Debt held against commercial property throughout the UK fell by
6.8 per cent last year, according to the influential UK Commercial
Property Lending Market report carried out by De Montfort
University.

The study is the largest and most comprehensive of its kind to
survey lending for UK commercial property and although it found the
overall level of debt was declining there is still a long way to go
to arrest the problems of the past.

Lending fell from £228.1 billion to £212.3 billion last year,
but according to the report between £72.5 billion and £100 billion
will struggle to be refinanced due to current market terms.

Despite progress being made in an effort to address the legacy
of debt, banks are struggling to tackle the overhanging property
debt accumulated pre-recession on their balance sheets. As much as
£153 billion - 72 per cent of the outstanding debt - is set to
mature by the end of 2016.

Bill Maxted, author of the UK Commercial Property Lending Market
report, believes the debt crisis must be tackled head on before
lending markets can improve.

"At the end of 2011, lending organisations were reporting that
the Eurozone crisis had created instability in the money markets
leading to rising costs, with many banks managing their capital
based on a worst case scenario both in the Eurozone and the UK," he
said.

"The debt crisis is regarded as a real threat to asset values in
the UK, and globally, and is a problem that has to be solved before
national economies and lending markets can start to improve."

Liz Peace, chief executive of the British Property Federation
(BPF), has urged the Government to make use of all the tools at its
disposal to encourage fresh investment in the office space markets.

"We would also hope that the FSA exercises extreme caution in
its implementation of slotting so as not to restrict any signs of
recovery in the property sector and further risk making it a less
attractive place to invest," she said.

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