Cyprus Banks After UK Homes In Misselling Scandal

Lisa Smith, BA (Hons), CeFA

Banks in Cyprus have stepped up moves against British homeowners on the Mediterranean island despite an eleventh-hour High Court deal staying legal action.

Thousands of expat homeowners have formed several groups to fight legal action to repossess their homes in a mortgage misselling scandal

Many claim banks are chasing them over loans they cannot afford to repay – and that they were badly advised to take out Swiss Franc mortgages to purchase their dream homes in the sun.

One group of around 100 expat homeowners threatened to challenge Alpha Bank Cyprus in London’s High Court, but the bank backed down and agreed a settlement the day before the hearing.

The full details of the agreement remain under wraps as part of the deal struck by lawyers for both sides.

Swiss franc mortgages

Now, one expat homeowner group is warning the Alpha Bank and other Cyprus banks have begun serving legal papers to put charges on the UK homes of British expats.

The disagreement revolves around the Swiss Franc mortgages.

Expats claim developers, mortgage lenders; lawyers and estate agents encouraged them to take out the loans because of cheaper interest rates and beneficial currency exchange rates against the euro.

However, when Cyprus toppled into financial crisis, the value of the Swiss France strengthened considerably against the euro, pushing up loan repayments.

The homebuyers were complain that they were not properly told about the risks associated with their borrowings and would not have taken out the mortgages had they known. That, they say, makes the mortgage contracts void.

Expats in mortgage trap

The banks have offered to reschedule loans, allow other relatives to take on the borrowing or accept one-off payments to remove the charges against any UK property owned by expats.

Lawyers are concerned that many expats have ignored written legal warnings about the charges against their UK property and that this property may be at risk if they default on the loan.

One group, Judicare, is explaining the problems to British-based owners of Cyprus property at an open meeting on July 12, 2014, at Birmingham’s St Andrew’s football ground.

“Many expats and British holiday home owners bought these properties at the peak of the Cyprus housing boom, then the values collapsed when the island was in financial crisis,” said a lawyer for Judicare.

“Now, many properties are worth less than they were when purchased and a number are in negative equity. The buyers are trapped because the property market in Cyprus won’t let them sell at the price they need to clear the mortgage debt and no one local wants to rent a home because the state of the economy means they cannot afford the price.”

2 thoughts on “Cyprus Banks After UK Homes In Misselling Scandal”

  1. What I really don’t understand is how the banks can enforce on a property that has no title deed surely if you buy a property it should come with a title and in Cyprus this is not the case. No one has argued this legal point. How can you buy a property without a title deed.
    Secondly during the construction the banks released funds from an account in the clients name that was holding the approved mortgage funds in stage payments. How can this money of been released in full if the property was incomplete? Also if there was an exchange rate variation I understand this deposit money (the sum given by the bank against the mortgage), would have increased in value and most clients had a credit balance on completion (if the property completed) what happened to theses funds as they were not given back to the mortgagees or used to reduce the balance of the mortgage? I further believe that on a number of developments lawyers acting for the buyers were empowered by the banks to release such funds based on a schedule of works but these lawyers were friends or relatives of the developers and money was released by the banks against a lawyers approval! There were no safety balances and checks to ensure that works had been carried out, incredibly the cozy relationships between lawyers developers and bankers was to the detriment of the foreign buyer.

  2. Agree Philip. No RICS valuation prior to lending, land mortgaged, low reservation fees (to pay sales agents) the list goes on….more bent than a corkscrew…..


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