Real estate company insolvencies have jumped by 16% in the past year as landlords struggle to repay their debt, according to research from Mazars.
The number of insolvencies in the sector rose to 738 businesses in the year ending 30 September, from 634.
Landlords represented the biggest increase, leaping by 35% to 271 that went under this year. Developer insolvencies were up by 4%, to 234.
The number of agents collapsing this year rose by 11% to 233, as residential property prices and transactions began to fall.
Mazars said interest rate hikes have driven up commercial mortgage repayments, leading to some landlord companies struggling to service their debts. The fall in pricing for office and retail properties has also made it harder for those seeking to sell them to repay their debt, which is in turn becoming more costly.
Landlords have also struggled to fill premises vacated by office and retail occupiers as their leases end, said Mazars. Insolvencies in sectors such as retail, including major tenants like Wilko, have led to significant void periods.
In residential, a reduction in properties available to rent has made it more difficult for tenants to find homes they can afford, according to Mazars.
Rebecca Dacre, partner at Mazars, said: “The real estate sector has been hit particularly hard over the last three years. More and more businesses in the industry are reaching the end of the road.
“Landlords are in a difficult position, often carrying large amounts of secured debt which leave them with little room to negotiate, especially as the property market downturn impairs the value of the property.”
“Insolvency can be inevitable and within the residential market, will sadly take more and more rental properties off the market and away from prospective tenants.”
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