Managing property in a downturn PDF Print
For a number of years, lenders have been competing fiercely to lend against property, which has resulted in reduced margins and increased loan-to-value ratios.  In the current economic climate much of this lending is now looking unhealthy, and reductions in value are increasing loan-to-value ratios further and even creating situations of negative equity, and broken loan covenants.

Mark Ingram, associate and insolvency specialist, offers advice on managing the impact of the downturn: ”Some developers and investors are now starting to show signs of substantial distress, and banks and other lending organisations are reviewing their property loan portfolios.  The early identification of problems is key in order to turn around distressed property lending, or alternatively optimise exit strategies.

“Key warning signs to consider include significant exposure to town centre apartment developments, high levels of gearing, and significantly increased exposure to secondary investment properties within the last 12 -18 months. Investment activity outside a client’s usual area of expertise is often another key indicator.”

The multi-disciplinary team at Bruton Knowles is well placed to assist in managing distressed property lending, bringing together expertise in valuation, insolvency, investment, development and construction to work with stakeholders to find the optimal solutions, hopefully avoiding insolvency. 

Should insolvency be necessary, the professional team also has surveyors who are members of the Non Administrative Receivers Association, and are registered by the RICS to accept Fixed Charge Receiverships.

The team has recently been involved in a number of distressed property lending situations, including:

  • The sale of warehouse premises used by a Worcestershire plant hire company which became insolvent
  • The valuation on behalf of a struggling investor of a residential development and investment portfolio with a value of circa £20m
  • Advising on the value, sale and exit strategies on behalf of a variety of parties including individual investors, banks and insolvency practitioners.

For further information on managing distressed property lending and insolvency issues, please contact Mark Ingram on 0121 212 7631 or via email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it