Thousands of UK investors who lost money in Spain’s property market crash could be reimbursed, following a Supreme Court ruling.
The verdict last year ordered banks to pay investors back for deposits that were last, after they placed money in off-plan homes.
Off-plan investments are common in real estate, allowing developers to raise capital earlier for their projects and investors to acquire units or land at a lower price. However, the financial crisis in 2008 saw many developers around the world collapse, with developments left unfinished. In Spain, where a building boom was at its height, there were an estimated five million new apartments and homes built, more than any other European country.
Buyers who had put cash deposits down for off-plan projects from developers that went under found themselves at the end of a long list of creditors, with thousands losing money. The compensation owed is estimated to be as high as £2 billion by Spanish Legal Reclaims, a law firm that is representing some buyers who lost money.
SLR welcomed the ruling last year, saying that as many as 100,000 investors could be owed a payout, amounting to as much as £20,000 per investor.
“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,” Luis Cuervo, chief executive of SLR, tells the BBC. “The Supreme Court said that financial institutions are obliged to repay that money to buyers, if a developer disappears or is bankrupt.”
Before you rush out to claim your money back, though, SLR cautions that it is important to get legal advice first, as Spanish law only allows claims for compensation to be submitted once. Banks, meanwhile, are expected to put up a fight, with the whole situation potentially costing them as much as £15 billion, without taking into account interest owed and legal fees.Google+