North Cyprus Property | Who Killed the Construction Industry?

North Cyprus Property – Who Killed the Construction Industry?

So many victims, so little action.   Look what Sibel Hodge had to say way back in 2010

“It’s all very well concentrating on the Cyprus Problem, but what about the other problems that also affect thousands of people in North Cyprus? Of course I’m talking about the many property issues that residents face and, in particular, the current mortgage problem across the country.

A mortgage given to land owners by Akfinans Bank at the Kulaksız 5 site in Karşiyaka is the latest case to hit the headlines. Buyers who bought on that site are now facing possible eviction after Kulaksız Construction took out a 100,000 TL mortgage on the land in 2005 without their knowledge and failed to make any repayments. The land owner, Yüksel Yılmaz, acted as guarantor for the mortgage. The interest rate of the mortgage was 80% and now the debt stands at 900,000TL. 80%!!! Now, I’m not an economic expert, but surely it’s common sense to realize that someone will have trouble paying off that kind of interest rate.

Akfinans have won a court judgement to now auction the land and recover the monies, which sadly means that property buyers who bought on that site in good faith could now face eviction and be forced onto the streets, homeless. So who is responsible? Well, at the very least, it would appear that Akfinans has been incompetent and irresponsible in their lending practises. Now, as I understand it, the role of guarantor to a loan would be to have the ability to repay the mortgage if the mortgagee failed in their obligations to do so. So why is Akfinans not chasing  Yüksel Yılmaz for the debt? Hasn’t he got the funds to pay? If not, why was he given guarantor status in the first place? Was Akfinans rubbing their hands together when the mortgage agreement was signed, knowing that Kulaksız Construction and Yüksel Yılmaz would be unable to repay this money? It’s not rocket science, is it? So, Akfinans and all the other bankers out there who are involved in similar cases, how do you sleep at night? How would you feel if this was your mother, father, wife, children, grandchildren who were facing eviction because of your poor business decisions and judgement?

I know first hand what it feels like to be going through a case like this. In 2006 I bought an apartment at Seaterra Reserve as an investment. Like the residents at Kulaksız, our contract also stated that the property was free from any impediment and encumbrance and would remain so. However, when we went to register our contracts following the new Estate Agents Law in 2008 we discovered £2 million worth of mortgages had been taken out on the land. None of this money has been repaid and Marsol Properties (Seaterra’s trading name) stated that they did not have to be interrogated by us about what the terms of the mortgages were. Subsequently, we discovered 4 companies involved in these mortgages, which we believe are all sister/phoenix companies. But in this case, the mortgage lenders are not a North Cyprus bank, they are a company in the British Virgin Islands with seemingly no address, phone no, fax no, etc. And because they are private companies that all appear to be related to each other, any interest rate could’ve been agreed to move money around. If it was a similar 80% on £2million and nothing has been repaid…well, you do the maths. We are now involved in a lengthy court battle to try and recover our money. A court case where the directors of Seaterra/Marsol Properties, Eyal Podhorzer and Jacob Verthaizer, have failed to attend any of the five hearings. Is it good economic practise to allow foreign companies to make a huge profit in North Cyprus and then take the money to other countries, leaving a trail of mess and devastation in their wake for property owners to deal with?

The construction industry is one of the biggest contributors to the economy in North Cyprus and goes hand in hand with tourism. I’m sure I don’t have to point out how construction has a massive knock on effect on many other areas of the economy, but I will because some people just don’t seem to get it. Property buyers will also buy furniture and household items, pay for utilities, buy vehicles, petrol, taxes, food; they will bank here and pour their money into businesses and shops; their friends and family will visit and will also contribute to North Cyprus. I could go on, but I hope you get the picture.

This kind of behaviour has a detrimental impact on the reputation and credibility of North Cyprus. It drags the good down with the bad. And even before the global economic problems struck, the construction industry was dying because it failed to protect buyers.

These horrific problems are not just being experienced by ex-pats. Turkish Cypriots are also suffering because of these deplorable business practices. Turkish Cypriots, who, I might add, are also voters. Notwithstanding that, we always say that North Cyprus isn’t recognized, but it is. It was recognized by all the ex-pats who weren’t put off at the first hurdle by the North/South problems and loved this country and its people enough to invest and make a life here. Instead of being rewarded for taking that leap of faith in North Cyprus, they are being penalised and victimised at every turn. And although they may not be able to vote, they are still residents, and they are still your people.

So, President Talat and Prime Minister Eroğlu…what will you do for your people?

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Very little has changed since this was published, indeed more victims have emerged and the Government of the day still do nothing.
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