Property Bargains may be too good to be true on a Divided Island
Brits who bought property in Northern Cyprus during the last 30 years will be on tenterhooks this year as a test case for the ownership of their land and property is fought out in the English courts. The result will have far-reaching consequences for property owners who bought in the years since the 1974 Turkish invasion, or 'intervention' as the Turks call it.
A coup d'etat by the Greek Cypriot military 30 years ago was the pretext for the Turkish army to invade Cyprus. As the island split in two between Greek and Turkish factions, over 167,000 Greek Cypriots fled from the Turkish invasion. The British courts will argue over the fate of the subsequent wave of foreigners who came to live on the Mediterranean island.
Legal challenge to ownership
Over 6,000 Britons have been attracted to buy by the relatively cheap price of property compared to the south - before separation there were only 25 Britons in what is now the Turkish Republic of Northern Cyprus (TRNC). The combination of never ending sunshine and very low prices has overcome fears about the legal or moral right to buy land which is still claimed by somebody else (usually those who fled). But the cheap price of the property tells its own story, which is reflected in the insecurity of title. The former owners of that land are now challenging existing occupiers' right of ownership.
The test case centres on Meletis Apostolides, who has brought a case to the English High Court against the Orams, a British couple (backed by Cherie Blair's counsel) who bought the land on which he lived before the invasion.
Apostolides aims to get his successful judgment in the Greek courts enforced here. It ruled that the Oram's villa be demolished and damages of £7,650 and £294.41 a month be paid to Apostolides until the situation is resolved. But Turkey and its Northern Cyprus protectorate are not members of the EU and thus not subject to the court's decision - which is why Apostolides wants to appropriate the Oram's UK property as compensation. If the Greek is successful, it will put British buyers in Northern Cyprus on the back foot and will hit property sales — especially those without pre-1974 title deeds. Worryingly, there is a precedent. In 1998, the European Court of Human Rights awarded £340,000 in damages to Titina Loizidou, after it was found that Northern Cyprus had prevented her from gaining access to her property in the Northern seaport of Kyrenia.
Bargains?
But despite these worries the region still attracts many Brits seeking out bargain properties. As a result of a building boom which started in Northern Cyprus when a UN-backed reunification plan looked likely to be successful, there are now a glut of properties on the market, and prices have been forced down as a result. It's worth repeating that if you're worried about the outcome of the test case and still wish to purchase, although scarce and 30% more expensive, buy property with pre-1974 title deeds. Moreover, local agents should not be trusted. They have been known not to disclose the risks to prospective buyers.
The hostility from Greek Cypriots in the south of the island, where they are a majority, is apparent. They accuse British buyers of being 'vultures', picking over the carcass of a disputed island for personal gain.
How to avoid compensation claims
The legal situation is so serious even the Foreign Affairs Select Committee warned British citizens thinking of buying property in the north that they risked "exposing themselves to legal action by Greek Cypriots who may be the rightful owners of those properties". Consequently, that unease prompted Adrian Medd, Chairman of the Federation of Overseas Property Agents Developers and Consultants (FOPDAC) to declare in the Manchester Evening News: "We do not encourage our member agents to sell there, because no one knows what is going to happen. Anyone who does buy there has to realise they may be called on to pay substantial compensation to the displaced owners in the future."
If you are still interested, you may benefit from a visit to www.pre74properties.com, which offers apartments and villas with 'clean' title deeds. But the risk may be too great for some, as it not only exposes your villa in the sun to risk but also, as the Orams have discovered, gambling on your British one too.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The overall cost for comparison is 7.1% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There may be a fee for the mortgage advice. The precise amount will depend on your circumstances, but we estimate it will be 1.5% of the loan amount with a minimum fee of £500 added on to the loan.
Mayfair Consulting Limited is an Appointed Representative of The Mortgage Times Group Limited, 279 Tottenham Court Road, London , W1T 7RJ , which is authorised and regulated by the Financial Services Authority no. 303007.
