Property Receivership in 2023: Why the right solution remains essential


Daniel Richardson - Partner CG&Co

None of us should expect good news about the UK’s economy any time soon – and it remains essential to plan accordingly.

Last month, the Bank of England raised interest rates for the twelfth consecutive time from 4.25% to 4.5%, taking borrowing costs to their highest level in 15 years.

This was also the culmination of the most aggressive hiking cycle witnessed since the 1980s.

Bank governor Andrew Bailey blamed the “very big underlying shock” in food prices for that increase.

Just a few months ago, the Bank was predicting that the Consumer Prices Index (CPI) would fall to its 2% target by the middle of next year… But it’s now predicting that this will not happen until the start of 2025.

While the International Monetary Fund said last month that it expects Britain to avoid a recession, credit agency Moody’s subsequently warned we will actually suffer a ‘mild recession’ this year.

Moody’s highlighted ‘strong inflation momentum’ – with core consumer price inflation clocking in at a 31-year high of 6.8% in April – alongside unimpressive UK economic activity in its assessment of the country’s prospects.

Moody’s has also asserted that this will result in the Bank increasing the base rate ‘at least’ once more to 4.75%.

As has been widely documented, property prices started to fall on a monthly basis at the end of 2022 – although the real downturn could be yet to come due to the effects of increasing mortgage rates.

According to Nationwide, the average house price fell by 3.4% in May, representing the most significant drop since July 2009.

Nationwide has also warned that the challenges within the housing market are expected to intensify in the near future.

As we approach the second half of 2023, there continues to be a clear risk that loan to values will increasingly struggle to meet outstanding debt figures.

It could mean that borrowers are increasingly unable to raise the funds to cover shortfalls which, in turn, will increasingly prevent refinance exits from progressing.

I’m aware from regular conversations with lenders that their appetite to complete deals remains undiminished.

But lenders must continue to identify underperforming or default loans at the earliest opportunity – and especially those where the term has expired.

What’s more, those loans must subsequently be acted on without delay on a case-by-case basis.

At CG&Co, we have a specialist in-house legal department who work in close partnership with our team of highly-experienced property receivers.

Proactivity – in its truest sense – underpins every aspect of our approach.

During some of the most difficult operating conditions on record over the past three years, we’ve consistently ensured that lenders can relend using their own funds.

We’ve no intention of deviating from this approach.

In the face of the interest rate hikes, soaring inflation and the anomalies that currently exist within Britain’s housing market, it pays to plan ahead.

Adopting the right solution to property receivership has never been more essential.