Here’s one of the odder side effects of the continuing Eurozone debt crisis: wealthy divorcees are now more likely to argue about how doesn’t get that luxurious second home on the continent than who does.
According to an intriguing article in the Telegraph, those holiday homes on the continent, once part sure-fire investment and part aspirational status symbol, have now become, in many cases, very real financial burdens for couples left struggling to pay huge mortgages on properties worth a fraction of their former values.
Massively indebted economies in countries like Spain, Italy, or most infamously Greece, have sent seen once inflated property values plunge, leaving owners who thought they had made solid investments in bricks and mortar suddenly struggling with negative equity.
Journalist John Bingham cites some spectacular examples: a couple arguing over a house in Cyprus which, thanks to a toxic combination of a poor exchange rate, high local taxes, and a plunge in value is now worth minus £53,000.
In another case, a divorcing couple are wrangling over the fate of a plush villa in Spain now worth only £240,000 – an eyebrow-raising £100,000 less than it once did. Meanwhile, they still have a £193,000 mortgage to pay and the villa is unlikely to be sold for the foreseeable future in a thoroughly depressed Spanish property market.
Case notes from a divorce hearing quoted in the article offer a vivid insight into the mindset of the couple: “Solicitor explained that if we want the husband to keep Spain, which is a dead duck, we need to offer him a sweetener.”
It is not difficult to imagine couple fighting tooth and nail to hang on to a Spanish villa just a few short years ago.
As the article notes, not all the Britons who have bought second homes in Europe are extravagantly wealthy. Many are simply middle class couples who wanted some sunshine and thought they were buying a reliable nest egg into the bargain.
But now settlements featuring second homes on the continent have become, to quote the article, “a game of pass the bomb”. Eurozone properties have now apparently become so toxic that some divorce solicitors are advising their clients to let their former partners keep them because “they are more trouble than they are worth”.
Some divorcees who received European properties at the height of the boom and were then hit hard by the crash have reportedly been returning to the courts to try and renegotiate their settlements . Sensibly, the courts have shown little patience for such arguments. Once you agree to a financial settlement, you are bound by it. They are binding, and not even bankruptcy can free you from their obligations. Nevertheless one can help but feel sympathy for such divorcees. As one solicitor quoted in the article notes, they may have come to the end of a lengthy marriage and now find themselves stuck with assets which have shrunk to a frightening degree – and all thanks to escapes of spendthrift European politicians who apparently gave so little thought to the consequences of their actions. That is very bad luck.
This is a fascinating example of the way in which a once much coveted and hard-fought-for marital property can turn on a dime lose its allure altogether. It is also a timely reminder of that wise old maxim and legal principle ‘caveat emptor’ – let the buyer beware.