Real estate sector could cost Treasury £1.8b in unpaid government loans

The UK real estate sector could cost the Treasury £1.8bn in the worst-case scenario – where 60% of loans taken out via the Bounce Back Loan Scheme aren’t repaid.

Some 85,517 loans were taken out using the scheme, amounting to £3bn, as real estate firms typically took out £35,000 per loan.

The research comes from Business Rescue Expert, an independent insolvency practice, which said 42% of liquidation cases it’s handled in Q1 2021 have taken out a loan using the scheme.

The firm said the best-case scenario is where 15% of loans aren’t repaid, which would still cost the Treasury £450m.

Chris Horner, insolvency director with Business Rescue Expert, said: “As the first loan payments for the BBLS come due, businesses will have to seriously look at their ability to pay and their calculations might have been affected by not being able to reopen earlier than this month at best.

“Businesses that have topped-up their initial BBLS loan will also find out that not only are they unable to defer these payments, but they’ll come out at the same time as their original loan repayments – an unwelcome and expensive surprise.

“The most important thing we can is to remind business owners and directors that there are options available for them. If they get professional advice and quickly then they could yet find a way out of a seemingly impossibly tight situation. Ignoring it is only guaranteed to add to their problems.”

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