The answer is, and there should quite obviously be an international treaty on this subject, that property is owned independent and irrespective of the ruling government. The idea that a government can take over a region and declare properties as its own to sell is absurd. These people have continued to own their properties, and the Britons that "bought" them, bought nothing more than a worthless piece of paper.
This also applies in the West Bank, IMO. That's the way to deal with the "settlement" issue.