Tough conditions and rise in bridging loans behind spike in property receiverships
A Manchester firm which specialises in property receiverships has reported dramatic growth in the volume and value of property-related cases during 2019.
CG&Co experienced a 40% rise in the number of appointments and a 200% increase in the value of the properties under its control, to £300m.
Over the past 12 months, bridging loans have also accounted for a higher percentage of these cases.
CG&Co, based in the city centre’s Booth Street, said it attributes the increased number and value of these appointments to the tough economic trading conditions faced by borrowers, combined with the rapid growth of the bridging sector and its enhanced presence in this sector.
CG&Co partner, Daniel Richardson, said: “The poor performing property market has resulted in an increasing number of defaults in the bridging sector as borrowers find themselves unable to achieve their exit plans, either by sale or refinance.
“In addition, the bridging sector is growing with a constantly-increasing number of borrowers turning to this style of funding over the past 12 months.
“As a result, the volume of defaults across the market has shown a corresponding increase.”
Among CG&Co’s closed cases, Richardson highlights the sale of a period property converted to six modern self-contained apartments as an example of the firm’s ability to recover loans on behalf of clients in the shortest time frame.
Following CG&Co’s appointment, it secured the rental income, improved the occupancy level and subsequently completed the sale at the asking price which achieved a full recovery for the lender within six months.
He said: “I firmly expect the bridging market will be busier than ever over the next 12 months as borrowers continue to seek quick, competitive property finance.
“It is also to be hoped that the property market continues to pick up throughout 2020, which should enable borrowers to implement refinancing as confidence grows and valuations improve, or indeed assist in disposal strategies in recovery situations.”
