17/05/2004 09:36
The imposition of VAT on properties and the increase in the cost of the construction materials will reduce, if not eliminate, the margin of profit of the land development companies, Chairman of the Land Development Association, Lakis Tofarides told StockWatch on Monday. The imposition of VAT and the increased cost of construction materials will affect negatively certain companies that have sold in advance houses whose price did not include the latest increases.
Mr. Tofarides did not exclude the possibility that certain businessmen did not submit the applications for a city planning permission on time, so that the pre-agreed price did not include a VAT. Sources reveal that foreigners have already proceeded to the purchase of thousands of residences in Paphos, the construction of which is still pending.
“The profitability of the contractors, however, will not be affected by the aforementioned factors, since the increase in the cost of production will burden the buyers. We must expect that the members of the association will increase the price of their products. It is noted that one third of the annual turnover stems from sales to foreigners”, Mr. Tofarides said.
Chain price hikes
Although the land development sector has been hit by the imposition of the VAT on properties, the increase in interest rates and the price hike in iron, the liberalization of the cement and fuel prices will make the cost of production even higher and will cause chain price hikes that will push property prices up, Mr. Tofarides noted.
Not much information on VAT
Finally, Mr. Tofarides stated that the members of the Association have not yet been informed on the enforcement of the law concerning the imposition of VAT on properties. “If we sell a property against £150 thousand and the plot on which the residence is built in worth £50 thousand, where will the VAT be imposed on? The £150 thousand or the £100 thousand?”, Mr. Tofarides wondered.
Mr. Tofarides did not exclude the possibility that certain businessmen did not submit the applications for a city planning permission on time, so that the pre-agreed price did not include a VAT. Sources reveal that foreigners have already proceeded to the purchase of thousands of residences in Paphos, the construction of which is still pending.
“The profitability of the contractors, however, will not be affected by the aforementioned factors, since the increase in the cost of production will burden the buyers. We must expect that the members of the association will increase the price of their products. It is noted that one third of the annual turnover stems from sales to foreigners”, Mr. Tofarides said.
Chain price hikes
Although the land development sector has been hit by the imposition of the VAT on properties, the increase in interest rates and the price hike in iron, the liberalization of the cement and fuel prices will make the cost of production even higher and will cause chain price hikes that will push property prices up, Mr. Tofarides noted.
Not much information on VAT
Finally, Mr. Tofarides stated that the members of the Association have not yet been informed on the enforcement of the law concerning the imposition of VAT on properties. “If we sell a property against £150 thousand and the plot on which the residence is built in worth £50 thousand, where will the VAT be imposed on? The £150 thousand or the £100 thousand?”, Mr. Tofarides wondered.
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