A new survey has revealed that many of the UK’s major financial institutions are unwilling to lend to property investors until 2011.
The survey, by Jones Lang LaSalle, has cast fresh doubt over the recovery of the commercial property market across the country. The unwillingness to lend could have a devastating effect as the UK recovers from the economic downturn as it means buyers will struggle to access finance and companies will find it difficult to re-finance. The Daily Telegraph reports that there is currently £250 billion of debt unpaid to the sector.
The Lenders’ Expectation report found that it was only asset-rich banks that were in a good position to lend. Between June 2007 and June 2009 commercial property values across the country, including office space, retail space and warehouse space fell by 44%.
The Bank of England have warned that this restraint in lending could cause an increase in defaults on many loan books of UK banks.
Despite this, the report also shows that confidence in the property market has risen in the last 2 years as commercial property values have climbed.
The reports reveals that 35% of lenders asked said they would be willing to offer financial assistance of between £25 million and £50 million, 30% will grant loans of £50 million to £100 million, while just £16% would be lending between £10 million and £15 million.
Looking to the future, 48% said they were expecting to offer loans of more than £100 million in 2011.
The 2009 Investment Statistics, by Cushman and Wakefield, show that 191 deals worth £6.6 billion were completed in Central London last year, down from £6.99 billion in 2008.