Thousands of expat investors in property in Cyprus are discovering that they could be facing grave losses.
Investors have until December 31 to file a legal claim in the Cypriot courts against lenders and developers.
Some 15,000 Britons bought property in Cyprus between 2003 and 2009. Many bought “off-plan” with building work still to commence or to be finished. Many have not been.
Most of those affected are buy-to-let investors who planned to rent out the property for holidays. Some were expats who moved to the island to work or for retirement.
Mortgage repayments for many of these people have now doubled or tripled in size because of huge currency fluctuations. At the same time, property values in Cyprus bottomed out, plummeting by 70% in some areas and forcing owners into negative equity.
UK buyers are reckoned to have €1.6bn of debt outstanding to Cypriot banks.
A number of buyers were persuaded by banks and developers to take a mortgage in Swiss franc due to its stability and low interest rates. But in the wake of the global financial meltdown, the franc jumped 40% against the euro.
Many investors claim they were mis-sold mortgages because they were not warned of the risk of currency fluctuations. Others said Cypriot solicitors used invalid powers of attorney to commit them to loans with terms different to those marketed.
One UK-based law firm reports that a legal battle in under way to determine if these cases will be heard in the UK or in Cyprus, leaving investors yet more unclear as to their best course of action.
In June, another UK law firm filed an action in the High Court on behalf of 215 clients.