The collapse of Carillion has contributed to a 4% fall in lending to the commercial property sector in January 2018 to £4.10bn from £4.24bn in December 2017* says Lendy, one of Europe’s leading peer- to-peer secured property lending platforms.

The construction sector typically sees an increase in lending and investment in-between December and January as new commercial building projects begin for the New Year rather than this year’s fall.

Lendy says that the collapse of Carillion, the biggest construction and outsourcing firm in the UK created nervousness amongst many mainstream lenders over the construction sector.

Lendy adds that many commentators say there was a particular concern about whether smaller construction firms, whose main client was Carillion, would be able to stay in business.

Some traditional lenders have also seen their loan books severely affected by Carillion’s collapse, with Lloyds commercial banking writing off £108m of loans to the outsourcing firm. Santander have tripled their impairment costs in 2017 to £203m, citing bad loans made to Carillion.

The fall in lending comes on the back of a decade of tough financial conditions for commercial property projects, as traditional lenders have restricted financing to the sector following the financial crisis.

Lendy says traditional institutions reluctance to lend provides an opportunity for alternative finance providers, like P2P, to enter the profitable commercial property market.

Liam Brooke, co-founder of Lendy, says: “The unexpected fall in lending highlights just how big an impact Carillion has had on the commercial property industry.”

“Lenders who have had to deal with heavy losses following Carillion’s collapse may think twice before giving loans for some future commercial real estate projects.”

“However, the fundamentals of the construction sector remain strong, and the decline in lending from traditional sources, creates opportunities for non-traditional lenders to enter the marketplace.”

“There are still numerous opportunities for lenders, both traditional and non-traditional to get involved in good, financially sound construction projects.”

*Bank of England data 2018