Seperation, House Sale, Negative Equity?? please help ???

[IndigoMoon]

My brother bought a house with his girlfriend at the top of the market in 2006.

with the fall in house prices, the house is now teetering on negative equity.

sadly they have split up, they have been living together as housemates since november and my brother has coped fine with this. the ex girlfriend however has now announced that she cannot cope with it anymore. she instigated the split and had a new boyfriend within a month of the split who is better off than my brother.

i suspect she wants to buy a house with the new fella.

now if the house sells for its top market value there will be 5k in it so once you take into account fees etc etc I think they will break even or have debts to pay.

i have told my brother that financially he would be better staying put and riding the storm out.

he says he can cope with the situation.

they are joint owners and not tenants in common.

he cannot take the mortgage on.

has anyone got any great ideas as to how to deal with the situation????????

It will probably take a long long time for house prices to bounce back. People who know a lot more than me are predicting years of house price falls, and to be honest that makes a lot of sense - we're potential FTBs and we've been scared off buying, I'm sure we're not alone.
I wonder whether it's better to put the house on the market and take a small financial hit now, so that he can be done with it. The worst thing would be to "chase the market down" where you keep dropping the price by £5k bit by bit, but as you do time goes on and people's expectations go down by £5k too, so you never get a buyer. We've seen that happen to a house in our area already - it's been on the market for months and months and they've dropped by £30k, but still no buyer. If they'd put it on for a lower price at the beginning, I think that they probably would have had a buyer.
It's a crappy situation for your brother though.

Could he take in a lodger?

I agree rent a room out and tell silly bint how it is, she'll just have to wait. Maybe keep it on the market anyway just in case somebody who hasn't read the papers/seen the TV/has cash comes along and buys it, there's always a bigger fool.