Dozens of small property developers and investors are seeking legal advice over whether they can take action against high street banks for the alleged mis-selling of interest rate swaps.
Solicitors are reporting a wave of enquiries from developers and investors that are facing receivership as banks use swap contracts to crackdown on loans made to smaller companies.
Law firm Collyer Bristow said that it had received at least 10 enquiries from small property firms over the past fortnight. Other solicitors are reporting similar numbers.
The firms believe that they have been mis-sold the derivative contracts, which they were told would act as insurance against potential interest rate hikes.
Stephen Rosen, a partner at Collyer Bristow, said: “Many of our clients bought the products over the telephone.
“They were not warned that the swaps contracts were for a term often longer than the loan itself, and that the banks penalised anyone who wanted to get out of them with punitive exit fees.”
Rosen said that one of his clients, a property company with a £10m portfolio, would have to pay an exit fee of around £1.5m to get out of its swap contract.
lucy.barnard@estatesgazette.com
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