The Cyprus dream becomes a nightmare
Briton Tim Hudgell bought two luxury apartments on the holiday island...now he’s battling banks after it all went horribly wrong
Saturday 19 October 2013
Tim Hudgell’s story is the stuff of every overseas property buyer’s worst nightmare. Tim agreed to buy two off-plan apartments in Cyprus for £109,000 each in 2006. The sales brochures were suitably glossy with promises of luxury clubhouses, saunas, jacuzzis and even swim-to bars, every inch the Mediterranean ideal.
However, alarm bells started to ring the day Tim signed on the dotted line: “I flew out to the development to sign the contracts and a lot of the promised facilities were either half-finished or not even started.
“I raised my concerns but was told that I if I didn’t go ahead with the transaction then the deal I had would be defunct.”
So Tim signed the paperwork for the property and, unbeknown to him at the time, entered a world of financial pain. “Not long after the documents had been signed and sealed, I started to realise problems didn’t just relate to the completion of the development,” he said.
The promised facilities had still only part materialised or not been completed as the financial crisis hit home and many developers in Cyprus either went to the wall or were taken over by the country’s troubled banks. Of even greater concern to Tim and his fellow villa and apartment owners, however, was the home loans they were persuaded to take out in order to purchase their property.
Many of the mortgages were arranged in Swiss francs because this was deemed a safer and more stable currency – from the perspective of the bank and the developer, of course. But the pegging of Cypriot mortgages to the Swiss franc had a quite disastrous effect as the eurozone countries foundered and the single currency took a battering.
“My mortgage payments have shot up, more than doubling at the height of the crisis,” Tim explained. “I was paying nearly £5,000 a month in repayments as the Swiss franc soared in value.”
At his wits’ end, trying to reschedule his debt with the banks to no avail, Tim has joined with other owners in Cyprus in launching a legal action, trying in effect to get the loan agreements set aside on the grounds that they were not properly drawn up in the first place.
“I feel I have been mis-sold from the very beginning, first by developers promising the Earth and not delivering and now by the banks. They want a total of £400,000 from me and I have decided not to pay them any more and institute my own proceedings in the Cypriot courts.”
Tim is far from alone. Judicare, a specialist in recovering overseas property investments, is handling a host of legal cases in the Cypriot courts on behalf of clients. It estimates that there are between 20,000 and 30,000 British buyers on the island with mortgages linked to the runaway Swiss franc.
“We have received trial dates for 40 cases in the Cypriot courts but this is the tip of the iceberg – there are many more buyers either labouring to pay huge sums in repayments or defaulting on their loans,” said Neal Heaney, managing director of Judicare (and an ex-Premier League footballer with Arsenal, Manchester City and Southampton).
But he has a word of warning for people looking to bury their heads in the sand and simply hope their problems disppear: “Because Cyprus is part of the EU, they can apply to the British courts for possession orders against the property of Britons to meet debts in Cyprus. This means people can’t simply ignore their debts and hope they go away, as they could conceivably lose their home in the UK as a result.”
Since Judicare started the ball rolling in Cypriot courts, the banks’ attitudes towards Britons in financial difficulty seem to have changed.
“We are starting to see some lenders trying to restructure loans with property owners as they no doubt fear being embroiled in a long and potentially losing case,” said Mr Heaney.
More generally, Cyprus’s reputation with foreign buyers has taken a battering in recent years. There are ongoing disputes over property ownership in the Turkish-occupied north of the island, as well as the continuing crisis in the nation’s banking sector, which has severely damaged confidence among investors. In addition, there are continued problems over title deeds, with many owners not being issued with legal documents even years after handing over their money.
The likelihood of a raft of court cases between banks, developers and owners over the legality of Swiss franc mortgages is only going to further erode Cyprus’s reputation, according to Richard Way, editor of the Overseas Guides Company. He said: “In Cyprus, title deeds are issued separately. In the wake of the title deeds situation and refinancing of projects by developers, buyers are advised to get their bank to protect their money while they wait for deeds to be issued. There are positive movements being made to smooth out ownership of property in Cyprus, including an amnesty law, but it takes time.”
However, Mr Way said these problems shouldn’t put off potential buyers in Cyprus – just make sure you get the legal i’s dotted and t’s crossed before handing over cash, and be wary of non-euro mortgages. He also pointed to the attractions that Cyprus still has for British buyers. In the right spots, the rental market can be practically year-round, flights are easy and cheap from the UK, and Cyprus is a conveniently located EU destination, close to the investment money of the Middle East.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Exodus Gods and Kings: Ridley Scott never considered casting 'Mohammad so-and-so from such-and-such' in lead role
- 2 This letter from a reader explains why women can’t play football
- 3 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
- 4 Scientists predict green energy revolution after incredible new graphene discoveries
- 5 Michael Buerk wishes he'd killed Jimmy Savile when he had the chance - by pushing him overboard a cruise ship
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Obama: The only people with the right to object to immigration are Native Americans
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Rochester aftermath: Sacking of Emily Thornberry will make work of Labour MPs '10 times harder'
Ed Miliband's 'north London set' must be demolished to save Labour, say critics
iJobs Money & Business
£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...
£20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...
£30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...
£Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens