This blight on all of our futures must be tackled
Not only is negative equity hindering our recovery, it will leave the most vulnerable with an impossible burden, writes Brendan O'Connor
Writing the other day in the Irish Times, Jack Fagan told of an investor couple who had booked a €450,000 apartment in 2007. The value of the apartment, even if they could sell it now, is notionally €220,000.
The couple had mortgage approval back in the heady days of 2007. Now that the time has come to complete on the sale, the bank is no longer willing to give them the purchase price. The developer is threatening to take the couple to court to make them complete the sale. The compromise seems to be that they buy their way out of the contract for about €100,000. It's a middle-class property investor horror story. And for "property investor" read presumably a couple who thought they would buy an apartment as a pension fund, not evil developers or, worse, rich folk.
And they aren't the only couple who booked apartments in 2007 at the peak of the market and who are now being expected to buy these apartments at the prices agreed then. Treasury Holdings was the first to initiate legal proceedings against such people, and that could be just the beginning of people being forced to buy apartments that are up to a quarter of a million euro in negative equity as soon as people take possession.