Property company insolvency rates rose by 8% in 2015 as banks took the opportunity offered by improved markets to realise their bad loans.
In total 346 companies became insolvent in 2015, up from 319 in 2014, and more than double the total for 2011, 154, according to research from law firm EMW.
EMW said banks’ ability to recoup the value of distressed loans has forced companies to sell assets before starting insolvency proceedings or risk becoming “zombie” companies.
Geoff Willis, principal at EMW, said: “Higher occupancy levels and rental increases, especially on office investments in London and the South East, have driven up prices. Banks have been holding on to these sour loans since the credit crunch struck and are using this opportunity to recoup some of the value tied up in this bad debt.”
EMW said that many banks were reluctant during the downturn to put property companies through the insolvency procedure because of the risk of depressing the market still further.
