UK bank lending to property drops again

UK bank exposure to real estate has fallen again to 8.3% of all debt in Q4 2012, according to the latest Bank of England quarterly lending figures.

The banks' exposure is measured as the proportion they lend to real estate as a percentrage of total lending.

Jeremy Handley, director of valuation advisory at Jones Lang LaSalle, said: 'The drop in outstanding real estate debt is a trend that has continued since the beginning of 2010 - a result of low level lending and continued deleverage by banks. We see no obvious sign of the Funding for Lending programme having significant effects on the amount of new real estate debt.'

David Lebus, senior consultant, corporate finance at Jones Lang LaSalle, added: 'There is a continued limited appetite for debt despite total pricing being at historically low levels. This is creating competition between banks where borrowers are seeking debt to fund prime transactions. While many banks remain risk-averse, there are signs from a number of lending institutions that they have aggressive plans for 2013.'

'In addition, we would hope to see some increased lending at the more secondary end of the market as the new debt funds start to spend the money they raised during 2012,' Lebus said.