Turquoise Resort (UK Property Owners)

Andrew Murrison Excerpts

Wednesday 22nd February 2012 Commons Chamber

[Naomi Long (Belfast East) (Alliance)]

Most people, when they purchase a holiday property, do so with the expectation of escaping the stresses and strains of home. Perhaps they even hope that it will be a good investment for the future, but for my constituent who purchased a property in the Turquoise development in Bodrum, the reality has been far removed from that dream.

A number of other right hon. and hon. Members have constituents who have been similarly affected, so they will be familiar with the case. However, I would like to outline what home owners have related to me about what they have endured over the past number of years. It is a tale of woe in which they have experienced significant problems with the build quality; the advertised facilities promised either never materialised at all or, if provided, fell well short of the standards advertised; and their properties, far from being prudently managed on their behalf, have allegedly been rented out without their receiving income. As a result, they have been forced to pursue costly and time-consuming legal action to try to repair the situation. The Turquoise development is one of three by Artev Global on this site, the other two being Royal Heights and the Flamingo country club. Villa Turizm was appointed by Artev Global as the sub-contracting company to manage the site, and it controlled a total of 1,350 homes across the three developments.

The problems began with the build quality of the developments themselves, where to varying degrees home owners found that what they were promised did not match what was delivered, For example, an owner in the Royal Heights development whom I met recently has stated that those properties are significantly smaller than advertised. The layout of the development was also changed unilaterally by the developer, with the result that many of those purchasing a property which purported to have a sea view instead have the rather less appealing view of the rear wall of the adjacent apartment. I have been advised that many properties suffer from damp; others have leaking roofs; some of the structural elements on the site, such as retaining walls, have not been properly constructed; and people have experienced ongoing problems with the sewerage and drainage systems. Their view is that the builder has undertaken only minimal repairs in response to complaints about building defects, simply to get through the five-year period, beyond which responsibility for such problems passes to individual home owners.

Furthermore, the developments were marketed with the promise of certain facilities, such as a golf course, a sandy beach and exclusivity of use. Some have materialised, others have not, with the quality of those provided often at variance with the brochure description. It is worth bearing in mind that these properties were advertised in the UK at various reputable exhibitions and that those promoting them are, in many cases, UK citizens, yet there appears to be limited opportunity for legal redress.

Beyond issues of build quality and facilities, however, the growing catalogue of alleged fraud, corruption and intimidation in respect of the sites is substantial. A dossier prepared by the homeowners group that sets out the detail of the allegations has been sent to the Foreign and Commonwealth Office. The dossier documents the multifarious ways in which those in the group believe the property management company has defrauded them, and they are too numerous to cover in any depth this evening.

Let me give just a flavour of the alleged illegal practice. Home owners believe that they have evidence to prove that the company has been surcharging them for utilities, such as water and electricity—they have been advised that that is illegal under Turkish law. In addition, they believe they have also been paying twice or overpaying for some provisions of the management agreement, including maintenance.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I congratulate the hon. Lady on securing this debate. My constituents have also been adversely affected by the situation at Turquoise in Bodrum. Does she agree that although the Turkish authorities are correct in saying that this is a legal matter, it is doing huge reputational damage to Turkey, and that it is in Ankara’s interests to make sure that this is gripped, as it seems to be somewhat systematic?

[Naomi Long]

I absolutely concur with what the hon. Gentleman has said, and I will elucidate that point later.

The dossier also contains statements from a significant number of home owners alleging that their properties were rented out either against their wishes, or without their having been informed of the rental or receiving the income due for the periods in question. Some owners became aware of that when they received utility bills for the properties indicating that they had been in use when no rental was notified, for others it emerged when personal property was missing when they returned to the property after an absence. Others still turned up on site to find someone else staying in their property, and one resident has described arriving at their property to find that their keys no longer fitted the locks. On investigation, they have concluded that a window had been forcibly removed from the property while they were off site to gain access, the locks had been changed and the property had been rented out without their consent. Despite their complete lack of trust in the management company, they then discovered that under the management plan for the site they had no ability to replace the locks. I will revisit the matter of management plans later.

Allegations of intimidation of those who were vocal in their complaints about how the complex was managed are numerous. At one point, those involved in organising an extraordinary general meeting to co-ordinate legal action against the management company were arrested and questioned by the police after a complaint was made against them for doing so. One home owner has told me that the atmosphere became so intimidating that he varied his travel arrangements to and from, and within, Turkey, staying in hotels rather than at the site, and often changed hotels during a stay.

In 2011, residents were informed that Villa Turizm had left the site and, it would appear, large debts, including money owed to the home owner funds. The home owners have estimated that that could run into hundreds of thousands of pounds, but with Villa Turizm now gone their only option is to pursue resolution and compensation through arduous and costly legal action in the Turkish courts.

The developments are now being managed directly by the developer. The home owners have negotiated, through their solicitor, a voluntary arrangement, whereby they pay their management fee into a UK bank account, under their control, and release the money to the site management only once they are satisfied that the previous month’s financial transactions are legitimate. In the short time that that has operated it appears to be working well, and other similar developments are looking at it as a potential model to follow. However, it has no legal standing, and until the management plan is legally annulled the home owners will remain vulnerable, as the developer could revert to the previous management company scenario.

The arrangement also does nothing to address the wider issue of the alleged missing money, which the home owners estimate could be upwards of £1 million across the three sites; nor does it give them retrospective access to the accounts for that period, which will be the subject of another protracted and costly legal battle, with no certainty of success. In response to my letter to the Foreign and Commonwealth Office about the case last year, the Minister for Europe stated:

“The Government cannot intervene in private legal disputes within other states, nor can we become involved in steps to recover any capital outlay in respect of individual property deals that have gone wrong.”

That is echoed in a letter from the Turkish embassy to the right hon. Member for Putney (Justine Greening), who has been pursuing this matter on behalf of her constituents. It states that

“private ownership of immovable property is purely a private law matter which does not allow much to be done by this Embassy.”

Both I and my constituents accept that, up to a point. However, what is alleged here is not a simple property dispute between one purchaser and a developer, but potentially a much more complex and systematic fraud against many UK home owners. Given the seriousness of the allegations, I do not think it unreasonable to expect the Turkish authorities actively to investigate them with a view to pursuing criminal prosecutions, if appropriate, or to expect the UK Government to press them to pursue the matter with vigour, given the number of UK citizens affected.

The letter from the Minister for Europe went on to state:

“We would encourage anyone experiencing problems with property to seek legal advice by engaging an independent lawyer who will be best placed to advise on rights and methods of redress”.

He went on to direct the residents to the British embassy website, which lists English-speaking lawyers. The letter from the Turkish embassy also

“strongly urged them to get professional aid from a practising Turkish lawyer if they have not already done so”,

and referred them to the same website. It is worth noting that, despite using that list of lawyers, it took the home owner group over a year, and six different lawyers, to find one in whom they could have confidence to act purely in their best interests as the client. In one case, confidential documents relating to the home owners’ case against the developer ended up in the possession of the developer, adding to their wariness regarding the independence and trustworthiness of the legal support available to them. Allegations of bribery and corruption of legal teams are frequent.

In addition, the requirement for foreign nationals to lodge a bond of 10% of the value of the claim—in many cases, the value of the property—with the court before being able to pursue action against a Turkish citizen makes seeking legal redress prohibitively expensive for many, who are forced to cut their losses. This is another specific issue that I hope the Government will raise with the Turkish authorities, as access to fair and transparent legal representation and due process under the law is fundamental.

I accept that the Government cannot become involved in individual property disputes in other jurisdictions. Even within those strictures, however, there are things that the UK Government have been doing—and, indeed, could be doing—to help those already caught up in such situations and, importantly, to prevent others from falling foul of the same trap. Indeed, the Minister of State acknowledged that to be the case in his letter to me, and stated that the Foreign and Commonwealth Office would continue to work with the Turkish authorities to find ways to improve the situation.

One significant improvement relates to management plans. Under Turkish condominium law, every resort must have a management plan, and that document must be lodged with the local authority. However, there is no onus on the local authority to check the legality of the content of the document submitted. In this case, the management plan effectively prevented the home owners from replacing the management company by a vote at an AGM. The home owner group has been advised that the management plan is illegal under Turkish law and contravenes their international human rights. However, it will be able legally to take control of the site only if that management plan is annulled. Pursuing a legal case to do so over the past nine months has already amassed legal costs of £20,000, and it is expected to take at least another year for the case to reach its conclusion. An immediate change that would help immeasurably would be a requirement for local authorities to check that any management plan was legally valid and compliant with Turkish condominium law. It would still remain the responsibility of each purchaser to seek legal advice on the document, as to whether they personally found it acceptable, but at least they would have reassurance that its contents were within the law. Any influence that the UK Government could bring to bear on the Turkish authorities to introduce such a change would be very welcome.

About £70 million has been invested across the three sites in the development, mainly by UK and Dutch citizens, with around 90% of the home owners being from the UK. The same developer has a further three or four sites in the same area of southern Turkey, so at least 2,000 other British people could be affected. This represents a significant investment stream for Turkey, in terms of the property investment and of the associated visitor spend generated by those staying in the resort. To have such a large number of people affected by allegedly fraudulent practice carries with it significant reputational risk for Turkey, as an investment and as a holiday destination. The perception that foreign nationals will also find it more difficult to access justice when things go wrong compounds the situation. In addition, some of the alleged fraudulent practice relates to the avoidance of tax and national insurance payments, at a direct cost to the Turkish Government. It is therefore not in the interests of the Turkish authorities or the many reputable developers and solicitors working in that country to allow this situation to continue.

In correspondence in September last year, the Turkish embassy confirmed that the

“issue of fraudulent builders along the seaside resorts of Turkey, including those of Artev and Turquoise, has already been brought to the attention of the relevant Turkish authorities.”

Further, in the Minister for Europe’s correspondence, he indicated that meetings were taking place between the two Governments, and that the British embassy had raised the issue with provincial governors and mayors. I would be grateful if the Minister could update the House on any progress that has been made. Also, given the information available regarding this and other sites, and the recent high-profile conviction in Northern Ireland in relation to a Turkish property scam, would the Government consider reviewing the advice for UK citizens seeking to purchase property or needing legal advice in Turkey, as the degree of risk attendant on the process would appear to be higher than is generally perceived?

Although the story of that particular resort has been the primary focus of my remarks, it would be remiss of me not to mention also the wider experiences of those purchasing property in Turkey, as they raise one other key issue affecting buyers and involving the Tapu or habitation certificate, which is similar to property deeds. Unscrupulous developers have be known either to remortgage a property which the buyer has already paid for in full on the strength of the Tapu before registering it in the buyer’s name and disappearing, leaving the original purchaser to clear the debt or forfeit the property, or to fail to register the Tapu in the name of the buyer, instead selling it on to someone else but pocketing both payments.

In the run-up to this evening’s debate, I was contacted by people from across the UK who were keen to share their appalling experiences, first at the hands of those scammers and then in the Turkish legal system. I want to share a couple of those experiences with the Minister this evening. One gentleman bought a two-bedroom villa, having given power of attorney to a prominent lawyer in Bodrum in respect of the sale, only to discover two years later that it belonged to someone else. Despite a four-year battle with a new lawyer, he ended up with nothing: no money, no villa, and even his furniture and electrical items, valued at £2,000, were taken and sold to pay the court costs of the holder of the deeds.