A Ray of Hope for Struggling Real Estate Companies

A Ray of Hope for Struggling Real Estate Companies

Since the 2008 global downturn in property markets, real estate companies have struggled to regain their footing. As a matter of fact, in 2015 the number of property companies within the UK that went into insolvency peaked due to increased prices.

Property insolvency can be a complicated and opaque process, wherever in the world you happen to be, requiring the advice of a specialist with knowledge of insolvency regulations and laws. Further, bankruptcy law varies widely from country to country, and this article is written from the perspective of property companies in the UK, so be sure to obtain the advice of a local attorney in these matters.

While no company wants to go into insolvency, with the right help and advice, it can be a simple and even liberating process.

 

Rise in Bankruptcies Caused by Improvements in the Property Market

You’d think that the increase in commercial property insolvencies would be largely caused by a struggling market. However, it’s actually the opposite. A lot of companies are being forced into insolvency because of improvements in the market.

After the initial financial crisis, banks ended up lending a lot of money to businesses. They have since struggled to get rid of this debt, as many companies have had a difficult time with getting back on track.

There was the worry that if they placed property companies into insolvency, it would further damage the market due to the sheer number of extra properties being put up for sale.

Now that there is some improvement within the commercial property sector, there is less concern about placing additional properties on the market, and banks are now starting to cash in on those debts.

 

Estate Agents Have Suffered Due to Economic Changes

The lack of demand and slow sales have really taken their toll, forcing many real estate agents to finally close their doors.

Then, too, realtors now face a lot of competition. The rise of online markets such as Rightmove, along with quick sale competitors, is causing genuine problems for traditional agencies. In particular, quick sale companies allow people who are struggling financially to sell their property quickly at a reduced rate. However, experts have warned that these companies are also affecting local property markets, giving customers a misleading idea of how much property is going for these days.

 

Know When to Cut Your Losses

The main issue commercial property companies have when it comes to insolvency is its complexity. It’s imperative that you choose reliable, experienced insolvency practitioners who will guide you through the process. They can help to ensure you’re doing everything correctly and no issues crop up along the way.

It’s obviously a tough to know when to cut your losses and apply for bankruptcy. However, with the right help you could even benefit from becoming insolvent. What, you might ask, are some of those benefits?

Firstly, the debts you’ve been struggling with will be completely written off, taking a major weight off your shoulders. While there are exceptions for certain debts, an insolvency practitioner will be able to help you understand exactly how the process will affect you and your business.

You’ll also avoid court action, which could have a serious negative effect on your business and your reputation. Once the company is in insolvency, it is worth keeping in mind that you will no longer be able to continue trading. You can, however, set up a new business. So a bankruptcy doesn’t necessarily mean the end; it could instead offer you a fresh start.

Now that the property market is starting to recover, there’s no reason why you couldn’t set up a new property business. Of course, you might want to cut your losses and try something new, but the option will be there without the worry of debt.

Overall, the property market has really struggled to get back on track after the financial crisis of a few years ago. While progress is being made, many regions are still struggling. Insolvency is sadly the only option for many property companies, but with the right help, it doesn’t have to be overly stressful.


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