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Poor exit strategies driving rise in bridging repossessions

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  • 30/01/2020
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Poor exit strategies driving rise in bridging repossessions
Poorly planned exit strategies were one of the key reasons for a “dramatic growth” in repossessions called in by specialist lenders last year.

 

Property receivership firm CG&Co said it experienced a 40 per cent rise in the number of appointments and a 200 per cent increase in the value of the properties under its control to £300m in 2019. 

Over the past 12 months, bridging loans accounted for a higher percentage of these cases, and the firm expects this to continue rising this year. 

Property cases now account for half of all its business, the firm said, which it noted were mostly attached to buy-to-let properties.

It said of the cases it had come across, unexpected health issues, business loans falling through and clients not properly planning exit strategies were among some of the common reasons why borrowers were defaulting.

 

Busy 2020

CG&Co attributed the increased number and value of these appointments to the “tough economic trading conditions” faced by borrowers combined with the growth of the bridging sector.

The firm operates by acting as an intermediary between a lender and a defaulting borrower and acts to ensure a lender can recover debt.

Partner Daniel Richardson (pictured), said: “Repossession is always a last resort.” 

He added: “The poor performing property market has resulted in an increasing number of defaults in the bridging sector as borrowers find themselves unable to achieve their exit plans, either by sale or refinance.” 

Richardson also said he expected the bridging market to be “busier than ever” in 2020.   

“In addition, the bridging sector is growing with a constantly increasing number of borrowers turning to this style of funding over the past 12 months. As a result, the volume of defaults across the market has shown a corresponding increase,” he added. 

 

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