Sharp Rise In Commercial Property Loan Defaults Reported

Fri, 04 Dec 2009

The number of commercial property loans in default doubled in the first half of 2009, new research has revealed.

According to the latest UK commercial property lending survey from De Montford University, the value of loans in breach of financial agreements soared to £30bn during the six months to July.

A total of £18.6bn was reported in breach of banking covenants and £11.8bn in default - the equivalent of South Africa's entire commercial property market.

The amount of loans in default represented 8.6 per cent of the total loan stock of the 56 lenders surveyed by the university.

However, there was a slight fall in outstanding debt to UK property sector, from £225.5bn to £224.1bn - the first drop since records began in 1999.

During the first half of the year, new lending was limited at £7.4bn, compared to £49bn for the whole of 2008. Some £3.5bn was made up of new business loans, with refinancings making up the remainder.

Just 12 banks accounted for 83 per cent of the lending, with UK lenders having a 58 per cent share of the market.
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