UK real estate insolvencies doubled since Q3 2007

Real estate and construction firms have been the worst hit in Britain by the global downturn, with the number going bust more than doubling since the credit crunch started two years ago, according to a report on Friday.

Some 1,573 companies in the property sector went bust in the second quarter, compared with 696 in the third quarter of 2007 when the run on British bank Northern Rock occurred, accounting firm Wilkins Kennedy said on Friday, citing data from the UK Insolvency Service.

The sector, which includes developers, agencies and investors, as well as construction-related businesses, represented 24 percent of all British insolvencies in the second quarter to be the single largest group, it said.

The property downturn has also hit the hotel sector, where insolvencies nearly trebled to 53 in the second quarter of 2009, from 18 in the third quarter of 2007, despite more British staying near home for their holidays, Wilkins Kennedy said.

"Despite the rise of the 'staycation' UK hotel groups are going under at a faster rate than ever … banks are understandably reluctant to lend to companies whose underlying assets are based on property," director Anthony Cork said.

The Insolvency Service announced on Aug 7 that second-quarter company liquidations jumped 39 percent year-on-year to 5,055, while personal insolvencies jumped to a record 33,073.