Madam, – Having been a very minor player in the Irish property scene for the past 35 years, I have witnessed many peaks and troughs during those years. However, I have never experienced anything like the present depression.
It is now widely recognised that. residential property prices have fallen by as much as 60 per cent from their 2007 high.
The resultant horrific fallout means that there are now thousands of householders in deep financial trouble.
The plummeting value of their homes has raised the alarming spectacle of negative equity.
Debt forgiveness has been suggested as a solution, but in my view it would be very difficult to implement. A possible and more practical solution would be to create a new title to these properties whereby the negative equity would be capitalised and would be similar to the old ground rent repayable annually over say 75 years, while the apportioned mortgage is payable as normal. For each €100,000 of negative equity I would suggest an annuity of €2,500. This would result in two types of title, one the normal freehold and the other, where the negative equity applies, would be treated similar to the old leasehold title. Obviously, as property prices recover it might well be that the annuities could be redeemed well within the 75-year period and the title would then revert to freehold.
This solution could share the load between the lending institution and the home owner and, with goodwill from all involved, it would help to lift the burden of negative equity from the shoulders of those people whose only fault was to seek to put a roof over their heads. – Yours, etc,