I've had £200,000 refunded - and thousands more could too
The financial crash left us all worse off, but for 130,000 Brits, it destroyed their dreams of owning a home in Spain too. They had been persuaded to put down a hefty deposit in order to buy Spanish properties. When the world economy went south, so did the developers - taking all their money with them. 56-year-old Malcolm Young from Northumbria was one of them - losing €130,000. His story, however, could give hope to thousands of others.
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In the lead up to the crash, the runaway Spanish property market attracted hundreds of thousands of Brits to put down deposits on new properties that were springing up all over the country. The developers borrowed enormous sums against the value of their buildings, and when the market collapsed, so did the developers. Buyers who had handed over deposits were the last in a long list of people who were owed money by the developers, so the vast majority didn't see a penny.
International property expert, Amanda Lamb, says: "The allure of Spain goes far beyond sun, sea and Sangria as many Brits invest significant sums in affordable holiday homes. Many of these buyers had fantastic experiences and will continue to do so, but for others, the property crash brought their holiday home dreams to a grinding halt."
Fortunately, most of those who paid their deposits had their money held in a bank account. Although these accounts were emptied when developers went bust, a group of buyers took the banks through the courts, arguing that money in the accounts should have been safeguarded. They called on a law from 1968 which says that buyers must have guarantees on deposits. They therefore argued that banks should be jointly liable with the developer for keeping that money safe.
In 2015, the Spanish Supreme Court agreed. It said that the banks were jointly liable with the developers, so they should be obliged to repay the deposits if the developer went bankrupt - plus interest.
Specialist legal firm Spanish Legal Reclaims and the Centre for Economics and Business Research estimate that the ruling means around 130,000 British buyers could be due payouts of between £10,000 and £500,000 each.
Luis Cuervo, CEO of Spanish Legal Reclaims, says: "Thousands of British buyers who had big dreams of owning a place in the sun were left high and dry when builders and developers went bust. For years, buyers fought to get their money back unsuccessfully, but changes in the law mean they will finally get what they are owed. The bill facing Spanish banks is expected to be around £5.3 billion, but only if buyers take action."
Malcolm was one of those who took the opportunity to get his money back. He says: "After putting down more than €130,000 in 2004 as a deposit for two apartments in Marbella, I was looking forward to spending my holidays in the sunshine with my family. However, I soon learnt that the entire development had been built without the appropriate planning permission, meaning my investment was completely worthless."
Malcolm took the builders to court, but despite winning four cases against them, he lost any chance of getting his money back when they went bust.
Fortunately he was able to take advantage of the Supreme Court ruling. He found a Spanish lawyer, now working for Spanish Legal Reclaims, who went through the court and got a refund - plus interest. He added: "The exchange rate movement did me a favour too!"
Should you fight?
The downside is that anyone who wants a refund will need to fight their case separately. The banks are unlikely to let this go without a fight, so it will be a long process - taking years. If the banks lose, they are likely to appeal - drawing it out even further.
If the case is not successful, you may have to pay costs. Alternatively a lawyer may take the case on a no-win-no-fee basis, but in the event of a win is likely to take around a third of the settlement.
Anyone in this position should therefore consider carefully whether they are prepared for what lies ahead. They should also check they have the paperwork (including documents from the developer and proof of payment) before they get started. They also need to find a reputable lawyer who can make the process far less painful.
It's not an easy win, but with a potential award of £200,000, it might just be one buyers are prepared to take on.