Property body puts up €200,000 for case against state

A GROUP of property developers and investors have pledged to provide up to €200,000 to support a landmark legal case against the state to highlight the past government’s role in overseeing reckless lending by financial institutions.

The Irish Property Council yesterday launched a campaign to find a suitable individual to act as plaintiff in a test case before the High Court.

The IPC believes a successful legal challenge could force the state to acknowledge its role in a situation which has left thousands of property owners in negative equity and force it to provide a solution to the problem.

However, the IPC admitted none of its own members considered themselves suitable to act as plaintiff, but it did not elaborate as to why they were reluctant to front a challenge themselves.

A number of national newspapers yesterday published advertisements for the IPC, seeking declarations of interest from any individual willing to act in a test case.

The group has also asked for donations from all parties affected by the property slump towards the cost of mounting such a High Court challenge.

The IPC argues the Government had a duty of care to Irish citizens to warn them of the dangers they faced in relation to high-risk borrowing to buy property.

“You can’t leave 300,000 people in negative equity by the side of the road and hope that it will all work out,” said IPC spokesperson Patrick White.

He claimed the group did not want to see people in the property industry being disproportionately “scapegoated” for the catastrophe which had seen property values fall by up to 75%.

Mr White said reckless borrowers could not exist without reckless bankers, regulation and government. “It is like a pyramid,” he remarked.

The IPC has called on the Government to introduce legislation which would tackle the problem of massive debt incurred by thousands of property owners and investors as well as conduct a review of bankruptcy laws.

The group has suggested that it should allow borrowings to become non-recourse loans whereby mortgage holders could hand back the keys to any property as a method of clearing their debt.

The IPC has also proposed that borrowers be allowed extend their loan repayment to periods of up to 50 years at rates of less than 1% but to still allow them to trade in their property at today’s values.

Mr White said the IPC believed it could achieve its objectives through taking a successful court action rather than lobbying.

While well-intentioned, the establishment of NAMA had failed to provide liquidity to revive the property market, he added.