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Britain's banks are causing a bottleneck in the commercial property market by holding onto seized assets rather than selling them on, an industry expert warned today.
“While confidence in the commercial property sector is rising, there's a shortage of freehold assets because banks are holding back on releasing their property inventory,” according to Solly Benaim, Head of Real Estate & Construction at accountants BDO.
Banks originally take on property from firms that collapse into administration owing them money or default on loans.
Benaim warned that while investors are “flooding into the UK commercial property market”, the big banks' concern about selling off assets too low has led to the problem that “there isn't enough stock of property around for the money available chasing it”.
Benaim said: “Many banks are failing to put properties into administration, or properly market those that are, so creating scarcity in the market. London is proving to be the battleground for this struggle. My concern is that if the banks keep on holding to their assets we could go back into another dip.”
He added: “Given that the Government owns some of the banks, it needs to push them to get back into the market. The banks' role in releasing property and liquidity is critical if the market is to capitalise on the improving confidence.”
Reader views (1)
This sounds like someone trying to talk up his own commercial interests. Banks potential losses only become real if they dispose of assets. Of course there will be buyers if property is cheap but given that the taxpayer owns so much of the banks should they not be applauded for trying to secure the right price?
- Ian, London
