A report out today shows a 19 per cent rise in the number of property businesses classified as being in “significant financial distress”.
The report is the Red Flag Alert - the health check of the economy reported every three months by the restructuring consultancy Begbie’s Traynor.
The property companies in trouble include estate and lettings agencies as well as property management firms and property investment specialists.
The criteria for featuring on the list include the awarding of county court judgements against the companies - regarded as a sign of their inability to keep up with relatively simple payments.
In the property sector of the economy in the second quarter of 2018, some 42,254 firms were in trouble - up 19 per cent on the figure a year ago. There is no detailed breakdown of specific types of comopany within the overall property category reported by Begbie's.
The wider economic position in terms of distressed companies across all sectors in the UK slightly improved in the second quarter, after disruption caused by bad weather in the first quarter.
Julie Palmer, partner at Begbies Traynor, says: “Although the volume of businesses in ‘Significant’ financial distress remains at relative highs after four consecutive quarters of accelerating distress, the rate of deterioration in UK corporate health has slowed during Q2 2018, supported by recovering business and consumer confidence, higher levels of employment, and continued interest rate stability.”
However, her colleague Ric Traynor, executive chairman of Begbies Traynor, warns: “With manufacturing growth down on last year, continued inflationary pressure, slowing wage growth and potential rate rises on the horizon, we’re not out of the woods yet. There still remains a heightened level of distress among UK businesses and the slight improvement in the second quarter could yet prove to be temporary.”