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Archive for the ‘Buying property abroad’ Category
Friday, July 8th, 2011
Inside Track promised riches but went bust. Now its property investors are going to court try to recoup their money
In the summer of 2007, just before the house price bubble burst, buy-to-let seminar firm Inside Track claimed it sold one in every 12 new-build properties in the UK, in association with sister company Instant Access Properties.
Its customers for these flats, and others in Spain and the US, were investors who had signed up with the two companies whose promotional literature confidently told buyers they could become “property millionaires”.
Guardian Money has been warning against these firms since August 2002. And in 2008 they went spectacularly bust, leaving many would-be landlords nursing losses ranging from about £50,000 to more than £500,000.
In the years since, many of these investors have thrown in the towel, some ruefully putting down their losses to experience. But one, Tamsin Barks from West Sussex, did not. She has waged a lonely and often acrimonious battle against those she considers responsible for advice that has led to personal losses that could top £400,000. Facing opponents with huge legal resources, she has fought a one-woman war through the courts, often representing herself against top barristers.
But now it appears she is no longer alone. For hundreds of other Inside Track/Instant Access Properties victims could join her in the fight for compensation. They have pledged to look into a potential group legal action against those they hold responsible for their plight. If the concept proves viable, they could have the firepower of an £800,000 legal fighting fund.
From 2002, Inside Track advertised free “workshops” in newspapers, on the radio and via a mailshot campaign. Thousands signed up, sometimes handing over nearly £10,000 in seminar and membership fees to its sister company Instant Access Properties for “education” and “expertise” before they bought anything.
Once hooked by the promise of property wealth, the twin companies stoked the speculative frenzy even further, promising a fast road to riches via sales of flats bought “off-plan” in Spain and Florida, as well as the UK. These properties were often little more than a developer’s intention for the future.
After the firms went bust, thousands of property owners were left with assets worth far less than they had paid for them. Some had title to, or had paid deposits on, properties which remain unfinished or not even started. Others were not worth the buying price. Many investors eventually handed back the keys to lenders.
We first reported on Barks’s fight in February 2008. She had bought seven properties on Instant Access Properties’ recommendations – four in the US, two in Spain and one in the UK. She says all have lost her money, despite the firm’s claims of superior market knowledge and advice.
“I thought it was too good to be true. And I wish I had stuck to my instincts. But I was on my own and vulnerable. Property investment seemed sensible – it was bricks and mortar, not some fly-by-night financial deal, and I could understand it,” she told us at the time.
Prepared to risk what little she had left to gain “justice”, she has spent the past three years in a lone legal battle. Barks has already launched challenges in court against founder Jim Moore, who no longer lives in the UK, former company secretary and director Maria Gifford, and former executives Brad Rosser and Anthony McKay.
Some of those associated with the two companies as directors, shareholders or senior managers have done very well. Moore, formerly the promoter of failed perfume pyramid sales scheme L’Arome, had accumulated so much that ex-wife Kim Moore could negotiate a reported £16m divorce settlement in 2008.
Barks, with 200 others, recently consulted specialist litigation lawyers Coyle White Devine to explore the possibility of bringing a group action to try to recover their losses. According to Barks, the private consultation, at an undisclosed London location, was held amid tight security due to fears a public meeting could be infiltrated by agents working for defendants in any future legal action. There was also concern that an open meeting could be targeted for defamation actions by potential defendants, preventing victims openly relating their experiences.
Barks says so many victims have similar stories that only a group or class action would make sense. “It’s simple arithmetic. Our group of Instant Access victims has grown from a handful to over 600 in under two months, although we reckon there are at least 2,000 more who might join us if they knew about it,” she says. “But if only 400 join and each puts in £2,000, then we have a very serious £800,000 fighting fund. Nothing has been decided yet about any potential action, so there is no need for cash now – it will depend on the views of leading counsel and legal expenses insurers. Even if I only recovered a fraction of my losses I would have some satisfaction, and it would be better than nothing.”
Inside Track/Instant Access Properties victims complain of:
• Failing to get mortgages when they were told they were available
• Misdescriptions – one property “200m from the beach” was in fact 5km from the sea
• Properties that were never started or left unfinished
• Hidden commissions of up to 15% on property sales – on top of “membership fees” and 3% “finder’s fees”
• Deposits paid to developers in Spain who have disappeared
• Over-valuation of properties and poor quality surveyor reports
Although Brad Rosser was listed as the group’s vice-chairman in an Inside Track press release in 2006, he says he was not a director of the company. And although a November 2004 Sunday Times report said he was a “co-owner” (along with Jim Moore) of the companies, and the 2006 Sunday Times Rich List stated that he “runs” Inside Track and Instant Access Properties, “with a stake worth about £70m”, he says that was wrong and he never owned any shares.
Asked who did own the shares, he says: “I was not a director. At any rate, a director does not need to have the full disclosure of shareholders, particularly if the shareholders do not want to disclose themselves. So I have no comment on the shareholders to make.”
Rosser and fellow Inside Track executive Tony McKay dismiss Barks’s claim as being without merit. In a statement they said: “We refute any allegation that we have been involved in any wrongdoing. We will robustly defend Ms Barks’s case and any other litigation, including a group class action. We believe any litigation is utterly misconceived.”
Guardian Money was unable to contact Jim Moore.
Those interested in the potential legal action should email classactioniap@gmail.com
Posted in Buying property abroad, Buying to let, Features, House News, Investments, Money, Property, The Guardian | Comments Closed
Tuesday, May 3rd, 2011
Aggrieved UK investors call on Spanish banks to honour deposit guarantees on troubled properties as country launches drive to attract overseas buyers
A publicity roadshow aimed at encouraging foreigners to buy Spanish holiday homes has been branded “an insult” by groups of Britons caught in legal difficulties over the status and funding of their properties on the Costas.
Spanish housing minister, Beatriz Corredor, and public works minister, José Blanco, visit Britain this week at the start of a six-nation tour. The Spanish authorities said the ministers will use the roadshow to encourage individuals and institutional investors to buy some of the estimated 1m new homes lying empty in Spain.
“We must revive the holiday housing market to speed up the ‘digestion of stock’,” said a Spanish government spokesman, while Blanco claimed the exercise will “highlight the strengths of our economy [and] transparency and legal certainty of our planning legislation”.
However, protest bodies such as the Spanish Bank Guarantees Petition and the Finca Parcs Action Group are organising online petitions calling for the roadshow to instead address long-standing grievances on the alleged refusal of Spanish banks to honour aval bancario, or bank guarantees.
Since the late 1960s, Britons buying homes off-plan from Spanish developers have been told their deposits go into third-party reserve funds set up by Spanish banks. If a developer goes bankrupt or fails to build a property the banks then refund a purchaser’s deposit. But in recent years, the groups claim, many banks have allegedly refused to honour the guarantees of several thousands of British buyers.
Keith Rule, a spokesman for the campaigners, said: “Many estate agents, lawyers and banks were negligent and acted with a complete lack of professional due diligence. We, as innocent victims of the Spanish housing market, demand action and recompense.”
Ruth Genda from Wymondham in Leicestershire put down a £75,000 deposit on a Spanish holiday home in 2003. Construction was delayed, but as the apartment was finally completed it was declared an “illegal build” as it didn’t have formal planning permission. Genda took Banco Popular Hipotecario (BPH) to court, which declared her guarantee valid and ordered the bank to refund the purchase. But BPH appealed and the ruling was overturned.
“The case was eventually dismissed and my deposit was never returned. We believe thousands are in the same position. Where is the transparency and fairness which the government ministers now want others to believe in?” Genda said.
The Spanish government says the roadshow is a “pioneering initiative” targeting countries with national economies that are recovering from the downturn and which have historically provided many of the foreign buyers for properties on the Costas.
This week’s publicity events in Britain will be followed by similar exercises in France, Germany, the Netherlands and Scandinavia, with Russia later in the year.
Michael Cashman, a Labour member of the European parliament and long-time supporter of British buyers seeking bank guarantee repayments, has written to the Spanish government. “What about those that have already invested and who have found absolutely no results through the Spanish legal system?” he asked, adding: “I would not advise any investment in Spanish property until this problem is resolved.”
Posted in Buying property abroad, guardian.co.uk, House News, Law, Money, News, Property, Spain, UK news, World news | Comments Closed
Friday, April 1st, 2011
Collapsing prices have hit holiday villa owners and left ‘an entire generation of Spaniards with a millstone round their necks’
Spanish homeowners used to have little in common with the wealthy north Europeans snapping up holiday villas and apartments on the Costas. Now both are united in adversity. Both are suffering in a market preoccupied with falling values, negative equity, a glut of unsold new property and, in some cases, doubts about the legality of new estates.
An estimated 600,000 new homes, and 200,000 part-completed ones remain unsold, a sizeable proportion of which are in holiday areas. The Bank of Spain says official house prices have fallen 17% since 2007, but many observers believe that the market is much worse than that, as the bank’s index is based on valuations, not achieved sale prices. Estate agents say prices of homes have typically fallen 20% to 50% in different parts of the country, with no sector unaffected.
“There is an entire generation of young Spaniards with a millstone round their necks,” says Enrique Quemada of One to One Capital Partners, a business consultancy. “They will have to work their whole lives to pay for houses now worth half what they bought them for.”
Meanwhile, the holiday home market also remains in the doldrums. A three-bedroom bungalow in Castellon, north of Valencia, has been slashed by its British owner from £109,000 to £79,000, and then to £66,000, but still has no takers. Taylor Wimpey, a British developer which has been building homes in Spain for more than 50 years, has new villas on the Costa Blanca for sale at £140,000, down from £235,000.
On the Balearic Islands, until recently thought of as immune from the crash, prices are down as much as 40%.
“There are some real bargains, especially at the top of the market,” says a spokeswoman for Savills estate agency, which has one new luxury villa on Mallorca slashed from £15.4m to a mere £9.5m.
Desperate developers are also faced with a slump in British demand because of the poor euro-sterling exchange rate. As a result, a golfing resort in Catalunya is selling its homes with a guaranteed rate of €1.25 to the pound on all purchases over the summer; the market rate is €1.14.
Most commentators believe that more price falls are inevitable, but even if Britons choose to buy now, the prospect of getting a Spanish mortgage is “pretty bleak,” according to Melanie Bien of broker Private Finance.
“Spain stands out with a housing market and a lending record that’s far worse than France, Portugal or Italy. If you must buy, somehow try to remortgage money from your own home back in Britain,” she advises.
The latest figures to emerge from Spain show little respite from a downturn that is now in its fourth year. Although there was a small rise in the number of homes sold early in 2010, this was driven by the desire to beat deadlines for the scrapping of mortgage tax relief and a rise on VAT on new homes. By the end of last year, sales volumes were again on the slide.
Despite the glut of unsold new homes, another 257,443 were completed in 2010. Even so, there has been a 43% collapse in the value of the Spanish construction industry, according to EU figures, and a collapse in land prices of about 50%.
Spanish banks – many of which hold thousands of repossessed homes as assets – are legally obliged to start selling these homes after holding them for two years. As a result, more properties are expected to flood the market for sale this year.
Meanwhile, as if that’s not enough, the scandal of Spain’s “illegal homes” continues. For more than a decade there have been disputes over some new developments retrospectively declared illegal by councils, controversial compulsory purchase powers given to developers by some local authorities, and politicians who have been jailed for accepting bungs.
The most recent controversy blew up last month when 12,697 new homes were declared illegal in the Almanzora Valley in south-east Spain, an area popular with holiday-home buyers. Some 920 have been earmarked for demolition, while the remainder may be rezoned, thus allowing them to be declared legal and have utilities connected.
“How many will be made homeless, or lose their life savings, if 920 houses are demolished? Who’s going to compensate those who bought in good faith?” asks Maura Hillen, president of Abusos Urbanisticos Almanzora No, a local pressure group composed mainly of British residents. Similar groups of disgruntled UK buyers exist across many of Spain’s tourist areas.
Now the housing crash has become so much a part of the modern Spanish psyche it has been accorded the ultimate tribute – its own television soap opera.
Crematorio has a storyline that includes unhappy foreign buyers, corrupt councillors, lurid affairs, drugs and violence against a backdrop of the Spanish Costas.
Far-fetched? Not this time. Many believe the fiction is some way behind the fact.
Britain and Spain aren’t a million miles apart when it comes to home ownership aspirations.
Both are big on owner-occupation. Spain has one of the highest rates in the whole EU – a whopping 82% – with the rental market concentrated in a few major cities such as Madrid and Barcelona, says the Rics European Housing Review 2011, a major annual study of Europe’s property markets.
Tax breaks have encouraged people to invest in housing, though many of these have now been scrapped as part of the recent austerity measures.
And it’s not just Brits and other northern Europeans who have responded to the siren call of Spain’s sun-kissed beaches. The Rics study points out that, among Spaniards, “there is also a high propensity to aspire to own a second home in the countryside or on the coast: over a fifth of households own one. This helps to make crowded urban conditions more tolerable for those that can afford it”.
The latter point is a reference to the fact that Spain’s houses are typically pretty busy, bustling places. Says the report: “This cramped lifestyle reflects cultural factors, as well as housing shortages, as several generations of families may live together in dense urban accommodation. The number of rooms per dwelling is quite high by average EU standards, yet they tend to be small, with the usable floor area towards the bottom of the rankings.”
Property prices may have fallen, but last month Spain was named one of the world’s most overvalued housing markets. A report in The Economist claimed Spanish homes are overvalued by more than 43%, and said this compared with just under 30% for Britain, 20% for Ireland and -12% for Germany (ie, the market in Germany is “undervalued”). It reckons home prices should reflect the rents that tenants pay, so its index calculates the ratio of prices to rents in 20 economies. Spain was the fourth most overvalued after Australia, Hong Kong and France.
But, writing on his Spanish Property Insight website, Mark Stucklin says: “You have to take these figures with a pinch of salt as far as Spain is concerned.” The problem, he says, is they are based on official figures which “significantly understate the true extent to which prices have fallen. Spanish prices have fallen much further than this index suggests … If you want to know what’s going on in the residential property market, a much more revealing figure is the collapse in planning approvals, down by 90% since 2006″. Rupert Jones
Posted in Buying property abroad, House News, Money, News, Property, Second homes, Spain, Taylor Wimpey, The Guardian | Comments Closed
Saturday, March 26th, 2011
Britons who own a French holiday home have had to weather a much gentler downturn than in Spain – and house prices may now be on the up
The heady days of buying holiday homes abroad using equity from soaring house values in Britain have long gone, yet France remains a favourite for the few still buying overseas.
No authoritative data exists on international holiday home sales but websites such as Primelocation and FindaProperty say listings for classic French cottages and renovation projects receive heavy numbers of hits, despite the economic malaise.
Britons typically buy near airports served by budget airlines, in four main regions – the south west, from Normandy down to the Spanish border; the Mediterranean coast, along the Cote d’Azur and provence and into Languedoc; the Alps; and a smaller number of generally wealthier purchasers look to Paris.
Britons who choose France for a holiday home are typically better off than those who buy in Spain and have had to weather a much gentler downturn. Price falls of 10% to 15% have been common over the past five years but many owners – such as Andrew and Jill Ness, accountants from Birmingham – have easily recouped that by improving their homes.
“We bought a bergerie, a country house about 30 minutes from Bordeaux. It was only €108,000 (then about £73,450) back in 2005 because it needed structural work and rewiring,” says Jill. “The villagers were helpful and welcoming and recommended workmen. The hard part was supervising and controlling costs.
“It sounds contradictory but the rate of work would slow, yet the scope of the project would expand, because we weren’t there, day to day, to see what was happening,” says Jill.
The couple spent €55,000 but have now had the home valued at €240,000, giving them a profit of well over £80,000. But other British buyers, hoping to fund their purchase with lucrative rental income, have been less successful.
Richard Dale, a Briton who moved to run an estate agency in western France in 2003, writes about his own gîtes rental business on blog.rhf-international.com.
He says: “In 1998 in Charente-Maritime there were just a handful of complexes — three or more gîtes on a single site, typically sharing a pool. Now there are literally dozens, with seemingly yet another opening each month. Some complexes have 20 or more. The number of tourists has risen, but nothing like as quick as the amount of accommodation.”
Lanisha Butterfield of travel website HolidayLettings.co.uk, which advertises more than 5,500 French holiday homes, says: “If there are 20 gîtes in an area an owner needs to make theirs stand out. It can be very tough.”
Rental income is modest even for those who do find takers. Butterfield says many owners have been running discounted offers for summer 2011 since the autumn, and tourists can easily find that hiring a cottage for a week in France in high season can be cheaper – even including ferry costs – than a comparable property in Cornwall.
As a result of the vast over-supply of holiday homes, Britons looking to buy are more discerning. Graham Downie, who runs Cognac Property in western France, says: “In the area around Cognac I’ve seen a move away from the seemingly obligatory gîte complex. Most of my searches now are either for family homes in good condition, with views over the vineyards, priced between €250,000 (£217,418) and €400,000 (£347,767), or for townhouses with a small garden or courtyard between €200,000 (£173,883) and €300,000 (£260,825).”
The biggest victims of the French downturn, however, may be those who bought new-build. Figures from estate agency Humbert show that prices of some in Champagne-Ardenne fell by more than 20% in 2009 and have not yet recovered from that slump. “Even in the prime locations, asking prices [for new homes] have fallen back by between 10% and 20% since pre-recession levels,” says a report from the agency.
Few buyers have had to cut their losses, however. Estate agents say there has been no discernible rise in “distressed sales”. Instead, some believe canny Britons, who bought when sterling was strong, are waiting to see if the exchange rate shifts further in favour of the euro – in which case a quick sale could see them net a good profit.
Signs of le recovery
After years of gentle decline and sometimes sharp falls, the French housing market appears to be picking up.
“Interest from international buyers dropped substantially at the end of 2008 but transaction numbers are rising once more,” says Graham Downie.
The Fédération National de l’immobilier, the French estate agents’ body, says average prices of all homes rose 6% in 2010 and property purchases exceeded 700,000 – a 15% rise on 2009. “Prices, after having fallen quite significantly – approximately 10% if we look at the end of 2009 – have regained a certain strength,” says FNAIM president René Pallincourt.
The average price of a home in Burgundy is now €148,400 (£129,000), while in Languedoc the figure is €208,800 (£182,000) rising to €384,200 (£334,000) in Provence. The federation and lenders, such as Credit Agricole, predict rises of about 3% this year, with larger increases in cities.
It is a hard slog for British purchasers. “The days when homeowners released equity from their UK properties to pay for a dream house in Provence are a distant memory,” says John Busby of Athena Mortgages. He says more Britons who cannot afford to buy outright are seeking French mortgages, which require deposits of between 10% and 30%. Borrowing in euros avoids exchange rate complications and may be cheaper to pay off if sterling eventually rallies. But Busby warns there is a possible hitch. “French mortgages work on the basis that the total of all [payments on] mortgages and loans held by the borrower do not exceed one-third of their income. This means monthly repayments on a UK mortgage will be taken into consideration.”
Posted in Buying property abroad, Features, France, House News, Money, Property, The Guardian, Travel | Comments Closed
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