Hundreds of villa buyers facing ruin

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.”

Are the authorities waiting for a tragedy like Aberfan?

THE GEOLOGY of Cyprus is unique and results from the natural forces responsible for its creation. Over millions of years, the island has been slowly squeezed out of the water as Africa has moved north, pushing against the European land mass by continental drift.

The natural forces that created the island left behind a legacy of riches. For Cyprus’ early inhabitants these included copper, from which the island got its name.

Construction issues

But the natural forces that created Cyprus also left behind a legacy of problems. The most notable of these is unstable land in which landslides are common. In Cyprus, landslides are usually triggered by heavy rainfall, earthquakes, erosion, and human activity.

Anyone travelling the island should visit Pissouri, Kinousa or Polemi where they will see the damage resulting from houses built on landslides.

The Cyprus Geological Survey Department (GSD) has mapped vulnerable landslide areas in Paphos District and to a lesser extent, those in Limassol.

Problematic Paphos villages include Agios Photios and Statos, Choletria, Theletra, Episkopi, Marathounda and Armou. Following devastating landslips at Agios Photios and Statos, the Government moved both villages to a new location. Choetria & Theletra villages were also relocated after suffering similar disasters.

The GSD map shows bentonite and mélange landslides. These clays absorb huge amounts of water, expanding by as much as 15 times their original volume and shrinking back as they dry out. The extreme forces exerted as they expand and contract can wreak havoc to anything built on them. Deposits of bentonite and mélange can be found at many villages, including Simou, Drinia, Phiti, Milia, Anadiou, Lasa, Krittou, Marottou, Kannaviou, Melamiou, Ayios Dimitrianos, Nata and Fionikaria.

When it rains it pours!

In 2006 heavy rain in Paphos triggered mud slides which resulted in damage to property and the tragic loss of two lives. The authorities worked hard to put matters right. They improved and enlarged drains, and contoured and cleared ravines blocked by discarded rubbish.

Almost immediately, a developer in-filled one of the cleared ravines and started building houses. What happens the next time there’s some heavy rain? Will these houses get washed away?

Heavy rains also caused problems at a development at Pissouri. One owner went to check that the contents of his garden shed were keeping dry. Seconds after returning to the house he heard a loud crash; a 20 foot reinforced concrete wall had collapsed, crushing his shed and filling his garden and swimming pool with mud, water and goat excrement. If he’d lingered a few seconds longer in his shed, he may well have been killed.

More recently, a development at Nata built by British property developer Adrian Mills (who subsequently skipped the island), was declared unsafe by an independent surveyor who visited one of the properties in 2007.

In 2011, a development of 14 villas and apartment at Tala started to shift prompting the police to close the main road leading to the Kamares village, diverting traffic from the area. (The road has been reopened).

The homes at Armou

The development of 6 homes on a hillside of soft clay at Armou is at great risk from the winter rains. One of the houses has already been deemed unfit for habitation and has been condemned; local people have avoided the area.

But landslides in the area could also be triggered by excavations and vibrations caused by vehicles, alterations to the surface water flow caused by roads and other hard landscaping, large discharges of water from swimming pools, sewerage problems caused by the non-permeable nature of the soil, etc.

These factors may impact on neighbouring areas, damaging buildings, and accelerating nearby active slides.

Planning law

Given Cyprus’ long experience of landslides and having to move whole villages to new locations, you would think that the law would prohibit the construction of property on unstable land. Unfortunately, this is not the case!

According to the Cyprus Geological Survey Department, engineers and geologists engaged by developers (and others) are responsible for ensuring the stability of any structure and its surrounding area.

If problems arise, buyers must pursue their case through the courts; landslide is a natural hazard and properties built in these areas are generally uninsurable.

A disaster waiting to happen

You may recall the Aberfan disaster of 1966. On October 21st a tip of coal waste, undermined by water, engulfed the South Wales village of Aberfan killing 144 people, 116 of whom were children.

Let’s hope the powers that be have the courage to ban construction in unsafe areas – or ensure that the plans take ground conditions into account before issuing building permits.

Or perhaps they’re waiting for a tragedy like Aberfan to strike in Cyprus!

Developers oppose new property tax

DEVELOPERS in Cyprus have expressed their opposition to a proposed tax on large houses, currently being considered by the government as part the island’s bailout adjustment programme.

The developers said Cyprus could raise property taxes at a time when it was trying hard to attract foreign investors.

In a written statement, the developers association considers “especially unfair” a proposal to introduce a tax on homes larger than 300 square metres.

The state can increase its revenues by taxing the thousands of properties, which are not even on file.

Developers also voiced their opposition to a proposal by the island’s international lenders for foreclosure procedures to be expedited to 18 months.

This should not be done in less than between seven and 10 years, they said.

Developers propose that banks should be allowed to give loan extensions that would suit the borrowers’ current capabilities.

The association also recommends speeding up examination and approval of permits for large projects and also provision of tax breaks to encourage investment.

Freak weather destroys holiday homes

STATE broadcaster CyBC reports that a tornado hit the Paphos villages of Milia and Fyti this afternoon, sparking fear amongst their residents.

According to their Paphos correspondent it was the first time that locals had come across such freak weather conditions in the area.

The tornado lasted just four minutes destroying everything in its path along a 30 metre residential stretch causing severe damage.

Trees were uprooted, prefab buildings were overturned and a number of holiday homes were destroyed.

Such events are rare in Cyprus. In January 2003 an unusually powerful tornado swept through the coastal town of Limassol, causing extensive damage to shops and homes, uprooting trees, tearing apart roofs and overturning vehicles.

Armou homes on verge of collapse

DESPITE the promise of help from the Paphos district office seven months ago, residents of a small housing development which is rapidly sliding down a hillside in Armou, say nothing has been done.

The Sunday Mail first highlighted the dire plight of the homeowners in March.

The six houses which make up the development in the picturesque village are still moving down the hillside and are likely to collapse completely if rains are heavy this winter. One of the houses has already been deemed unfit for habitation and has been condemned.

A number of the homeowners have issued court proceedings against the developer. All of the houses, which were only built in 2004, have serious structural problems, from slanting floors, to the partial collapse of stairs, walls, swimming pools and patio areas. Outside drains are exposed in one garden and retaining walls have split.

The estate was constructed on land locals had long been warned was unsafe.

One of the access roads to the development is currently impassable and although a second road was repaired, large cracks have again appeared.

The developer responsible for the estate is JNM, but despite repeated efforts, the Sunday Mail has been unable to contact them.

Geoff and Maggie Higgs, owners of one of the stricken homes, were forced to leave their ‘dream home’ a few months ago as they no longer felt safe. They are currently lodging with friends in the UK.

Only two homes are now occupied, one by Simon Phillips, his wife and two children. The Higgs’ daughter, Sian Sparrow, her husband and two children are renting a house next to theirs to keep an eye on her parents’ property.

The Sparrows had previously been renting the house on the estate which has now been condemned.

“We moved into the initial property in April 2011, and nearly a year later during the terrible weather, we noticed massive cracks appearing in the house and the outside areas. The house was also at a noticeable slant. Everything happened so quickly, the condition of the house deteriorated massively in just a couple of weeks,” Jason Sparrow told the Sunday Mail:

The family was forced to leave the property, which was declared unfit for habitation but decided to move into another house on the estate.

“We were told by a surveyor that the current house we are renting – which is Number 5 on the estate – would be ‘the last one to go’,” Sparrow said.

Until recently, according to the couple, the property had remained relatively unaffected by the shifting land. But, they pointed out that following just two days of recent rain, cracks had appeared in the swimming pool.

Another homeowner, Graham Slyper, was diagnosed with Parkinson’s disease last November and is currently based in the UK. He says he had been hoping to spend the remainder of his life at his home in Armou, but he believes the likelihood of this happening now is slim.

Speaking whilst visiting his property on a trip from the UK a few weeks ago, he said: “the cracks in my house have opened up further in the last few days of rain. They were measuring about 6cms and now they are about 9cm. The pool has cracked, and I’ve got the pool people here trying to stop the water leaking out of it.”

“It’s terrifying; we are all worried about what is happening,” said Maggie Higgs who was also on a visit from the UK.

Permanent resident Phillips said he was particularly worried with winter approaching. “None of us are able to sleep properly and we’re fearful our homes may collapse,” he said.

“We have been told when it rains if we have a winter like last year, we could see the whole development go in a matter of hours. This is a beautiful village and a fantastic spot but it’s turned into a nightmare.”

A report by the president of Paphos’ architects and civil engineers association, Chrysostomos Italos was completed in June and has been handed over to the legal advisers of the homeowners. Italos places the blame firmly on the developer.

Italos visited the site again last week. “I inspected the entire estate and the site is moving. Something has to be done. I am waiting for the district office to take action and protect the area,” he said.

“I am very concerned that if we have a bad winter, the houses will collapse.”

Italos has suggested a number of measures which if implemented quickly could still save the development. These included a drainage system and an underground system to take away water and special supports.

“It will be very expensive and I would not suggest the owners do it, and it’s not their responsibility. The entire area needs to be made safe, not just individual houses. The developer or the government must carry out these works.”

Tragically for the residents, it appears as if the area where their houses were built, just below the church in the picturesque village, was well-known among locals as being unsafe.

“Everyone in the village knows that below the church isn’t a safe place to build. When I was a small boy, I was told to be careful of this area and not to go there in bad weather,” Armou mukhtar, Panikos Hadjitheoris previously told the Sunday Mail.

Evagoros Andreou, of the Paphos district office planning permits department has visited the housing estate and sent the developer a number of letters.

“We recently met with him and I can’t make any further comment as we are still examining the situation,” he said.

He said he and members of the geological department would visit the estate again next week. “I cannot give any further information yet as too what action we will take, but it will be in accordance with parameters indicated by the law.”

According to Italos, the district office can take a number of different steps.

“As the development has still not been signed off and is still in the developer’s name, they will be asked to verify that all the works were carried out according to the permits,” he said.

More disturbingly, the district office could even act against the homeowners, as they are living in properties which do not have certificates – even thought they are not responsible – and this is against the law, he said.

Italos offered a glimmer of hope though.

“In some other areas I know of, the district office has carried out the repairs themselves and then taken the developer to court to claim the money back. I am hoping that the district office of Paphos will do this with the developer responsible for the site in Armou.”

The homeowners pointed out that the problem is steadily worsening, with houses above the development also slipping down the hillside.

The group is understandably angry, upset and under immense stress.

“We sold everything in England to come here for a dream life, but the reality is I’m not far away from having to tell my children that we don’t have a home. I carry that weight around with me. I don’t know what I would do if we couldn’t live here anymore,” said Phillips.

Geoff Higgs added: “When you get to 67 years of age, you’ve worked all of your life, paid off your mortgage, sold up, come to Cyprus, been advised by lawyers, paid money for your property and it’s been snatched away from you, it’s too stressful and agonising to express.”

“If nothing is done, soon we will literally be homeless,” his wife added.

Where well-off Chinese are looking to immigrate

china overseas property exhibition
2012 Beijing International Property Expo/Autumn – photo: http://www.beijingexhibition.com/

AS WEALTHY CHINESE increasingly look to invest overseas, foreign businesses also have stepped up their efforts to woo potential Chinese investors. Nowhere is this courtship more visible than with foreign real-estate developers.

On a recent Saturday, some 140 developers from more than 20 countries showcased their properties to Chinese buyers in an expo held in Beijing. To catch the eyes of the prospective buyers, the developers handed out fancy brochures, decorated their exhibit booths with bold-colour pictures of featured properties, and in some cases, even had young saleswomen wearing bunny ears.

But what attracted many of the Chinese visitors the most was the lure of foreign residency, which made the 30 exhibitors from Cyprus the most prominent group at the entire expo.

Why Cyprus? While mild weather, rich history and a nice location  in the Eastern Mediterranean might make the tiny island nation an attractive place to live, the main appeal is the incredibly low bar it sets for immigration: Anyone who spends €300,000 on a piece of property on the island automatically becomes eligible for permanent European Union residency.

“Cyprus has relatively low immigration hurdles than others like the U.S. and Canada,” said Shao Gang, while flipping through a brochure handed out by a Cyprus developer. “That is attractive to us,” said Mr. Shao, who said he works at a local trade group.

Other developers who drew large crowds at the expo included those from Singapore and Australia, both of which also offer attractive investment immigration programs.

Tony Du, general manager at Affluent Investment Group, was at the expo helping an Australia developer consulting with potential Chinese buyers on immigration-related questions. “Of the 100 people I talked to, 60% of them wanted to emigrate, and 40% only wanted to buy properties overseas,” Mr. Du said.


(We understand that the Chinese authorities issued circulars warning potential buyers to be vigilant and to seek expert advice before making purchases.)