Developers secured cheap land which they then obtained high-density planning for. This was all financed by the Banks. Then the promoters set about feeding the growing hunger for holiday home purchases, and the properties were sold for crazy prices.
Then in came the Banks again, stage left, returning to the fray and offering the unknowing purchasers ’ cheap mortgages with high Loan to Value Mortgages (LTV). All you saw as buyers was your ultimate dream being sold to you at very attractive rates and guarantees – and not what was really going on behind the scenes. If we dig a little deeper, developers didn't purchase prime plots, but low-value land, e.g. desert land near Murcia and Almeria.
They built here using shoddy and cheap building practices, saving them money. These flats and houses were then mis-sold to you – the unwitting buyer - for a high price, without any knowledge of what you were actually buying into. This mis-selling of cheap property resulted in high margins for the developer and these lucrative spoils were then spread between the main protagonists of the process – the developers, promoters, and Banks.
It was a well-oiled machine greased by massive commissions and bonuses from the attractive margins gained. The system survived because of the unscrupulous standards of all those involved, as well as the solicitors and notaries who also propped up this profitable business model.
Rotten to the core, the system fed people’s greed for money and profit. Everyone in the chain was part of the conspiracy – apart from you who unwittingly handed over your hard-earned cash which kept the wheels turning. The extent of this corrupt system ran deep, for example, even the Mayor of Marbella received over twenty years prison sentence for facilitating dodgy planning permissions!
Every level was in cahoots to sustain their lucrative financial rewards, which they all believed would go on forever. A nice little earner that would continue to boost prices and keep reaping huge profits. With no plan B in place, nothing was supporting it when things did eventually go wrong. Because the 2008 financial crisis hit at full speed, almost overnight, this property disaster's aftermath is still being unraveled.
Even today, hundreds of thousands of people are still trapped in negative equity property hell or left out of pocket from holiday homes that were never built or finished.