Stung in the Property Market? It Could Happen to a Journalist

One of the great joys of the internet is that it helps you to trace things back through the passage of time. If politicians say one thing one day and another thing on a different day, then there is some eagle eyed blogger or forum poster that will spot it, or search for it, and bring it to light. If a journalist claims that a particular location is the bees knees and cats whiskers one year and changes their mind another year, then it can very easily be found online. It makes for a whole new level of transparency in the 'information stratosphere'. 

In this particular case there is no great need for the tracing back, the person in question isn't trying to hide anything, in fact the exact opposite is the case, but reading the original article is interesting, when the outcome is considered, nonetheless. 

With this in mind I read with interest a very honest recollection from a property hunter at the weekend, relayed in the Irish Mail on Sunday. Recollections of an overseas property hunter are, you may well say, two a penny and 'very 2007'. But this was no ordinary recollection, it was that of Zoe Dare Hall, a well known and respected British property journalist. Again, you may well say, 'isn't it well for her to have a platform to tell us how wonderfully she did in her overseas purchases when we have all been falling by the wayside' and again, you'd be incorrect. 

Ms. Dare Hall was not, in fact, waxing lyrical about her wonderful timing in entering the market at 'just the right time' and exiting it having made a 'small fortune'. On the contrary, she was berating herself for 'losing her mother's Legacy - in Estonia'. You will find a scanned copy of the the piece here, (many thanks to Action Against Churchills for this). For those who don't wish to read it, Ms. Dare Hall basically outlines the nightmare scenario for every amateur (or professional for that matter) overseas property investor. She avoided all the so called 'hot spots' in favour of the little known seaside town of Parnu in Estonia. If you check out this article in the Independent, from July 2006, you will get the gist of why she decided to invest in this particular location. Here's a snippet:

'Many people believe that Parnu will be the next Tallinn. "Tallinn's market is very tight but Parnu is the place to be," says Chris Tonkinson of Crichton Developments, which is selling apartments on a golf resort near a white-sand beach in Valgeranna, and in Audru, from £50,000.'

Essentially, the Estonian property market has tanked. Added to this, the Isle of Wight based agent, Churchill, through which Ms. Dare Hall invested - despite being led to believe she was investing through Crichton Developments - has gone under. Not only that, Karl Goldthorpe and Paul Wade of Churchill's have been arrested by Isle of Wight police following allegations about their dealings in the overseas property market. 

Essentially, despite her best attempts to avoid the 'sharks' in the overseas property market, Ms. Dare Hall found herself swimming among them.  

I have to say, well done to Ms. Dare Hall for putting her story out there because, there are many who wouldn't (and no doubt many who haven't). It is a lot easier to ignore it and pretend it never happened, an unfortunate habit of Irish investors who get roasted. It also begs the question; "if an overseas property journalist who has been around the world and interviewed dozens of agents and developers, can get caught out in such a fashion, well, where's the hope for the rest of us?" There is no protection of any description for overseas property investors and amateurs regularly get stung for very large amounts of money. Everybody just seems to be prepared to turn a blind eye to it these days. My inbox is overflowing with stories of wealth sapping losses - but nobody seems to be in the least bit interested. 

It's always the same, there's never a damned NPSRA around when you need it. We need regulation, but it appears we're not going to get it - but that's a story for another day.

It also begs the question - should property journalists be obliged to declare their investments so that those reading their columns can ascertain whether their guidance should be heeded or ignored.

OK, it's not an obligation yet, so I'm not telling you. Suffice to say, I'm a lot more solvent than most Irish developers or banks at the moment - but that's not saying a lot. 

If you have had problems with the Isle of Wight based Churchills group or Karl Goldthorpe, you may like to visit the Action Against Churchills group which, as it says, will keep you up to date with what is happening with respect to actions against the group. 

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Property Expo Cancelled

Ireland's most prominent and, recently, its only multi-agency  property exhibition, has been cancelled for 2009. The Property Expo, which was run by iQuest and promoted by the Sunday Business Post, has been a regular on the Irish exhibition calendar for a number of years but stand sales have been so poor for the shows that it has become the latest victim of our biting recession. The shows were scheduled to run in the RDS on April 18th & 19th and in Cork's City Hall on April 25th and 26th .

At time of publishing of this blog the Expo website has not been updated to reflect this information but it will, no doubt, appear on the site in the near future.  

Hopefully things will have picked up by this time next year and we will be announcing the show's new dates for 2010. Love them or hate them, such exhibitions have always been a great means of meeting others involved in the industry to find out what is going on at the coalface. The exhibition's cancellation will leave a substantial hole in the information gathering process for the overseas property industry. We wish them well for the future and hope to see them back in action in 2010.

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Florida Foreclosed Property

Looking for a cheap property in Florida? Well the good news brought by the recession is that there is no shortage of availablility. Prices in Florida are, in the main, way down. If you really want to make a killing, though, then bank repossessions (known as foreclosures in the US) are the way to go. 

If you browse of the following link you'll find a selection of foreclosed properties that we've cherry picked for your perusal. These are exceptional properties in good areas and all in an excellent state of repair. Most importantly though, they're cheap. 

Some people say their conscience won't allow them to purchase a property which has been the source of much discomfort for the previous owners. If this is the case just remember that the previous occupants are now the owners no longer. What's done is done. The bank is now in possession of these properties. Not bidding on the property isn't going to be of much assistance to you but will be a huge help to someone else, because someone is going to profit from the rock bottom prices on offer. Remember, if you don't make an offer, someone else will. Either way the previous owners aren't going to profit from the sale, what's done is done and there's nothing you can do about it. It's unfortunate, but that's the way the cookie crumbles as they say in the US. 

See a list of foreclosed property in Florida here. 

If you'd rather not browse through the properties on the site and would just like to be sent information on available foreclosed property available in Florida, simply fill in this form and we'll have our partners send you an appropriate listing. 

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USA Property Links

For a selection of property in the USA click here.

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Green Shoots of Recovery in the US?

When we consider how or when the global economy may start to recover we have to look to where the massive slide began - the US. This is where the recovery most likely to affect us here in Ireland is likely to first present itself.

On that basis it is interesting to note the property section of the US Census Bureau's recently released Economic Indicators. 

The latest release says that: "Privately-owned housing starts in February 2009 were at a seasonally adjusted annual rate of 583,000. This is 22.2 percent above the revised January 2009 estimate of 477,000."

The more in-depth document states: 

BUILDING PERMITS

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 547,000. This is 3.0 percent (±3.5%) above the revised January rate of 531,000, but is 44.2 percent (±1.2%) below the revised February 2008 estimate of 981,000. Single-family authorizations in February were at a rate of 373,000; this is 11.0 percent (±2.1%) above the January figure of 336,000. Authorizations of units in buildings with five units or more were at a rate of 156,000 in February.

HOUSING STARTS

Privately-owned housing starts in February were at a seasonally adjusted annual rate of 583,000. This is 22.2 percent (±13.8%) above the revised January estimate of 477,000, but is 47.3 percent (±5.3%) below the revised February 2008 rate of 1,107,000. Single-family housing starts in February were at a rate of 357,000; this is 1.1 percent (±11.0%) above the January figure of 353,000. The February rate for units in buildings with five units or more was 212,000.

HOUSING COMPLETIONS

Privately-owned housing completions in February were at a seasonally adjusted annual rate of 785,000. This is 2.3 percent (±14.8%) above the revised January estimate of 767,000, but is 37.3 percent (±7.7%) below the revised February 2008 rate of 1,251,000. Single-family housing completions in February were at a rate of 505,000; this is 8.2 percent (±11.8%) below the January figure of 550,000. The February rate for units in buildings with five units or more was 268,000.

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Could this be an indication that the bottom has been reached, or are we simply grasping at straws? Only time will tell. Watch this space. 

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USA Property Links

For a selection of property in the USA click here.

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For a selection of property exhibitions featuring American property click here.

Newfound in Risk of Collapse

Jayne McGivern has resigned as CEO of AIM-listed resort developer, Newfound, as the company warned of a risk of collapse, according to a report in Property Week Magazine. 

McGivern will be best known for being at the helm when Newfound called time on its involvement with the Humber Valley Resort in Newfoundland, Canada. 

Newfound, which now concentrates on its developments in the Caribbean, said that McGivren’s departure was a result of it restructuring of its operations and management to cut costs. At the time the company warned that, without new funds, it would have to ‘cease operations’.

The Property Week piece quotes Newfound as saying: ‘Unless new finance can be found for the group over the coming months, there is a risk that the Company will exhaust its cash resources, in which case it will need to cease operations.’

Further information from the article:

McGivern, a former Multiplex UK chief executive who took over last year, will remain on the board of the company but is to be replaced as CEO by Stephen Bentley, who is currently the finance director.

The day-to-day management of the company will be outsourced to a management company, and then Bentley will step down from his role as CEO and finance director to become a non-executive director.

Richard Foley has also resigned as a director, but will remain an employee of the group overseeing Newfound’s Caribbean projects.

John Morgan, acting chairman of Newfound, said: 'It is clear in the current financial market that property development companies are struggling to raise capital to fund projects. Newfound is no exception to this and the board has decided that the company needs to restructure its operations and executive management to reduce its expenditure.'

Ends.

Crazy About Newfoundland reports that McGivern is understood to be teaming up with Mikola Wilson to launch an opportunity fund. Wilson runs niche investment firm Seven Dials Fund Management. The new fund is expected to target high-yielding, income-producing assets with latent development potential and is also being mooted to take over the day-to-day management of Newfound.

Meanwhile, over at Humber Valley Resort there are signs that the 'green shoots of recovery' may be in the air. The Crazy About Newfoundland blog reports that there are two bidders vying for the assets of the resort.

The blog reports that "A management group led by a chalet owner has confirmed it has made a bid to buy Humber Valley Resort’s assets."

"The deadline for the tender call for the bankrupt resort’s properties — including the golf course, restaurants, land and other holdings — closed Friday, and the resort’s trustee in bankruptcy now has until March 16 to decide what to do with the bids. The trustee, Ernst and Young, won’t say how many bids have been received, but a bid has been made by a group led by Brian Dobbin, the man who founded the resort that went into bankruptcy in December."

"At least one other bid has also been made. A management group that includes Mike Ward and some other owners, in a prepared statement to The Western Star Tuesday, said its plan recognizes the “misguided focus” and the problems of the previous management teams, and knows what is needed to turn the resort around."

The full blog is available here. 

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Editorial from OverseasCafe.com

Sunday Times Looking for Bulgarian Dreams Clients

Sunday Times Reporter, Anna Mikhailova, is looking to speak to clients who purchased through Bulgarian Dreams in order to compile a report on the company for the newspaper. 

If you are a purchaser with Bulgarian Dreams and would like to pass on your information for the benefit of others, Anna can be contacted via her email address at  anna.mikhailova@sunday-times.co.uk. 

If you are unfamiliar with the whole Bulgarian Dreams saga or its previous coverage on the site you'll find a selection of previous pieces on them here. 

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Paul Coughlan's Prestige Group Nears the End Game

The Prestige Group looks like it will be the next high profile casualty of the recession.

The company claims to have placed €2.75bn in property investments since its inception. It has been involved in the overseas property market since 1998, at which stage the boom in Irish investors purchasing property in Spain was well underway. The Irish mass market had, at that stage, started to move further afield to look at areas such as Portugal, Hungary and Florida in particular.

A creditors meeting has been called for next Wednesday (March 18th, 2009) at the Stillorgan Park Hotel in Dublin. Some of the major creditors of the company include KBC (formerly IIB), the Bank of Scotland owned Ulster Bank and Bank of Ireland.

Prestige came to prominence in the early noughties when it sold huge amounts of off-plan property in Manchester and Budapest in particular. Many clients claimed, once they had received their properties, that they had been sold at very high valuations and the rentals achieved on them were far below those outlined by Prestige in its marketing documentation.

In recent weeks posts have been appearing on a number of forums from frustrated investors who have not been receiving their rentals on properties purchased from the Prestige Group. There have also been rumours that Coghlan has been, to date unsuccessfully, trying to sell his luxury villa in Portugal. 

Coughlan's investment vehicle, Kaizen Property International, made somewhat of a comeback last year in the form of Touchstone Capital but this re-engagement with the overseas property market would appear to have been fleeting. The company sold apart-hotels in Germany and the UK as well as Below Market Value (BMV) property in the UK. 

The Prestige Group (domain name now owned by another entity) itself reappeared at the end of 2008 selling German Apart-Hotels, managed suites in Marbella and UK commercial property.

You can find a report on the liquidation of the Prestige Group on the Irish Times website.

UK Prolonged Recession and Possible Bankruptcy

Ok, it all sounds monumentally pessimistic, but you have to admit, anything is possible in the current unprecedented economic environment.

A recent report from Numis Securities predicts that house prices in the UK could slump by a further 55%. It also predicts a deep recession lasting throughout next year (2010) and a 'very real probability' that Britain will go bankrupt, reports the This is Money website.

UK prices have at this stage fallen 21% from their peak. The Numis report says they are likely to slump by a further 55% if the over-correction in prices is as bad as that experienced in the early 1990's.

The article estimates that this would leave six million Britons in negative equity - when their house is worth less than their mortgage.

There is a very interesting article on the OverseasCafe.com site about the potential for realising value in the UK market at this point in time.

It's well worth a view if you've any interest in UK property or purchasing value in the market. If you couldn't be bothered reading it but would still like to be sent some listings of repossessed, below market value (BMV) or simply very good value product in the UK, just fill in this form and we'll get our partners to send you on some information.

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For a selection of property in the UK click here.

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For a selection of property exhibitions featuring UK property click here.

Ryanair Removes Airport Check-in

Irish low cost carrier, Ryanair, has announced that it will remove airport check-in completely from October 1st 2009.  According to a Ryanair News Release: "This move will allow all passengers, including those travelling with checked baggage, to check-in online thereby avoiding time wasting queues and delays at airport check-in desks."

Check-in removal will be phased as follows:

Phase 1: From 19th March 2009, Ryanair’s web check-in service will be extended to (a) non EU/EEA citizens, (b) passengers travelling with checked baggage and (c) reduced mobility customers. 

Customers choosing web check-in and travelling with only carry-on bags will continue to enjoy this service free of charge. A web check-in fee of £5/€5 per person/per flight will apply to passengers travelling with checked baggage, while customers who wish to use airport check-in will be charged an airport check-in fee of £10/€10 per person/per flight at the time of booking.

Phase 2:  From 1st May 2009 all new bookings will be required to use web check-in, and the use of traditional airport check-in desks will be phased out over the summer months. The web check-in fee of £5/€5 per person, per flight will apply to all new bookings (except promotional fares) from 1st May 2009. In order to dissuade passengers from using airport check-in desks, the fee for airport check-in will double to £20/€20 per person/per flight at the time of booking.

Phase 3: From 1st October 2009 airport check-in desks will no longer be available at any Ryanair airport. All passengers will be required to web check-in and those who have checked in bags will use the airport “bag drop” desks, if required. From this date, children under the age of 16 will no longer be able to travel unaccompanied and passports and national ID cards will be the only accepted forms of photo ID on Ryanair flights.

Ends

This is the latest move in Ryanair's unrelenting bid to remove its reliance on services at airports which it deems to be costly (for passengers, it says, but anything that is costly for passengers is obviously costly for Ryanair as well and these costs get passed on to passengers). 

For a company which is so anti-charges (particularly the new government introduced departure tax of €10 which induced a serious Michael O'Leary hissy-fit) the standard £5/€5 per person web check-in fee seems particularly retrograde and in direct opposition to company policy. Essentially the company is now charging for something which was, up to now, completely free, and which passengers cannot avoid. 

Big Null Points on the competition front there Micko. 

Apparently charges are fine as long as they are introduced by Ryanair, but not if they are introduced by anybody else. As usual the company is a law unto itself. 

See the full story on our website.  

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Interest in UK rises - but no Buyers

The RICS market report for February is interesting, although it won't stop UK agents tearing their hair out. The report says: "New buyer enquiries increase at the fastest pace since August 2006, but newly agreed sales and sales per surveyor continue to fall. "

This is remarkable when you consider that August 2006 was in the middle of the chaotic boom that preceded the current unprecedented downturn (unprecedented in our lifetimes in any case). The fact that there is so much activity in the market would indicate that there is a willingness to do business, but obviously not at the price levels we are currently experiencing. This can mean only one thing, further price falls to come. 

The report also says: "Sales expectations and price expectations both improve, but the latter measure is still extremely negative. The seasonally adjusted balance of surveyors reporting falling rather than rising prices deteriorated again slightly from 76.6 in January to 78.3 in February."

On the plus side, the increase in enquiries is the fourth consecutive month in which this has happened, which indicates demand in the marketplace. RICS sees this turnaround in enquiries as an indication that some level of buyer interest is returning to the market.

The interest is most likely being triggered by the sharp cuts in interest rates as well as the decline in house prices; both factors have improved affordability. The sales to stock ratio, however, is still close to December’s all time low of 12.9%.

From a regional perspective, the price balance improved in London, East Anglia, Wales, the North and the West Midlands. Everywhere else, including Northern Ireland and Scotland, the price balance deteriorated.

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UK Property Links

For a selection of property in the UK click here. 

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For a selection of property exhibitions featuring UK property click here.

Exchange Bond Company Goes into Administration

The Exchange Insurance Company Limited ("ExCo"), a European specialist general insurance company authorised and regulated by the Financial Services Authority (FSA), with headquarters in the City of London, has entered administration. ExCo also maintained an administrative operations centre in Essex and an administrative office in Dublin.

The company will be quite well known in Ireland as the Exchange Bond was the instrument through which controversial Irish developer, the Ciaran Maguire Group (also operating as Flash Developments and Palm View Resorts), has been guaranteeing deposits on a new off-plan development proposed for the island of Boa Vista in the Cape Verde Islands. 

The Exchange Insurance Company's website currently says: "The Company is currently unable to pay creditors and meet claims and has, therefore, sought protection of the Court through the administration process whilst it is seeking to resolve its financial difficulties."

The Exchange Insurance Company Limited describes its business as the underwriting and marketing of the Exchange Bond and the Completion Bond.

An Exchange Bond is a surety bond or a form of financial guarantee. It acts as a substitute for the cash deposit given by buyers to vendors at the time of exchange of contracts in residential house purchases. The property vendor agrees to accept the Exchange Bond instead of cash. The buyer pays the entire purchase price at completion.

A Completion Bond is a financial product for use with deferred payment/equity schemes when buying property. It is a surety bond that guarantees the full deferred amount to the seller (usually the home builder) in the event the buyer fails to make the deferred payment due on the property within the time period allowed – usually 5 to 10 years.

Since March 6th last the company's website has carried the following message:

On 5th March 2009 Neil Mather and Christopher Morris of Begbies Traynor, 32 Cornhill, London EC3V 3BT were appointed joint administrators of The Exchange Insurance Company Limited.

The Exchange Insurance Company Limited is in administration. Its affairs, business and property are being managed by the joint administrators, who act as the company’s agents and without personal liability.

In the first instance, all enquiries as regards the status of bonds issued by the company should be directed to its offices in Great Dunmow. All enquiries will be dealt with as soon as possible by the available staff.

The administrators are working to secure funding to maintain the business as a going concern whilst the FSA approval process is undertaken ahead of a potential refinancing of the business. The administrators are already speaking to a number of interested parties and would invite any other interested parties to contact them urgently by e-mail directed to richard.goddard@begbies-traynor.com.

All creditor claims relating to the administration should be directed to the administrators’ offices at 32 Cornhill, London EC3V 3BT. All correspondence should be marked for the attention of the joint administrators of The Exchange Insurance Company Limited - in administration.

Please send any general queries that you may have to enquiries@exchangebond.com

Ends

This is only an excerpt of the posting. We have put a full version on our own website in case this website drops the content at some stage. You'll find it here. 

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Spanish Tax Rebates Due to Irish Sellers

In an environment in which good news is as scarce as hens teeth, we are very glad to report that Irish sellers of property in Spain may well be due a few euro in refunds.

Those who have paid Capital Gains Tax (CGT) on sales made in Spain at the rate of 35% are due a refund following a recent court decision. The EU commission deemed some time ago that the Spanish authorities were not entitled to charge 35% CGT to foreigners while taxing locals at a rate of just 15%. This is the first time, however, that a legal case has actually been taken and won.

The High Court in the region of Valencia has ruled in favour of a British couple, Mr and Mrs Roy, telling the Spanish tax authorities to repay them, having charged a CGT rate of 35% instead of 15%.

"This discriminatory law was in force for many years, It will have affected thousands of people" said Emilio Alvarez of Valencian law firm Costa, Alvarez, Manglano."

The opportunity to lodge a tax reclaim hinges on a change to the Spanish tax laws in December 2006, effected following an EU ruling that the discrepancy in rates charged to locals and foreigners was illegal.

In 2007, Costa, Álvarez & Manglano initiated a legal action to reclaim from the Spanish Government part of the Capital Gains Tax paid by EU citizens on the sale of their property in Spain. The firm has recently obtained a final judgement from a Spanish High Court obliging the Spanish Tax Authorities to refund overcharged Capital Gains Tax.

This judgement sets a legal precedent for thousands of EU citizens to reclaim money owed to them by the Spanish authorities. Essentially if you sold a Spanish property between mid-2004 and 31st December 2006, paying CGT at 35 %, you are entitled to a refund.

TheSpanish tax authorities had, up to this point, resisted retrospective demands for refunds. This Valencian court decision last month at the end of a year-long case, is the first ruling to go in favour of a claimant.

Costa, Álvarez & Manglano warns that, due to legal time limits, submissions should be made quickly to avoid the expiration to an entitlement to a refund. According to the European Court of Justice and Spanish Law, you must present your reclaim within four years of the Capital Gains Tax payment date.

Several hundred people have signed up to pursue claims but, in typical Spanish style, the process is not particularly straightforward. Firstly they must lodge a claim at their Spanish tax office. Assuming this is rejected (and it probably will be) claimants have one month to appeal to an 'economic tribunal'. If that, too, rejects the claim (and it probably will) then claimants have two months in which to start pursuing the issue through the courts. This, of course, involves employing a Spanish lawyer, preferrably one au-fait with Spanish tax law. Making a claim to the tribunal incorrectly or not doing so within the time period allowed will normally lead to the claim being struck out completely.

Costa, Alvarez, Manglano says: "The decision in Valencia was very clear, we don't expect other High Courts in Spain to make a different decision."

For further information contact info@spanishtaxreclaim.co.uk or phone 0034 93 550 9208.

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Flash Developments Issues Formal Statement on Palm View Resorts

Here is a 'formal statement' issued by Flash Developments on the Boa Vista Exchange website on Friday last, March 6th.

Flash Developments would like to issue a formal statement.

While we recognise and acknowledge the frustrations in relation to the current delays, we would like to point out that these delays are out of our control and unfortunately are common in Cape Verde. However we have the best people on the ground working on our behalf to speed up the process and we have been given the assurances that by the end of this quarter we will have all the relevant documentation in place allowing us to commence construction by the end of the second quarter 2009.

It has always been the priority of Flash Developments to ensure all our clients have been regularly contacted by our staff and kept fully informed and up to date on the developments of the Palm View Resort. We are delighted to announce that we have chartered a 180 seater aircraft for a complimentary all inclusive inspection trip to Boa Vista on the 24th – 26th of April for our existing clients and new clients as well as their legal representatives. On this visit our clients and the their lawyers will get an opportunity to speak directly to Cape Verdian (sic) officials and planning authorities while also having the opportunity to sit back relax and experience a taste of what the Palm View Resort will have to offer.

It is our belief that some of the comments posted so far have been irresponsible and unjustified. We are confident in the knowledge that you will not find any other developer any where in the world that would out lay in excess of €300,000 for a complimentary inspection trip if they were not 100% certain and confident of delivering on their promise. Our promise to our clients is to deliver an unrivaled world class Resort and to ensure that their investment in Palm View continues to be a smart and secure one.

We would welcome the opportunity to answer more specific questions directly. Please feel free to contact our office at any time and our staff will be more than happy to answer any of your questions. You can also contact our office if you would like to attend our inspection trip, allowing you to speak directly to the relevant Cape Verdian (sic) Authorities which will give you the opportunity to make a truly informed decision rather than listening to “hearsay” posted on forums.

Colm Quinn
Global Operations Manager
Flash Developments

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Editorial from OverseasCafe.com

Profiting from Property in Spain

Good news stories are difficult enough to come by these days, particularly in Spain, but here's one from Mark Stucklin in Spanish Property Insight.

In what was indisputably my worst ever property investment, I bought into a development in Xeresa, near Denia (Valencia) in 2004, being built by a large developer (I expect you know them) specialising in golf resorts. My lawyers were Del Valle Associates in Marbella (so you see I chose pretty well all round). I bought two properties off-plan in 2004, on the basis of a contract which looked OK to me at the time but which I subsequently discovered was seriously flawed. I paid deposits of around 30%. The whole process got off to an extraordinarily slow start, but construction finally began in early 2005, though, according to my builder’s start of works certificate, not officially until November, seven months later. This was very difficult to deal with at the time.

I had by this time parted company with Del Valle and found a new lawyer through your website (Juan Bertomeu of Iuris Consulting). It was soon clear to both of us that if I wanted to get out (which I by then did) it could only be done by claiming on the bank guarantee for non-completion in the required time. Given the force majeure conditions in the contract, we established the earliest date in May 2008 by when the claim could be lodged. It was apparent from my site visits (when we were never allowed actually to enter my own properties!) that they would not be completed by the date we’d defined.

Despite this, I was advised in mid 2008 that the properties had been completed (and that this stage payment and that stage payment were now due). Our claim had not at that time been lodged because my/our view was that every duck had to be in the proverbial row, in terms of documentation, before we did so. We finally lodged the claims on both properties in early September.

These were rejected by the bank because the properties had been “completed”.

To cut a very long story short, we made 12 different submissions to the bank , all of which had to be notarised etc. The bank made an endless succession of what we believed to be wholly unreasonable and non-contractual demands. My view was that however unreasonable the demand we would meet it as quickly as we could, and so we did. One notarised submission we made in November, relating to the unfinished state of the apartments, ran to 25 pages.

Finally, miraculously, the first guarantee was finally paid into my Spanish bank one week before Christmas and the second one week later. I received four years interest on my capital deposit. Additionally, of course, I was repaid in Euros, which were around 30% more valuable on the day I got paid than they were when I’d made my deposit.

In broad terms, therefore, I have in sterling made around 10% per annum on my four year investment (net of legal fees of some 13,000 Euros and my personal costs of 3,000) which, so far as I can see, is tax-free. This is far better than any of the parallel UK investments I made over the same period.

The fact that this profit arose through entirely unintended means does not lessen the feat of genius it represents.

So you see, it can be done!

The lessons (for me at least) are as follows:

Firstly, read the bank guarantee very carefully, on the basis that you might well have to use it. Start with the assumption that they will be extremely reluctant to pay.

Secondly, remember that the developer will seek to give himself more room against his own commitments than he is entitled to, especially at the start of the contract when non-completion is the last thing the buyer is thinking about.

Thirdly, before signing or paying anything, visit the site with your lawyer. Within 5 minutes of my doing so, unfortunately by then well into the contract, my new lawyer, on seeing the proposed layout, told me - accurately as it turned out - why the project would end up years behind schedule due to difficulties in obtaining further permissions not yet sought or agreed.

© Spanish Property Insight

OK, so it is not a typical investment story, and you'd have to be mad to knowingly attempt to make money in this fashion, but it just goes to show that you should never lose heart. If it can't be done one way, then try another.

A quick verse from Rudyard Kipling to finish:

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too:
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or being hated don't give way to hating,
And yet don't look too good, nor talk too wise.

This could well be a motto for the unprecedented times in which we now live.

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