The scam of property mis-selling has to be confronted by EU consumer protection
Fine Gael Dublin MEP Brian Hayes today called on the EU Commission to bring forward binding EU Consumer protection in the area of property transactions.
“While we have EU consumer law in the area of financial services or for airline passengers, it’s bizarre that literally no protection is offered to people who buy homes on false pretences. We either have a single market or we don’t – but the crime of mis-selling or false advertising on property needs to be included in basic EU consumer protection law,” he said.
“This follows the case of 35 Irish property owners who have lost significantly from properties purchased in France. There are many other horrendous cases all across the EU, but what’s unique about this is that the Irish group concerned is taking its case to the French Courts, or possibly to the European Court of Justice if they do not get redress.
“French leaseback properties were sold on the basis of false and misleading information. From French banks to local property agents to Irish national newspapers – people were GUARANTEED a rental income in every advertisement concerning the sale of the properties. Not only has the rental income not transpired, but the value of the properties has plummeted. The matter will now come before the French Courts in the coming months.
“The operating costs of these developments were significantly under-estimated, which allowed the viability of these resorts to be misrepresented to purchasers at the point of sale. As happened in Ireland before the property crash, the builders and the property management companies involved all went into receivership as owners were left with little or no rent to pay the associated mortgages. These operators have re-emerged in different parts of France, starting the process all over again with the next group of unwitting investors.
“Contrary to initial advice and information provided at the point of purchase, purchasers are now also tied into commercial leases that go on forever unless “eviction compensation” is paid to the lessees – this information was never included in the original lease.
“Because the property prices have more than halved, French banks can potentially seek a repossession and consequently put family homes at risk in Ireland, as all finance was arranged with French banks who were tied into the original sale.
“I have written to the French Banking Federation to get their response to the French banks’ involvements in providing mortgages to these schemes without any property valuation assessment involved. I am also in discussion with the Consumer & Marketing Law unit in the European Commission to see what, if any, proposals they might make on the issue of mis-selling or mis-leading information leading to property sales.
“This case highlights the need for a European response to protecting people who purchase property abroad. Too many people across the EU have been burnt by the complete lack of protection. This has to change.”