Buying Property in Cyprus without the right advice

buying property in cyprus without the right advice


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buying property in cyprus without the right advice,

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WHEN Steve Noonan, a legal adviser for Cleveland Police, bought his two-bedroom apartment off-plan at the Cypriot development of St Nicolas in the town of Chloraka, near Paphos for only £160,000 in 2008, it seemed too good to be true.

“And the problem is, it was too good to be true,” he says,buying property in Cyprus particularly when a debt collection agency in the UK started sending him letters, texts and phone calls demanding mortgage repayments on his Cypriot property, or his family home in Skelton, Yorkshire and other assets would be repossessed by bailiffs.

The deal involved a UK-based agent, the major Greek and Cypriot Alpha Bank, and the Cypriot developer Alpha Panareti. Mr Noonan and his wife Eugenie say they were told that repayments to Alpha Bank would be only £560 a month through a 25-year interest-only loan.

“I didn’t have the full amount, so this suited me. The plan was to use the apartment for about six weeks of the year for holidays, renting it out the rest of the time to pay the mortgage. I thought that if, in 25 years’ time, its value had risen, it would benefit our three children, now aged from 18 to 37,” Mr Noonan explains.

Alarm bells rang when his mortgage repayments more than doubled from £560 to £1,200 a month after the bank insisted on Mr Noonan taking out his mortgage in Swiss francs, deemed to be a stable currency at the time. He’s now paying more than £300,000 for his £160,000 apartment that’s thought to be worth only £65,000 today. In total, Mr Noonan estimates he’s £82,000 out of pocket to date and he’s yet to hold a title deed in his hands.

He also says that the bank was signing off payments before his apartment reached the appropriate stages of build. “The developer would say the building is now at foundation level, so it needs the next tranche of money, without the bank going and checking that was the reality,” says Neil Heaney, an ex-Premier League footballer, who now helps overseas investors through his property investment recovery company Judicare ( “In some cases I’ve come across, loans were drawn down by 90 per cent and ground hadn’t even been broken.”

In a claim, which could also be the trump card to extricate some British investors from crippling loan agreements, it has been alleged that Cypriot lawyers may not have complied with crucial legal formalities.

According to a Cypriot barrister Christos Triantafyllides, who has been employed by Judicare: “For power of attorney to be legally valid by Cypriot law, signatures must be ratified by the certifying officer to make sure he knows the person or sees identification that proves who he is. If this is declared to be illegal, then all other documents signed through the use of power of attorney are also illegal. This would make the loan agreement invalid.”

It’s very important that British buyers buying property in Cyprus are released from these loan agreements such as the one in Mr Noonan’s name, adds Mr Triantafyllides, with claims believed to be running into the millions. “It’s not good for Cyprus or the property industry,” he adds. “But it is good that the legal mechanism to safeguard the rights of people is in place.”

British buyers in Cyprus often suffer from a false sense of security, says Richard Way, the editor of Overseas “You drive on the left there, English is practically the Republic’s second language, you can shop in Marks & Spencer, and most significantly, much of the English legal system introduced there before independence in 1960 remains.

“It’s easy to see why Brits felt at ease buying on the island and weren’t as wary about legal representation or finer details of mortgage contracts as they should have been.”

Mr Way urges people thinking of buying in Cyprus to seek truly independent advice. This will strike a note with restaurateur Paul Sutton, who’s part of a class action with 19 other Britons in a case also involving Alpha Bank which is progressing through the courts. In 2006, he bought two properties from developer Solterra at Sinoro (a hotel turned into a luxury apartment complex) near Paphos, and at Polyxenia in Pernera, eight miles from Ayia Napa.

Mr Sutton bought his two-bedroom apartment at Sinoro for £175,000 and his beach townhouse at Polyxenia for £255,000. Similarly, his Swiss franc loans repayments have doubled, and debt collectors seeking to confiscate his home and assets in Cottingham, East Yorkshire have also plagued him after he stopped paying his Cypriot mortgages on the advice of lawyer Stefano Lucatello from Kobalt Law.

“The statements sent by the bank, listing extra charges that I and my accountant didn’t understand, claim I still owe £179,695 on the Sinoro apartment, which is more than I paid for it in the first place.

“Equally, after regularly paying £800 a month mortgage for two years, I’m being told I owe double the amount I paid for my townhouse at Polyxenia as well,” says Mr Sutton, 60.

An added issue in Mr Sutton’s story is claims that Eastern European workers (including some of Solterra’s builders) are living in the unsold Sinoro apartments, which has allegedly led to damages.

Sinoro homeowners have reported the “destruction” of the gardens, pool and some apartments and claim their homes have been illegally inhabited by workers.

“This means that I’ve had no rental income for two years, as no one wants to rent there,” adds Mr Sutton, who says the developer, when confronted about the unwelcome guests in the development, has dismissed his concerns.

Mr Lucatello says the wider implications across Cyprus of alleged mis-selling of mortgages and potentially negligent legal work “could bring down the (Cypriot) banks”.

He also hopes bringing these issues to the forefront will prompt the government to sort the problem of title deeds in Cyprus, which can take 10 to 15 years to obtain and in some parts of the island there are major land disputes taking place.

Alpha Bank, Alpha Panareti and Solterra were all approached for comment but failed to respond.

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