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Irish overseas owners walking away - 5 November 2009

A foreign property investment expert in Ireland has warned that hundreds of investors who bought overseas property at the height of the boom are walking away from their purchases as they cannot afford to meet repayments.

Lawyer Tom McGrath told the Irish Independent this week that he was inundated with people who were now in financial trouble and couldn’t afford to meet repayments on the overseas properties they bought – many of whom had remortgaged their property in Ireland in order to raise funds.

The problem is coming to light more now, he said, because many of the off-plan project in which investors bought are now nearing completion and builders are asking for their full and final payments to be made. Mr. McGrath said that people who bought property in Bulgaria were suffering the worst as many builders are going out of business and not refunding deposits to investors.

“We are aware of hundreds of people, but it probably runs to thousands of people, who are just walking away from a foreign property because they cannot afford to pay for it.” He told the Independent.

Meanwhile, former overseas property agent John Mulligan said thousands of people were tempted into buying because they were offered guaranteed rents for two years. What they didn’t realize is that often the rental guarantee was built in to the sale price: a developer would up the price of the property to cover the first couple of years rental returns, and then pay it back gradually to the investor.

Mr. Mulligan has written a book entitled ‘No Place In The Sun’ about villa sales in Bulgaria, in which he estimates that people who bought there typically had paid up to €120,000 for apartments worth just €40,000.

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