Property sector ‘experiencing rising insolvency rates’

Posted 08/09/2009

Property and construction firms are seeing increased rates of insolvency as a result of the recession, according to new research.

Statistics published by accountant Wilkins Kennedy has revealed that companies in these sectors are becoming insolvent at twice the rate they were in the third quarter of 2007.

This means that an average of 17 building and real estate firms are now going bust every day, which accounts for a quarter of all corporate insolvencies in the UK.

Wilkins Kennedy attributed the increase to the ongoing effects of the credit crunch, which has seen a downturn in the value of commercial property and the increasing difficulty many companies are finding in securing loans.

Anthony Cork, director of the firm, said that this is because “banks are understandably reluctant to lend to companies whose underlying assets are based on property”.

This comes after the second quarter report from the Insolvency Service last month showed a 39.1 per cent year-on-year rise in the number of firms being declared insolvent.