As many as 100,000 Brit investors could receive Spanish property compensation

Many unscrupulous developers did not protect their customers’ deposits before the financial crisis of 2008.

A law firm has estimated that up to 100,000 Brits who invested in off-plan property in Spain before the 2008 crash could be in line for sizeable compensation payouts, reports the BBC.

Spanish Legal Reclaims (SLR) suggests that, following a Supreme Court ruling in Spain in 2015 that stated developers must pay back investors who put down deposits on homes marketed as off-plan, many Brits could be looking at payouts of up to £20,000 each…

The pre-crash boom in Spain was partly fuelled by a rush to buy unbuilt new homes ‘off-plan’ in order to secure the best deals. But as the market hit a severe downturn in 2008, a number of the more unscrupulous developers collapsed – taking with them the deposits of thousands of hopeful investors.

“Property developers should have put the money into a specific account with a bank warranty – so even in the event of failure, that money would have been protected,” said SLR chief executive Luis Cuervo.

“The Supreme Court said that financial institutions are obliged to repay that money to buyers, if a developer disappears or is bankrupt.”

It is estimated that as many as five million new apartments were built in Spain in the years immediately before the financial crisis, with many of these properties sold off-plan. When the downturn hit, however, a swathe of developer bankruptcies meant that many urbanisations went unbuilt.

As various creditors circled on the collapsed firms, individual buyers found that they were at the back of the queue when it came to claiming back their investment.

In order to claim an owed deposit, British investors are being urged to seek independent legal advice before submitting a claim because Spanish law states that claimants can only file once, and if the claim is lost then that is it – there are no appeals or second chances.

For Spain’s banks, who will have to take the majority of the hit, they could be looking at a £15 billion payout in total, reports suggest.