Up to 100,000 UK investors in Spanish homes could get payout
- 16 May 2016
- From the section Business
Up to 100,000 UK investors who lost money when the Spanish property market collapsed could be in line for payouts, a law firm has estimated.
It follows a Supreme Court ruling in Spain last year, telling banks to pay investors back for the deposits they put down on homes sold off-plan.
A law firm representing UK buyers has said that could amount to as much as £20,000 per investor.
In total, Britons who lost money before 2008 could be owed as much as £2bn.
The estimates come from a law firm called Spanish Legal Reclaims (SLR), which is representing some of those who lost out.
"Property developers should have put the money in a specific account with a bank warranty - so in the event of failure, that money was protected," according to Luis Cuervo, chief executive of SLR.
"The Supreme Court said that financial institutions are obliged to repay that money to buyers, if a developer disappears or is bankrupt."
'Proper' legal advice
In the run-up to the financial crisis, an estimated five million new apartments and houses were built in Spain - more than any other country in Europe.
Most new developments were sold off-plan.
However, when the financial crisis struck in 2008, many developers collapsed, leaving housing projects unfinished.
Property-buyers who had put down cash deposits were at the end of the list of creditors, and thousands lost their money.
One UK investor who is hopeful of getting her money back is Stephanie Davis.
She and her late husband transferred €77,000 (£61,000) to a now-defunct Spanish developer to buy a villa off-plan in Andalucia.
"My husband would be so proud that I'm doing something about it. If he's looking down, he'd be ecstatic," says Mrs Davis, who is now taking legal advice about claiming her money back.
But she warns people to think carefully before joining the legal action.
"If you can afford it, then yes, but don't get into some legal tangle. We bought off-plan in 2008 - it was nearly built. But I think I'd wait until it was fully built before I'd want to buy something again."
However, UK investors are urged to get proper legal advice before submitting a claim.
Spanish law says claims can only be submitted once. If the claim is lost, it can never again be considered.
Despite the Supreme Court ruling, Spanish banks are unlikely to pay out without a contest - the stakes for them are very high.
The whole thing could cost them at least £15bn and that would exclude interest owed and legal fees.
The effect could be devastating - proportionately as big as PPI payouts have been in Britain.
But British banks and the economy here are on a more robust financial footing than their Spanish equivalents. Unemployment in Spain has only recently begun to fall from its high of 26%.