THE interest rate paid out by the state as compensation for expropriated land has been slashed from 9 to 3 per cent, under a law passed by parliament yesterday.
The drastic fall in real estate prices over the last few years due to the financial crisis was the chief rationale cited for the legislation drafted by the interior ministry.
Another reason was to bring the interest rate for expropriations in line with the lower basic interest rates currently being offered by commercial banks, the ministry said.
The move is intended to ease the burden on the cash-strapped state which has to pay an interest rate on the lump sums owed for expropriations.
The latest report by the Auditor-general showed the state owes some €500m in compensation to property owners whose land was taken over for projects like roads and other public works.
Property owners who have not been compensated for expropriations have the right to secure court orders to seize state assets.
In late March the limo of the Attorney-general was seized by bailiffs on the strength of a court order that ruled in favour of a private citizen whose land, around 10,000 square metres, had been initially expropriated – but never paid for – by the government, which then decided it did not need it and revoked the expropriation.
Shortly after the embarrassing incident, the state submitted a law amendment aimed at shielding state assets from seizure. The bill specifically mentions state limos, items of artistic, cultural and historical value as well as state monetary deposits.
Last year there were incidents in Paphos when the land office was stripped of its furniture by angry property owners, some of which have been waiting years for their compensation to come through. Their land was taken over by the state when it built the Paphos-Polis Chrysochous highway.
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