HUNDREDS, if not thousands, of UK buyers – many from the North-East and North Yorkshire – are facing legal action by a Cyprus bank after their hopes of buying a Mediterranean holiday or retirement home turned sour.
But how has it come to this? Many of the investors who bought a property in Cyprus were not wealthy or looking for a get-rich-quick scheme. They were ordinary people. Some had come into money from redundancy or a pension pay-out. Others had saved all their life and were looking for a secure investment for their retirement.
They took advice from someone they trusted, someone who knew their financial circumstances – their financial advisor.
For some, that person was Stokesley-based Andrew Laird, from Roseberry Financial Solutions.
Mr Laird asked if they had considered buying an off-plan villa in Cyprus. Buyers said he offered a “one-stop shop” to help with the purchase.
Glossy DVDs of developments by builder Alpha Panareti were provided. The architects’ images looked impressive. The villas came with swimming pools and magnificent views of the sea.
The properties weren’t cheap but buyers claimed Mr Laird told them the mortgage could easily be covered by renting the homes out to holidaymakers.
Buyers were told the mortgage would be with a Cypriot-based Alpha Bank, but would be in Swiss Francs because the currency was stable.
Investors say they never saw details of the mortgage and were never explained the risks.
The buyers signed a power of attorney which gave Cypriot lawyers the ability to sign on their behalf.
For a period of time, all seemed good. The buyers assumed work was progressing on their properties. However, they then began receiving statements from Alpha Bank showing their mortgages were being drawn down by the developer, despite little work on their properties being completed.
As the global recession began to bite, the value of the Swiss Franc began to increase, sending mortgage repayments rocketing. The Cypriot bank increased the pain by pushing up its own interest rates on the loans. At the same time, property prices were plummeting.
All the while, the developer continued to draw down on the buyers’ mortgages, while the bank failed to check how much work on the villas had been completed.
Many buyers were told their properties would be completed in 2008 or 2009, but deadlines came and went. The mortgages repayment kept increasing as interest was added and still the properties were not completed – buyers point out that the developer was already receiving its money from their mortgages so what incentive did it have to complete quickly?
Some properties were completed on time, but mortgage repayments had already doubled.
Buyers could not rent their properties out because they were not complete – and for those whose homes were complete, rents were a fraction of those promised.
Many buyers tried to obtain their property’s deeds – but found out they would only receive them when the whole development was complete.
It also emerged that the developer had taken its own mortgage out on the land – meaning buyers could only get their title deeds when that had been paid off.
Finally, for many the payments were too much and they defaulted.
Nigel Howarth, from Cyprus Property News, described the situation as a “catalogue of catastrophes.”
Andrew Laird later set up Roseberry Overseas Properties UK, which formed a network of agencies around the country selling villas in Cyprus and many hundreds of people are thought to be affected. Buyers who have not kept up with their mortgage payments are now being issued with writs by Alpha Bank, meaning they could lose their UK homes.
However, many are fighting back, launching their own legal action in the High Court against Alpha Panareti, Alpha Bank, Mr Laird and others.
Complaints have also been made to official bodies including Cleveland Police, North Yorkshire Police, the Financial Services Authority and Trading Standards.
The Northern Echo contacted Alpha Panareti and Alpha Bank to respond to buyers’ criticisms, however both failed to respond.
Mr Laird said he was one of 70 defendants named in proceedings regarding the case at the Royal Courts of Justice in London.
He said his solicitor had applied to court to strike out the claims against him, but pending that hearing he could not make further comment.
Cyprus property victim at risk of losing everything
KEN Graham has already paid out £60,000 in deposits and legal fees, but he is at risk of losing much more.
In 2004, the 50-year-old’s wife, Jacqui, died of cancer.
The following year, he was discussing potential investments for the life insurance policy with financial advisor Andrew Laird when the subject of Cyprus came up.
Mr Graham, from Kirklevington, near Yarm, said he wanted to use the money in a way which benefit their three children and create something they could always associate with their mother.
After being shown a picture of a beautiful detached villa, he eventually agreed to make the investment.
Mr Graham said the advisor never mentioned risks, describing the scheme as fail-safe. He could cover the mortgage by renting the property out and even sell it back for a profit if he wanted.
In 2009, Mr Graham then received a picture of his villa being built showing it was now semi-detached. He immediately contacted Mr Laird who told him it was not his problem and he should contact the developer, Alpha Panareti.
As the developer had broken the contract by changing the villa, Mr Graham tried to walk away, but was told he couldn’t. It was then that he discovered the developer had already taken much of his mortgage for a property that was due to be completed in September 2009, but is now scheduled to be finished in 2013.
Despite paying a large deposit, Mr Graham still owes around £500,000 on a property he bought for £300,000.
He is now waiting for the Cypriot bank to issue a writ which could mean he loses his family home.
Asked how he now felt about Mr Laird, he said: “I feel as if he has rubbed the death of my wife in my face.
“I want him to know what it’s like to face losing everything.”