Britain’s vote to leave the European Union (EU) and ongoing Brexit uncertainties have had a ‘minimal impact’ on lending activity in the UK’s commercial property market, a new report suggests.
According to the latest De Montfort commercial property report, lending activity remained steady throughout 2016, while UK lenders increased their market share of new loan originations to 45 per cent by the end of the year. This is comparable with just 34 per cent recorded the previous year.
However, overall, new lending was down 17 per cent compared to its post-credit crunch peak in 2015, the report reveals.
It also shows that average maximum loan-to-value ratios declined during 2016 by around 5 per cent.
63 per cent of loans secured against property were taken out in London and South East England, comparable with 12 per cent in the North of England, 11 per cent in the Midlands and Wales and four per cent in Scotland, it says.
Commenting on the data, Ion Fletcher, director of finance policy at the British Property Federation (BPF), said: “The apparent stability of the lending market masks a couple of underlying trends that could be important from a policy perspective, namely the continued rise of debt secured against London property, which now represents almost half of the outstanding total, and the continued relative dearth and high cost of development finance”.
Chris Holmes, of property body JLL, added that “the market reached a new equilibrium at the end of 2016,” which he believes is likely to continue well into this year.