A MAN forced to bear the full costs of a mortgage on a demolished house has spoken out after a landmark ruling against him.
Joel Kerr, 31, had purchased a two-up, two-down terraced house in south Belfast in February 2007 for the price of £152,500.
But he was unaware that it would soon be demolished to make way for a massive regeneration of the neighbourhood, and had fought a legal battle against the Housing Executive after it forced him to sell.
Because the housing crash took place in the intervening years, the value of the property dipped sharply – and the Housing Executive made an offer of just £91,000.
He lost his case last week, and has now spoken about the quandary he finds himself in.
Mr Kerr, who works for an educational IT firm and now rents a dwelling in Holywood, still pays £600 per month to his bank for the house in Moltke Street in the Village area of the city, despite the fact almost the entire street is no longer there.
He said: “I had shopped around quite a bit, and found it was the best property within the price range I had in mind.
“It had a double extension out the back. It had been completely renovated before I moved in. It was in perfect shape – it was a solid house.
“Apparently there were houses in the area not in great shape. I don’t dispute that. But mine was fine.”
He said he had not known anything about the regeneration until he was notified of the Housing Executive’s vesting order – the intention to compulsorily purchase the property.
“I wasn’t really sure what it meant,” he said.
“I probably didn’t act that quickly. Something like that is huge, and I probably carried on as normal, and thought I would deal with it at some stage. It took a while to sink in.”
It was suggested some people may be surprised by that, but he said: “Whenever you’re buying a house, I don’t think you really expect it’s going to get knocked down the next year.”
The home was vested in April 2010. He never accepted the offer of £91,000 from the government, but said the judgment of the court now leaves him facing few options.
“I’m paying a full mortgage on a house that’s knocked down,” he said.
“It’s difficult to understand how in this country you can be left in a situation like that.
“There’s no real solution for me. There’s no solution. That’s the end of it. That’s the situation I’m left in.
“I think the message that came from the ruling is: ‘Some people win, some lose. You lost. Tough luck’.”
Although he had shared with a tenant when he first moved in, he said his intention was for him to live there, and the house was not a mere investment.
According to Joe Allen, a chartered surveyor who was advising Mr Kerr, the demolition-and-regeneration scheme had “been on the cards” for about 10 years.
But he said that until the vesting orders are actually confirmed it was “in limbo”.
He also said “nobody could foresee the downturn in the market at the stage”.
“He’s having to pay a mortgage on a house that no longer exists, and pay rent on alternative premises,” he said. “The judge said there’s nothing that can be done about – it’s tough.”
His mortgage was for the full 100 per cent of the £152,000 of the home’s old value, he added.
The Housing Executive, which is responsible for the redevelopment, said it could only pay market rates for the homes bought on a compulsory basis – and this is what Mr Kerr was challenging.
The case came to a head last week when a judge ruled that Mr Kerr is not entitled to get any more than the market rate for the home after all.
Attorney-General John Larkin, representing Mr Kerr, had argued that the full value of the house should be paid, not just the value at the time it was vested.
But Lord Justice Sir Patrick Coghlin disagreed, although he did award Mr Kerr his legal costs and said it may be appropriate for the department to review its policy in regard to such cases.
He said that the law tries to balance the need for regeneration with the needs of those who are adversely affected by it – but it does not try to “resolve every anomaly and hardship”.
Mr Kerr’s battle was seen as a test case for an estimated 25 others in a similar position who feel they lost out on the development.
All in all, the three phase development covers homes in the Village area to the east of the Broadway roundabout, as well as the adjacent area known as Monarch.
Generally speaking, this refers to the area which stands just to the north of the Donegall Road.
The Housing Executive said by the time it is finished 538 homes will have been demolished and replaced by 270. Out of these, 134 will be social housing.
The Department for Social Development, responsible for housing, said: “The minister (Nelson McCausland) has already commented that he has great empathy with the many people in Northern Ireland who currently find themselves in negative equity, and has instructed officials to re-examine the policy to support owner-occupiers in redevelopment areas to determine if this can be amended to take account of the issue of negative equity.
“However, this will require some detailed legal analysis and consultation with his ministerial colleagues.”
In the wake of the court decision last Thursday, Mr McCausland issued a statement which read: “While I empathise with the many people in Northern Ireland who currently find themselves in negative equity, I welcome the clarity this judgment brings to the issue of compensation when property is vested in areas which require significant regeneration to provide residents with modern, comfortable homes that are fit for the future.”