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Recovery plan for struggling Britons in Cyprus

Financial services group Marcus James has launched a recovery scheme for Cyprus that offers to take properties off the hands of struggling Britons who can no longer afford their mortgage repayments.

recovery scheme offers hope for struggling Britons in Cyprus

Many Britons buying property in Cyprus are struggling to repay their mortgages

THE DREAM of owning a place in the sun has turned into a nightmare for Brits struggling to meet mortgage payments on a property that has sunk in value. But a new UK-based scheme claims it has a solution which could allow owners to bail out without incurring the penalties of repossession and negative equity.

It’s the brainchild of financial services group Marcus James which has just launched the Recovery scheme in Cyprus. For a fee of £495 an owner places a property with the company which then finds a new investor to “adopt” the property and take over the mortgage payments for an upfront fee of £5,000. The property is, in effect, sold – or rather transferred – for the price of the outstanding mortgage.

Owners lose their original deposits plus any money they’ve spent on their homes. But Tony Barker from Marcus James says many are prepared to do so to escape the financial burden. “I’ve met so many people who just want to wash their hands of the whole thing. They want to cut their losses and walk away from a property which has become such a burden.

How does it work? The company claims to have unofficial agreements with local banks in Cyprus, allowing a third party – the new investor – to take over mortgage payments on a property. The Title Deeds are transferred, but held by the company’s local lawyer and in the event of any default, the contract is withdrawn.

Banks and developers in Cyprus are keen to support the Recovery scheme,” says Mr Barker, “the banks to avoid significant default, and developers to keep the market as buoyant as possible.

But there are serious questions to ask about the scheme, says Nick Hopkinson, a director of Property Portfolio Rescue. “Isn’t the scheme just getting new investors into the same problems as the original buyers but on a different timescale? Even if deposits are supposedly ‘gifted’, where is the proof that the property assets were ever worth what was claimed?

Mr Hopkinson says that anyone thinking of buying property overseas needs to be aware of the risks. People could end up with a rapidly decreasing asset but still need to meet the mortgage payments which could soar if interest rates rise.

Overseas property purchases have other risks as well, he adds. “Every country has inherent legal ownership, political, currency, tax, property management and economic risks. I doubt whether the original buyers were properly informed of these risks and question whether any buyers being sold a ‘distressed bargain’ will be informed either.

For example, the lack of a Title Deed could prevent the sale of a property. Some 130,000 properties in Cyprus are without Title Deeds. “It can take about 12 years to get the Land Registry to issue a Title Deed,” says Nigel Howarth of Cyprus Property News, “and until that time you often have no autonomy to sell.” One of the reasons Title Deeds are so elusive is that the land itself may be mortgaged by the developer. In Cyprus “corruption is endemic“, claims Mr Howarth. “A number of property lawyers are in the pockets of the developers and won’t have told you that the land is already mortgaged, so denying you Title.

Chris Eracleous, an independent financial adviser from Daveriye Mortgage Solutions in Cyprus says there is an issue regarding the sales of property on land which itself is mortgaged. “But it’s always been general practice for banks to retain a portion of off-plan sales to pay off the initial mortgage on the land. Problems arose when values started soaring and the smaller developers were able to remortgage on the strength of that. Regulations have become stricter.

Mr Howarth is wary of schemes that specialise in taking advantage of “distressed sellers”. “They may have made the decision to purchase in haste. They need to avoid making an equally poor decision when selling their properties.” He stresses the need for buyers to talk to their banks. “They may be able to take a payment holiday or restructure the loan. They should also be looking for long-term rentals.

Marcus James Group hopes to roll its scheme out in other parts of Europe, notably Spain. With strict legislation governing such financial transactions this may be a tall order. Says Mr Barker: “I’m aware that it’s a breach of a mortgage agreement, but such difficult times need drastic measures.

What’s in it for the buyer? The principal appeal of Recovery is that no deposit is needed, aside from the £5,000 fee, with a mortgage already in place.

But the apparent ease of taking over a mortgage shouldn’t be the reason to buy a property abroad, says Nick Hopkinson of Property Portfolio Rescue. “Without local, expert advice and deep reserves of cash it is foolhardy for an investor to just take a punt because someone is pitching it,” he warns.

Copyright 2009 Independent News and Media Limited

Readers' comments

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  • Sheelagh Rose says:

    What Marcus James have omitted to mention is that they were agents for ROPUK Ltd, selling Alpha Panareti properties in Cyprus, amongst others.

  • Timmo says:

    What a downright cheek, so Marcus James, rides into the rescue of all the people they advised to buy these properties in the first instance.

    I am an investor who bought a property through Marcus James. I was told this is a no brainer when it come to investing in Cyprus. A Bank who will approve a mortgage in Swiss Francs, an award winning developer and a Solicitor to deal with the purchase and conveyance. Sounds like a plan I thought. How naive have I been?

    The Bank, developer and Solicitor all are working together rubbing their grubby mitts at the thought of another mug investing their hard earned cash with them. Did anyone tell me that stage payments would be paid to the developer when requested not when certain build stages were complete? No is the answer.

    Did anyone tell me the Solicitor is really working in the developers interest and not mine. No is the answer.

    Did anyone tell me that the developer and the Bank were working together on this project. No is the answer.

    Deceit and lies, cover ups and excuses seem to be all I am being told. Now the added insult to injury is, I can sell on my property but will lose around £30,000. How about Marcus James repaying me my £30,000 for the miss selling of this property in the first place.

  • Jayne Atherton says:

    International rescue A British businessman at risk of losing his holiday home in Cyprus found the perfect solution – by starting a property-saving company.

    Businessman Tony Barker is running a new foreign property rescue company after his own attempt to invest in an overseas development was struck by the recession.

    The Essex-based firm Marcus James Recovery is designed to help investors escape crippling mortgage payments on properties bought in Cyprus, while giving others the chance to buy without having to find a big deposit.

    The three-month-old company is now signing up struggling Cyprus holiday home owners, and the 49 year-old managing director’s own property on the island is just one of many hoping to find a saviour.

    Barker bought an apartment off-plan in 2006, convinced he would benefit from rising property prices or a healthy rental yield. But two years later the opportunities to make money had slipped away after the global downturn began, and Barker was left to pay more than £400 a month to meet mortgage repayments on the property.

    “By the time it was finished two years later, the market had collapsed and the pound was weak, making it more expensive for Britons to buy second homes abroad.”

    Finding himself stuck, Barker turned to his friend and former financial adviser Grant Goss of Marcus James Group, which specialises in financial services as well as overseas property sales, in the hope of finding a solution to his predicament, and the recovery business was born as part of the group.

    “Grant asked me to run the business because I had first-hand experience of the trauma of having a liability you can’t afford,” says Barker.

    “It turned out I wasn’t the only one in this situation. It became clear that many people who had bought properties abroad were suffering financially”.

    “A dramatic downturn in tourism was affecting rental yield, and people couldn’t sell their properties as the value had dropped, sometimes below the level of the outstanding mortgage.”

    The rescue plan works by finding investors who are willing to pay a set fee of £5,000 to take on the remaining mortgage payments from the first purchaser.

    All rights to the property are transferred to the new investor, providing they meet a guarantee to pay the mortgage. The new investor has the right to rent, sell or live in the property but the mortgage remains in the first buyer’s name.

    Barker says: “There is no mortgage to be underwritten or big deposit to pay so in the current mortgage climate it’s easier for someone to own a property abroad, and often the units are fully furnished.

    We found many original purchasers are simply glad of the opportunity to cut their losses and walk away from a property which has become a financial burden. They do lose their deposit though.”

    There are long-term plans to expand the business into Spain, Bulgaria, Croatia and Britain, but it’s possible the legal model used to set up the scheme in Cyprus wouldn’t work or would have to be altered to fit the different property laws of each countries.

    Edited by Jayne Atherton

    Metro Property Friday March 26th 2010

  • Richard says:

    Get FULLY INDEPENDENT advice before dealing with Marcus James or anyone else.

    Losing 20% or 20% of an over-valued asset is a BIG step to make.

    All you may do is compound the agony by opening up a whole new world of hurt.

    As for the ‘banks endorsing’ – well, let’s not even go there!

  • andy says:

    Marcus James ?. Who would care to gamble on Cypriot connection . This goose lays golden eggs produced by alchemy.

    Julie knows it too!

  • Julie says:

    So Marcus James has come up with the latest Cyprus scam – well done! Anyone who gets involved with this would need to be certifiable – as for unofficial agreements with local banks and title deeds being transferred into the hands of a local solicitor – I think we all know how most solicitors linked to developers and agents in Cyprus work.

    Could things get any worse…….

  • Matt says:

    Err, the Cyprus housing saga gets more bizarre by the day!

    – Buyer purchases house in Cyprus with no Title Deeds?
    – Buyer then can’t afford mortgage repayments – tuff!
    – Agent charges buyer €495 to give the house away?
    – New buyer purchases house for remaining debt :-)

    Isn’t this called repossession in Europe?

    Are money lenders supposed to take out insurance to cover for possible repossession…at least 75% of the costs?

    Why can’t the buyer legally sue Cyprus Bank & Developers for Title Deeds and Final Certificate scams. Then at least the buyer can sell the house at a big discount and at least come out with a few pennies of their own.

    What the Cyprus money lending houses and developers have done is fraudulently duped 1000’s of honest buyers. Corruption on a massive scale that Europe hasn’t seen for a long time!

    Did you know – Legally you are not allowed to occupy (live in) a building until it has been finally inspected by local authorities to make sure it is safe and has been built to official government standards as per building plans & regulations…

  • Tony Barker says:

    Hello. Tony Barker, Managing Director of Marcus James Recovery here.

    I can understand there being a degree of scepticism about the Recovery scheme.

    Bearing in mind we created the scheme in response to many of our own clients having invested in Cyprus, including me I might add, I can assure you there is nothing underhand in the scheme. It is designed to assist those who need to legally walk away from what has become a liability for them, whilst at the same time providing opportunities for investors to enter the market without the need for large deposits of 30-40%.

    In a bid to reassure you of our absolute transparency, I would be happy to take phone calls or emails personally to answer any questions you may have.

    Mobile – +44 7813 336664
    Email – [email protected]

  • Ian says:

    This feels like Financial Services (after the Banks) looking for fee-based incomes out of the misery caused to so many home owners.

    I wonder what the annual bonuses are like in the Financial Services Industry .

    You’d have to be beyond desperate

  • Dave Norman says:

    €495 fees €5,000 fees, someone is doing well,again, Cyprus banks perhaps ??

  • Clive Fletcher says:

    Sounds too good to be true doesn’t it? You know the rest.

    I bet the sting in the tail is that if you sign up for one of these deals the owner, usually the developer, or the bank, will charge like a bull to release you from your agreement. I wonder if Marcus James would be prepared to put one of there agreements on their web site for review – bet they wouldn’t.

    In reality this is really just selling off toxic debt as a commodity – beware !

  • Paul says:

    Is it April 1st already?

    The only people who will benefit from this ludicrous scheme are the Marcus James Group.

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