Banks could call in commercial property loans


Banks could call in commercial property loans if prices continue to fall, one industry advisor has claimed.

Potentially, the banks could call in billions of pounds, Michael Slade, chief executive officer of Helical Bar, told news provider, Bloomberg.

"There are £16 billion of loans that could be called in…that’s when you will find property being spilled out at below-trend prices," he said.

Mr Slade explained that finance providers need to raise capital and there are agreements in place with investors, which allow the bank to take control of assets if necessary.

Following the company’s recent first quarter trading statement, its chairman, Giles Weaver, said: "The next 12 months will be a difficult time for the sector and there may well be further setbacks to the economy during that time."

Commercial property values fell 17 per cent in the last year, according to the Investment Property Databank.