Please sign the petition mentioned 
Thanks.
The pain in Spain
- Created:
- 23 November 2009
- Written by:
- Claer Barrett
Seduced by Spanish sun, sea and sangria, thousands of British property investors have had their holiday home dreams shattered by corrupt property developers and lawyers.
For many, the azure swimming pools that looked so tempting in the brochure are no more than cracked, empty pits. Buckets of water collected from a standpipe are needed to flush the loo, and the whirr of expensive generators provides the only source of power.
When the sun sets, developments descend into darkness, meaning burglaries and vandalism are commonplace. With compensation claims mired in the bureaucracy of Spanish courts, inhabitants live under constant threat of eviction. Welcome to the Spanish property nightmare.
The plight of thousands of Britons who claim they have been ripped off by unscrupulous Spanish property developers has received precious little publicity. The natural instinct is to assume that those who have lost a fortune are speculators who have fallen victim to the slump (Spanish property prices have plunged by as much as 50 per cent since the market's 2007 peak, and over one million empty properties are estimated to be cluttering up the coastline). But this is not so.
These buyers allege they are the victims of mass fraud. Having agreed to purchase off-plan properties prior to construction, they have later discovered that developments lack planning permission, and have been illegally erected. Some properties have never been built; many more stand to be demolished.
Many thousands of investors are said to be chasing lost deposits, having pulled out of completing purchases when the facts came to light. Others have completed their purchases and moved in, but are now living out a Spanish retirement nightmare on half-finished developments that cannot be legally connected to the utilities.
Notes on a scandal
A group of over 1,000 British investors have joined forces to shame politicians into addressing their plight. Assembled under the banner of the Spanish Property Scandal Petition, signatories are fighting to receive compensation and reclaim lost deposits from Spanish lawyers and developers who they claim sold them illegally built properties.
With an average claim of €75,000 (£67,000) per signatory, their total losses amount to nearly €80m (£72m).
Suzanne Wyatt, a medical secretary from Kingston, is the somewhat unlikely leader of the compensation campaign. She personally delivered the 200-page petition to Downing Street and the EU Commission last month. The document urges Gordon Brown to publicly voice his support for the action in the European Parliament and put pressure on the Spanish government to investigate not just the original fraud, but the failure of the Spanish justice system to handle complaints. It also calls for an investigation of British estate agents who have been involved in "property abuses" in Spain.
Having received little in way of a response, this week Ms Wyatt has sent copies to Spanish Prime Minister José Zapatero and King Juan Carlos of Spain to step up the fight. Her own case is typical of the hundreds of desperate buyers she represents.
"I put down a €90,000 deposit on an off-plan property in Marbella in 2003 which still hadn't completed by 2006," she says. "The agents and lawyers in Spain wouldn't answer my calls. Then I looked on the internet, and found out that the development was illegal, and built on green-belt land."
That year, the Spanish developer behind the scheme was arrested and charged with bribery. Ms Wyatt refused to complete on the property, and demanded the return of her deposit. She won the ensuing legal battle in 2007, but the developer appealed. After a 22-month wait, last month, the developer was ordered to refund her deposit, plus legal costs and interests within 20 days. This period has elapsed, yet she is still waiting for the payment.
Nevertheless, she considers herself in a better position than many of her peers.
"Many of these cases have yet to be heard. The length of time to get to court in Spain is horrendous," she says. "Now, it's becoming even harder as so many developers are going into liquidation or bankruptcy.
There are now 1,050 complainants in Ms Wyatt's group, but she believes "many thousands" of British buyers are affected by the problem.
"Like me, many people are winning legal cases, but getting money back is another story," she adds. Three quarters of the group are chasing lost deposits; the remainder are retirees living on Spanish developments that could now be bulldozed.
These developments cannot legally be connected to utilities as all-important habitation licences have never been issued.
Whilst it is not against the law to buy a property without a habitation licence, it is illegal to occupy one. "For those living on these developments, it gets worse and worse," she says. "There is the constant threat of eviction or a huge fine."
Ms Wyatt is disgusted that most of the disenfranchised purchasers she is in touch with are paying taxes to the local administration, yet the town halls remain largely indifferent to their plight.
"There are a lot of British people living on developments with no mains water or electricity which gives rise to serious health and safety issues," she says. Generators are often hired by to provide limited power, and pump water, but swimming pools lie empty.
| ACTION, NOT WORDS! |
| Find out more about the petition at www.spanishpropertyscandalpetition.co.uk. And you can leave your own comments or experiences at the foot of this article... |
"There are serious health and safety issues over sewerage," Ms Wyatt adds. "Plus at night, it is pitch black, and properties are regularly targeted by burglars. I know one elderly lady who bought a place near Costa Blanca. She's disabled and has diabetes yet the apartment she's moved into still has no electricity or running water. At night, she has to inject her insulin by candlelight. One on occasion, she injected it wrongly, nearly went into a coma and had to be rushed to hospital."
For those that have completed their purchases, an additional problem is astronomical service charges. "Often, half or one third of the whole development is empty, so the responsibility of paying for maintenance is shifted on to them," Ms Wyatt reports. For British pensioners, the current Sterling:Euro exchange rate adds to the misery.
The blame in Spain
As well as corrupt developers, the Spanish Property Scandal group blames negligence on the part of Spanish lawyers, who failed to independently advise purchasers. The problem ultimately stems from foreign buyers blithely using the lawyer recommended by the developer's agent.
"Stupidly, many of us used the Spanish lawyer recommended by the agent," Ms Wyatt says. "They speak the lingo – you just go along with it. But the lawyers have to take a huge responsibility for this mess. They haven't worked in our interests, haven't properly informed us of our legal rights and have not given us the correct advice."
Judging by the experiences of the group, the most common problem is not being informed of their legal right to demand a bank guarantee for their deposits. Had this been enforced, three quarters of the cases would never have ground on for this long.
"This is a major problem, and most of us don't have bank guarantees even though it's been the law since the 1960s," Ms Wyatt says. Some purchasers were talked into paying extra for bank guarantees, which are now not being honoured.
The group also believes that lawyers knew of the developers' dishonesty about planning applications, and deliberately kept British buyers in the dark.
"It's a triangle of corruption," Ms Wyatt alleges. "If you look at the thousand or so cases we have, the same estate agents are linked to the same lawyers and developers, time and time again. We believe if the three hadn't been working together, none of this mess would have happened."
As an example, before Ms Wyatt's development was even finished, the building licence was revoked due to planning discrepancies. "The lawyer didn't see fit to pass on this information," she says. "I only found out when I flew out to Spain to see what was happening. Even then, they wouldn't let me into the complex."
The file of complaints are being investigated by the international division of the UK Law Society, and its Spanish equivalent, the Colegio de Abogados, but so far nothing has been done.
There has also been a lukewarm response from Number 10 Downing Street; the complaint has merely been passed on to the Foreign and Commonwealth Office. Despite numerous calls made by the Investors Chronicle to the Spanish Desk, the phone was never answered.
Four questions taken from the petition were tabled in the House of Lords at the end of October, but there has been "no response as yet".
The plight of British and Spanish investors was raised in February's Auken Report, a 34-page dossier that was approved by the European Parliament in March. Despite the threat of withholding EU funds from Spain until real estate abuses are corrected and the authorities speed up the justice system, this has yet to be auctioned.
Ms Wyatt and her supporters hope that this will be embarrassing for the incoming Spanish presidency of the EU. "I hope Gordon Brown answers our complaint properly. It is outrageous the way the Spanish government has dismissed us," she says.
In the meantime, British investors in illegal Spanish property continue to face a brick wall.
http://www.investorschronicle.co.uk/InvestmentGuides/Property/article/20091123/b7ffde06-d823-11de-99a4-00144f2af8e8/The-pain-in-Spain.jsp
This message was last edited by jtms on 13/12/2009.
This message was last edited by jtms on 13/12/2009.