THE COLLAPSE of Carillion contributed to an unexpected four per cent decline in commercial property lending in January, according to Lendy.
The peer-to-peer property platform said that the closure of the former construction giant has created nervousness amongst many mainstream lenders over the sector and created opportunities for alternative finance providers.
Commercial property lending fell to £4.1bn in January from £4.24bn the previous month, which contradicts normal seasonal trends, Lendy said. The construction sector typically sees an uplift in activity over the Christmas period as new projects often begin in the New Year.
Carillion was indebted to a number of high street banks when it went into liquidation. Lloyds had to write off £108m of loans to the firm, while Santander tripled its impairment costs in 2017 to £203m, citing bad loans made to Carillion.
“The unexpected fall in lending highlights just how big an impact Carillion has had on the commercial property industry,” said Liam Brooke, co-founder of Lendy.
“Lenders who have had to deal with heavy losses following Carillion’s collapse may think twice before giving loans for some future commercial real estate projects.
“However, the fundamentals of the construction sector remain strong, and the decline in lending from traditional sources, creates opportunities for non-traditional lenders to enter the marketplace.”
“There are still numerous opportunities for lenders, both traditional and non-traditional to get involved in good, financially sound construction projects.”