New legislation in Cyprus aimed at clearing up years of problems with title deeds will only apply to new purchases, leaving tens of thousands of property owners without legal documents.

The Cypriot Government confirmed that the new law will have no bearing on old transactions which means that buyers remain at the mercy of the developer who sold the property to them and the banks that hold their title deeds as collateral for loans.

It is a major blow for property investors on the Mediterranean island, many of them foreigners, as the Government has promised to sort out the mess which dates back decades in some cases.

It is estimated that up to 100,000 buyers may have paid fully for their properties but have no legal documentation to prove that they own it. This also means they cannot sell it. Around 30,000 of them are foreign investors most of whom are British. They believe that the Government has not only ignored their plight but has gone back on a pledge that the new law would help everyone.

Campaigners described the revelation as a ‘bitter blow’ which leaves them with no option but to seek some kind of redress through the courts system which is likely to be lengthy and expensive.