The Cyprus Banks Association has written to District Local Government Organisations (DLGOs) demanding information on the growing crisis surrounding building permit cancellations, as lenders face the prospect of being left with non-performing loans on developments that may never be legalised, Phileleftheros reports.
The letter follows permit cancellations by DLGOs and comes amid findings, reported by Phileleftheros on Tuesday, that 54% of building licence applications processed by the Nicosia DLGO show material deviations or irregularities. These include breaches of development coefficients due to miscalculations, parking space malfunctions and reduced distances from plot boundaries — with consequences for neighbouring residents’ amenity rights.
Banks that have issued loans for residential units in affected developments risk being left exposed if permits are revoked and projects are either cancelled or significantly delayed. The situation is particularly acute in cases of serious violations which, if the law is applied strictly, mean the affected buildings will never be legalised — or will have to wait for a future planning amnesty to obtain title deeds, possibly with annotations.
The problem is most pronounced in Nicosia and Limassol, where, according to sources familiar with the matter, a large proportion of applications are problematic to varying degrees.
Inspections failing
At the root of the problem, Phileleftheros reports, is the conduct of what is known as a “desk review” — a paper-based check — with some DLGOs failing to give adequate weight to on-site inspections that would verify whether what is being built matches what was designed and licensed.
The problem is compounded by the fact that the “building inspectors” institution — which was meant to check building legality independently of DLGO officers — has never been operationalised. Building inspectors were promoted as a substitute for oversight previously exercised by planning authorities, and were used as one of the arguments for abolishing the separate planning permit and building permit system.
ETEK response
ETEK president Konstantinos Konstantis, commenting on the Nicosia DLGO findings, said in a written statement that the fast-track licensing system for low- and medium-risk developments was built on specific pillars designed to ensure both legal compliance and speed.
“A key aspect of the arrangement is the conduct of a desk review of applications by the DLGOs — that is, a rapid and summary check, without detailed measurements, of the basic parameters of the proposed development that could affect neighbouring residents’ amenity,” he said.
He noted that under the system, permits for low-risk developments are issued automatically after 20 working days and for medium-risk developments — including buildings up to four storeys with up to 20 apartments and one basement, subject to conditions — after 40 working days. That window, he said, should be used by DLGOs to carry out their desk review.
“Unfortunately, we observe that, even though the desk review is explicitly provided for in the relevant decrees, it is not being carried out by the licensing authorities,” Konstantis said.
He added that ETEK would examine the specific points of deviation identified by the Nicosia DLGO and inform its members of areas requiring attention when submitting applications. “In any case, the Chamber notes the need for a radical revision of certain provisions of the existing legislation, which require re-examination and simplification,” he said.
DLGO proposal
Following Phileleftheros’s report, the Nicosia DLGO issued an announcement saying it would recommend to the Interior Ministry the establishment of a Special Technocratic Committee to act as a second-tier, island-wide body for reviewing potential permit cancellations, in the interests of good governance and equal treatment of all applicants and designers.