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British buyers of Cyprus homes to sue banks, advisers

From Europe Jan 14 2013 BY: Helen Burggraf , Contributing Editor , International Adviser

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UK buyers of Cyprus property, in London in November

UK buyers of Cyprus property, in London in November

Almost 800 UK property buyers who claim that they were mis-sold properties in Cyprus are at last taking action in High Court in London.

The buyers, who mainly bought the properties as investments during the height of the island's recent and now-ended property boom, are suing Athens-based Alpha Bank, property developer Alpha Panareti, as well as a number of financial advisers, according to the Sunday Times.

As reported, the High Court ruled in November that the buyers could have their cases heard and decided in a British court rather than in Cyprus in certain circumstances, paving the way for the case to proceed.

That case involved buyers who are keen to take legal action against Alpha Panareti Limited, headed up by entrepreneur Andreas Ioannou,  and Roseberry Overseas Property Limited.

According to The Times, a similar hearing, to determine whether those with grievances against Alpha Bank – Greece’s second largest bank – will take place in February.

“The linked cases could come to trial in October,” the Times reported yesterday.

It said the law firm involved in the case, representing the investors, is the London-based Highgate Hill firm, and it quoted a senior partner at the firm, Katherine Alexander-Theodotou, as saying that two clients "had committed suicide because of the stress" of their failed Cyprus property investments.

Alpha Bank and Alpha Panareti did not immediately respond to International Adviser's requests for comment. However, The Times reported that Alpha Bank, though declining comment, was understood to be planning to "fight the claim vigorously". It said Alpha Panareti and Ioannou also rejected the claims against them.

Swiss franc mortgages

The matter of the UK investors who lost money in their Cyprus property investments has been rumbling along for years, fuelled by the sheer number of individuals involved – some estimates range above 1,000 – and the amounts of money they allege they have lost (£20m is the Sunday Times's figure for those seeking to sue in High Court).

Lawyers, politicians and a number of crusading newspapers have become involved, including The Times and Sunday Times; the Cyprus-based Cyprus Property News; and the Northern Echo, a newspaper in County Durham, where a number of the investors caught up in the saga live. 

A common element of many of the claims against the banks, developers and advisers is that the mortages were taken out in Swiss francs – often, the investors allege, without their knowledge. As the Cyprus property market collapsed and the value of the Swiss currency soared, the investors found their investments worth far less than they had paid. 

Eventually the banks started issuing writs and termination notices on those who had defaulted on their mortgage repayments, and investors responded by hiring lawyers, contacting their members of Parliament and the European Parliament, and demonstrating outside the offices of Alpha Bank in London.

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