont think its fair for only certain areas to be allowed to have property rights over compensation.

Did this make any sense?

[turkcyp]

Dear GC friends (mikkie2, Magikthrill, MicAtCyp, and et al)

The compensation issue is the last of our problems. It can so easily be solved in the developed financial markets that you will not even realize it. The principles are very easy.

1) Everybody that has not left land at the south, (everybody meaning TC and settlers included) or has left much less than he/she acquired in the north will have to compensate the other party.
2) This compensation will be done through compensation board. Compensation board will act like Fannie Mae or Freddie Mac in USA, meaning providing long term loans (up to 30 years) to current occupants, and will get paid back in installments like mortgage system with appropriate interest.
3) Then this compensation board will bundle the all the loans together will perform what is called in economics/finance securitization and sell this securities to foreign investors.
4) This foreign fund from foreign investors in turn can be used to finance more loans to current occupants or can be used to pay the 30/40 years of lost use payments to GCs and TCs.
5) Because the compensation board will have the backing of RoC, it will act as a sovereign borrower so that it can get the lowest interest rate possible in the international markets making financing costs very limited. (Anyway all financing costs will be transferred to occupants anyway so compensation board is always soluble.)
6) This will also contribute the development of mortgage banking in Cyprus as well, so that local commercial banks can start issuing these mortgages as well, with the implicit backing of compensation boards so that rates are lower.
7) It is a knows fact that in economics/finance the default rate on home loans are the lowest you can think about. So very high majority of occupants will never default and pay back the price of their home in time. Those who do default will be forced to leave the property or move to a lower value property for the amount of money they have already paid before default.

This is not that complicated system is done almost in every developed country. There is no reason why it can not be done in Cyprus.

In theory I am against any goverment RoC, TRNC, Turkey, EU or especially the newly founded United Cyprus (we do not want to start a bankrupt state) to pay the property for any occupant. Everybody should be forced to bear the burden of the property they have. But in order to help these people bear this burden there are many various systems like the one proposed above that can be employed.

Take care everybody,

[magikthrill]

but who exactly actually gets to have their land back in your proposal turkcyp?

(just asking since you dont seem to refer to that)

[Alexandros Lordos]

Turkcyp,

the long-term lease approach, similar to your proposal, was in Annan 3, and was then replaced with the "one-third restitution" approach in Annan 5.

But I think the question which Magikthrill posed is valid: Who do you see as having the right to actual restitution and free enjoyment of property? I don't think GCs will be happy to retain ownership of their properties but then be forced to lease them out ...

[turkcyp]

Turkcyp,

the long-term lease approach, similar to your proposal, was in Annan 3, and was then replaced with the "one-third restitution" approach in Annan 5.

But I think the question which Magikthrill posed is valid: Who do you see as having the right to actual restitution and free enjoyment of property? I don't think GCs will be happy to retain ownership of their properties but then be forced to lease them out ...

No what I have proposed has never been suggested in any Annan Plan. In Annan Plan 3, what has been suggested was that GCs hold the ownership but are forced to lease it out.

In Annan 5, as you have said it is proposed that they get 1/3 of the property. But for the rest 2/3 it still does not explain how it will be paid top them.

That 1/3 restition rate in Annan Plan was not the amount of money GC will get. It was changing the previous provision in Annan Plan of how much of a land maximum GCs could get, to keep the bizonality of the system.

You are confusing apples and oranges. In both of the plans GCs would have got full compensation either by getting some land back or by getting bonds from the property board which mean they will get paid in the long term. And it never says what would have happened if the TC or settler can not pay back the money or how the shortfall of money will be solved.

This was the one of the fundamental missing points in all Annan Plans.

In my proposal, GCs are getting some of their land back and getting paid the rest in full immediately. (Of course if you guys are willing to put restrictions on voting rights of GCs the way I have proposed then there does not have to be any limit on settlement of GCs in the northern state).

The current occupants would make the mortgage payments to either banks or the board. And the board would then turn back and securitize all the mortgages into what is called “Mortgage backed securities” and sell it in the financial markets and with the money raised will pay back the GCs immediately back in full, so they do not have to wait 30 years to get compensation. In return those who have obtained in excess in south will be paying that excess in long term to financial institutions of course, with the interest. It is not complicated really, and it is done in every developed country. Compensation board will act like a financial institution/Fannie Mae

The question n you have asked, on who owns the property can still be determined the way Annan Plan proposed or any other way that can be agreed. My proposal can be tailored to suit to any proposal as it only related to financing of the ownership. Of course for the property that is turning back to old owner there would not be any payment except for the loss of use payments.

Take care,

[MicAtCyp]

Alexandre,

Thank you for repeating me the link for your new poll regarding the views of the TCs.I always wanted to congratulate you for that . Reading at least the summary you presented some time ago that seems to be an extremely interesting study with surprising results (at least for us the GCs) and I dare say much better than the previous one among the GCs.

You know I am a collector of studies and information .... Well I downloaded it 2-3 weeks ago but frankly I did not have the time to read it. I guess if the talks ever resume based on changes on the Anan plan I will have a lot of work to do....

[magikthrill]

Turkcyp,

the long-term lease approach, similar to your proposal, was in Annan 3, and was then replaced with the "one-third restitution" approach in Annan 5.

But I think the question which Magikthrill posed is valid: Who do you see as having the right to actual restitution and free enjoyment of property? I don't think GCs will be happy to retain ownership of their properties but then be forced to lease them out ...

No what I have proposed has never been suggested in any Annan Plan. In Annan Plan 3, what has been suggested was that GCs hold the ownership but are forced to lease it out.

In Annan 5, as you have said it is proposed that they get 1/3 of the property. But for the rest 2/3 it still does not explain how it will be paid top them.

That 1/3 restition rate in Annan Plan was not the amount of money GC will get. It was changing the previous provision in Annan Plan of how much of a land maximum GCs could get, to keep the bizonality of the system.

You are confusing apples and oranges. In both of the plans GCs would have got full compensation either by getting some land back or by getting bonds from the property board which mean they will get paid in the long term. And it never says what would have happened if the TC or settler can not pay back the money or how the shortfall of money will be solved.

This was the one of the fundamental missing points in all Annan Plans.

In my proposal, GCs are getting some of their land back and getting paid the rest in full immediately. (Of course if you guys are willing to put restrictions on voting rights of GCs the way I have proposed then there does not have to be any limit on settlement of GCs in the northern state).

The current occupants would make the mortgage payments to either banks or the board. And the board would then turn back and securitize all the mortgages into what is called “Mortgage backed securities” and sell it in the financial markets and with the money raised will pay back the GCs immediately back in full, so they do not have to wait 30 years to get compensation. In return those who have obtained in excess in south will be paying that excess in long term to financial institutions of course, with the interest. It is not complicated really, and it is done in every developed country. Compensation board will act like a financial institution/Fannie Mae

The question n you have asked, on who owns the property can still be determined the way Annan Plan proposed or any other way that can be agreed. My proposal can be tailored to suit to any proposal as it only related to financing of the ownership. Of course for the property that is turning back to old owner there would not be any payment except for the loss of use payments.

Take care,

i think an excellent solution would be where all refugees are given priority before compensation, and political restrictions are applied to the north of cyprus as stated by Alexandros, the only difference in my view is that these political restrictions are temporary for say 20 years when the citizens should be put to a referendum to decide if it should be kept this way. i dont think a single GC would object to such a decision.

[MicAtCyp]

IF refugees arent allowed to return and wont be compensated then how can a solution ever be achieved?

It seems you mixed up the right to return with the right to own your property. Anyway I already answered your question in my post prior to the one you are referring.
I repeat: The only thing that can be done is to encourage ( I hate to say enforce because that might not be allowed under EU law) the people to exchange properties. Obviously this procedure will be slow, and perhaps never 100% complete.

However who said that a TC living in Kyrenia cannot continue to own the property he has at Paphos and who said a GC living in Australia cannot continue to own the property he has at Ayios Ambrosios despite the fact that it will be used by someone else on rent or through some other agreement between the individuals concerned. Notice that under current law owning a property does not give you the right to throw the current tenant out, and furthermore the current law gives "homeness" rights to the current tenants.

I was not referring to the Annan Plan (the property provisions of which are utterly unworkable) . I was referring to my own proposal, at the first page of this thread. According to this proposal, original owners get all their property except that which will be exchanged by refugees and also that which has been heavily invested on.

A, OK now it makes sense. Sorry about that. However Alex did you estimate how many people will need to be compensated according to your proposal? I mean the new state can hardly afford anything more than 5 - 10 billion you know. . . .

This compensation will be done through compensation board. Compensation board will act like Fannie Mae or Freddie Mac in USA, meaning providing long term loans (up to 30 years) to current occupants, and will get paid back in installments like mortgage system with appropriate interest.

Dear Turkcyp,
i don't know where you found that proposal however whoever wrote it obviously lacks knowledge of the most basic principles of monentary economics. In other words those schemes cannot be applied on a massive scale, because they touch monetary principles that will completely destabilise an economy. Also:

A) Although the writer knows what everybody knows i. e that loans for real estates are paying the lowest possible interest rate, on the other hand he does not seem to know that this is one of the most basic tools in drafting the monetary policy of a state i. e to boost the economy out of recession or slow down the inflation. Too many loans will lead to a hell of inflation!
B) Banks do offer such loans only when they have nowhere else to lend their money, and only within the limits set by the Central Bank, so as to avoid inflation.
C) The interest rates for property are indeed low, but they are NOT so low that would enable everyone acquire property that easy. For your information the lowest price for a house in Nicosia today on just half a building plot is 80K. The lowest possible interest rate for housing is currently 5. 5% for the first 2 years and thereafter it increases. So just to cover the interest a family man will need to pay 360 pounds a month! Add at least as much to cover capital paying up, we end up to 720 pounds a month. All this at current prices at the free areas where the average salary is only 700 pounds a month!
D) It is extremely doubtful whether foreign investors will be interested to invest in a totally new state, where nothing is certain, and where the "united" economy has no history. Moreover the first thing foreign investors will ask is whether their profits will not be wiped off by the inflation that their own investment will cause.

There are two problems with your proposal both at the borrowing side of the issue (current user of a property) and at the paying side (the owner getting cash) . If we follow your proposal then from one day to another we will have an X number of people owing money BUT also at the same time a Y number of people having cash in their hands which they will not know what to do.
If the total sum of that money is HUGE (compared with the size of the economy) that will by itself skyrocket inflation.(If you want to explain you how I will in another post). AND THE TOTAL SUM FOR COMPENSATIONS WILL IN FACT BE HUGE!! Like I said in my previous post for just one per thousand refugess we will need a billion pounds compensation compared to the annual budget of the RoC of only 2 billion!!!!

As a result of this inflation the originally low interest rate the borrowers got, will not be applicable anymore, and the borrowers will never be able to pay up their loans. As you know salary increases always follow the inflation by one or more years.

The whole thing does not change if the loans are transformed to securities and sold to foreign investors. I leave aside the fact that foreign investors will not be interested to buy such securities in an economically destabilised state with a sky rocketing inflation. Lets take for example a foreign investor getting a security worth of 50, 000 pounds representing one real building plot. This foreign investor paid 80, 000 Euros to get his security. If within a year the value of that plot (due to inflation) is 100, 000 pounds the foreign investor loses because all he has in pocket is a 50, 000 pounds security which now due to inflation worths only 40, 000 Euros!! And foreign investors are not that ignorant you know. . . .

In my opinion the most healthy thing to do regarding the properties is to encourage people to exchange properties. This way yes a lot of people will get loans to pay their compensations. Now instead of letting those people who get the cash cause inflation lets give them the opportunity to get rid of their money by offering them the chance to buy land that is currently owned by the State! If the solution will be a Fed system then an equal proportion of State Land from both States should become available for sale to those who will get the cash compensations!

All these however require that there will be enough GC refugees returning (and regaining their properties under GC administration) so that the GC properties left in the TC constituent state can be exchanged with TC properties on an about equal basis.

In addition to that like Mikkie said more than 100 times in this forum, the settlers are a REAL problem regarding the properties, thats why their number must be limited to the minimum possible and Turkey to undertake all costs involved for those who will stay.

PS. I predict a stubborness among the Cypriots even on the matter of exchanging their properties. Both from the GCs and from the TCs. In my opinion the "real Cypriot donkies" will prefer to speculate and wait to see what will happen to the value of their properties. So most of them will prefer to pay rent for the properties they are using and receive rent for their own. Slowly slowly though they will convince themselves that "What the hell I am never going to return so lets exchange the damn thing". SO THE BETTER!!! The money borrowing procedure to cover the difference will be AS SLOW AS IT SHOULD BE to keep inflation down. In my opinion this slow procedure will take about 2 generations to complete i. e about 40 years, which is really excellent - economically speaking.