Expats in shock – homes sold at Auction

June 23, 2010 - PRLog -- A very disturbing situation is occurring in North Cyprus, home owners who bought their properties prior to 2008 in good faith, are now finding out that mortgages were taken out on the land by unscrupulous developers after the properties were sold. This is only possible because of the archaic way in which title deeds are transferred, sometimes taking up to 5 years or more. The situation is further exacerbated by the fact that banks, Akfinans Bank in particular, have blindly handed out loans to developers with no checks, and are then charging up to 80% compound interest.

Akfinans Bank Logo

The case with Akfinans bank is particularly disturbing. The original loans secured by the developer were for 100,000 Turkish Lira (roughly £ 42,000) and £1,600. The developer has long since disappeared since the loan was taken out in 2005 and because compound interest was charged at 80%, the debt has now reached 2 million TL (roughly £869,000), a debt that in any civilized society would be seen for what it is, a scam.

Villa at Kulakiz 5

The bank called in the debt and put the properties up for auction while newly elected TRNC government have sat on their hands and done nothing. In the end, the bank, in a complete farce and being the only bidder, bought the 13 properties at the Kulaksiz 5 site in Karsiyaka for 2.1 million Turkish Lira (£900,000), effectively no money changed hands. So for an original investment of £43.600, they have made a profit of £847,000.
The legitimate owners are now in properties that they apparently no longer own and have no idea as to whether the bank will charge rent or throw them out.
If this is not enough to dampen the property market, another development is now up for auction in July and more are in the pipeline.


Is it safe to buy?


In 2008 a new law was passed that stated that all Contracts of Sale in North Cyprus must be registered at the Land Registry and the personal written approval of the contract holder must be obtained for any further bank loan to be taken out against the land on which it is built.
Some reputable developers have gone one step further, Evergreen Developers, an Israeli company who are building Aphrodite Beachfront, have issued a legal statement confirming that there are no outstanding debts on any of their developments (http://www.ipb-magazine.com/en/evergreen-statement).
For people purchasing a property now this situation just could not happen but you have to wonder at just how many negative situations like this the TRNC government are willing to let happen.

Amaranta Valley, unfinished and soon to be auctioned

We can only hope that these unfortunate people, who put their life savings into buying a property in which to retire, get some compensation. Surely any normal government would be locking away the perpetrators, i.e. the Developers and bank officials rather than sticking their head in the sand and waiting for it all to go away. We wait with baited breath to see if this government will step up to the mark.

# # #

IPB Magazine is an Internet property, culture and travel Magazine supplying relevent and useful information the Travels and investors