THE slowdown in the property market is resulting in soaring numbers of insolvencies and high numbers of mortgage frauds being uncovered, according to figures released by property advisor GVA Grimley.
In the past eight weeks alone, the company's insolvency department has been appointed as Law of Property Act (LPA) Receivers by high street banks and other money lenders to recover more than £16.9m, including £6.8m in the north of England, which is s
ecured against both residential and commercial property.
Andrew Rodger, senior director and LPA receiver at GVA Grimley in Leeds, said: "Just 12 months ago we were reporting a buoyant property market and huge demand for both development and investment opportunities, but caution for the future. A year later and the credit squeeze is tightening and casualties are emerging.
"We're now finding that high levels of mortgage fraud have occurred across both the residential and commercial sectors. In many of the cases being uncovered, properties have been overvalued by creating bogus leases that show the property to have artificially high rental value or by ignoring ongoing costs such as repairs and maintenance."
Mr Rodger added: "While most of the property market is going through a quiet time, as lending criteria among the banks remains tight and the investment funds shut up shop to take stock of events, the LPA receiver could be set for a record year."
The latest commercial property market update by GVA Grimley revealed that investment transactions totalled £5.1bn in the second quarter of 2008. This was in stark contrast to the quarterly average
of £13.4bn in 2007 and £14.6bn in 2006.
Economic growth slowed further, with output increasing
by only 0.2 per cent, well below trend growth of 2.7 per cent
per year.
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