Expat property investors are launching a legal challenge against an alleged Swiss franc mortgage misselling scandal in Cyprus.
More than 200 British expats are starting court action against banks within weeks after waiting for years to try to resolve the problem.
Some investors bought holiday homes on the Mediterranean island in 2003.
Developers and estate agents arranged the deal so they paid an initial deposit and then a further payment once the property was ready to let.
The expats going to court funded the purchase with a mortgage denominated in Swiss francs, which soared in value as the euro slumped during the downturn, leaving the investors with inflating debts.
Power of attorney
Many of the expats claim they did not know about the financial arrangements as their advisers in Cyprus asked them to sign over power of attorney and took out the mortgages without telling them.
Lawyers claim legislation in Cyprus supports the expat misselling claim as the rules say a borrower should not be left in a worse financial position than if they had taken out a loan denominated in the local currency – the euro – if some other mortgage is offered.
For hundreds of expats, the case going to court marks the beginning of the end of a financial nightmare.
Many have not had any enjoyment or income from their holiday home investments.
Banks have repossessed many properties, and in some case, have tried to pursue outstanding debts against the owners in the UK.
Alpha Bank, one of the Cypriot banks facing legal action, has already issued writs to try to seize property and other assets in the UK from holiday home owners with property in Cyprus who cannot pay their loans.
“This is a terrible state of affairs for many expats,” said a spokesman for legal firm Judicare.
“The only reason the banks arranged these mortgages was because they stood to benefit and our claim is no one gave the home buyers any advice about the contracts they were entering into, which is wrong and against the rules.
“These power of attorney have already been found defective in many countries and we are confident the courts will find in our favour in Cyprus as well.”
The spokesman also explained that the Swiss franc has appreciated so much in value that an initial mortgage repayment of £700 a month now costs an expat £1,500 a month.