Pat Roskell is one of an estimated 850,000 people who have pursued their dream of owning a holiday home abroad. Promises in a glossy developer’s brochure enticed her to invest her life savings in a two-bedroom villa in Mallorca in 2005 but four years later she’s been left with nothing to show for her money.
The development offered pretty villas near sandy beaches on Mallorca’s east coast. But the builders filed for administration before completing the project. “I just want my money back,”says Roskell, 50, from Blackpool. “I expected my property to be completed by February 2008 but 18 months on nothing is finished, the developer has gone and I’ve no idea what to do.”Roskell, who invested £50,000, a third of the total price, says no one informed her the constructor was in trouble. “One day the webcam at the site switched off and I couldn’t get any information about what was happening, then alarm bells rang. ”What's most galling for Roskell is that many of the properties on the development were almost finished but the surrounding infrastructure and utilities have not been completed to habitable standards.“ There was some discussion owners might be able to pay for the development to be completed,” she explains, “and even if I could afford it, I’m not prepared to put in any more money with no guaranteed outcome.”
She now feels her only option is to wait for the administrators to sell the developer’s assets in order to pay creditors, though she knows she’s unlikely to see any money. “I thought I’d done everything right but no one will help me,” she says. Roskell’s story isn’t unusual. Many eager buyers got caught up in the euphoria that accompanied the boom and invested in off-plan developments abroad. Unfortunately, the boom also opened the door for rogue developers some of whom didn’t have the ability or, in some cases, any intention of completing their projects. While large numbers of properties in popular buy-to-let locations are now sitting partially completed, as buyers who trusted their life savings to developers have been left with no return or legal redress.“
People were lied to and duped,” says John Howell, an international property lawyer, “many developers hadn’t the experience or financial backing to build viable projects. But, some buyers were foolish, they invested speculatively in countries where the legal systems don't work well.” Howell is currently advising a group of investors seeking to reclaim money invested from Bulgarian Dreams, after the owners closed their London office last year and vanished.“ There’s the chance investors could be in a position to put in their own money to get the projects finished, it’’s not ideal but at least they wouldn’t lose all their money.”One investor who has decidedto write off his cash is Peter Stanfield, 44, from Basingstoke, who bought an apartment through Bulgarian Dreams in 2005.
“I chose Bulgaria because property was a good price and I was looking for an investment,” he says. “I put down £16,000 on a two-bedroom apartment priced at £52,000.” Stanfield says he trusted Bulgarian Dreams because it was a registered company with a central London office. “They seemed upfront and trustworthy,”he explains,“ I used their legal services and bought without visiting Bulgaria, which I realise was a mistake.” Stanfield’s property is in Balchik, in Bulgaria, but despite being aware of delays he didn’t suspect anything was wrong until the BBC programme Watchdog highlighted the issue. “Until I saw the show I had no idea the firm had folded.”
Though Stanfield is upset at losing £16,000, he tries to be philosophical about it. “I took a risk, I bought off-plan in a country I didn’t know and lost out as a result.” Stuart Law of investment firm Asetz says that without any system in place to protect buyers it’s unlikely people will be able to recoup their losses. “This scenario is being repeated all over the world and there isn't the possibility of any coherent legal system that would cover all international buyers.” Law says buyers are often their own worst enemy, failing to check contracts. Equally, he says some developers were also caught out by the economic collapse and the withdrawal of finance by the banks. Many investors also made bad choices in terms of where they bought. Pinning their hopes of capital gains and rental income on low cost air routes that are now under threat or were rumoured to be coming but never actually arrived. Ryanair, for example, recently announced it is reducing the number of aircraft it runs from Stansted by 40 per cent, citing rising charges and passenger taxes.
Ryanair boss Michael O’Leary has said that, “People who go to a holiday home in the west of France for one weekend in November are hardly going to fill a plane.” While British Airways is adding to overseas owners woes by suspending flights from Gatwick to Alicante, Barcelona, Krakow, Mardid and Malta from October. Airlines always tend to reduce flights in winter months. However, it’s possible that some of those routes may not reappear next year. And Ryanair has added routes to other destinations from Leeds-Bradford airport. “Airlines are businesses and do what’s good for them,” says Law,“ never trust them to fly to a destination permanently and don’t get caught up in the rush to buy when a new route is announced.” The property party might be over but it seems the hangover will be with us for some time and buyers like Pat Roskell are the ones picking up the tab. “I was planning to retire to Mallorca but this has messed up my life completely.”Reuse content