The number of companies in the property sector experiencing critical problems soared by 42% between the first and second quarters, according to data in Begbies Traynor’s latest Red Flag Alert report.
In Q2, 408 businesses in both residential and commercial real estate, were identified as suffering critical financial problems – a 42% increase on the 288 firms recorded in the first quarter.
However, the number of property firms tackling significant problems fell from 14,432 in Q1 to 7,159 in Q2 – a 54% drop.
Companies with critical problems are defined as those with county court judgements totalling £5,000 or more, or those presented with wind-up petitions.
Those with significant problems are companies either facing a court action or with poor insolvent or out-of-date accounts.
Ric Traynor, executive chairman of Begbies, said: “The fall in significant problems is an apparent glimmer of good news, but we believe this is indicative of weaker businesses actively moving from significant to critical financial problems, and ultimately to insolvency.”
He added that significant problems are typically higher in the first quarters of a year because of the volume of overdue accounts due to be filed by 31 December.
joanna.bourke@estatesgazette.com
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