Agencies compete for insolvencies

Two Dublin estate agencies are to start managing properties in receivership

TWO DUBLIN-BASED estate agencies are to go into direct competition with insolvency accountants to handle the ever-increasing number of properties going into receivership. The agencies are in the process of setting up individual insolvency divisions to manage non-performing property assets while a strategy is agreed to realise their maximum value.

Commercial agent HWBC has formed a 50:50 joint venture company with UK agent Allsop to offer fixed-charge receivership in the Republic. And Dublin-based Colliers International is launching a similar service to that already provided by its parent company and its Belfast office. A third agency is also understood to be gearing up to offer a fixed-charge receivership in the Irish market.

All three contend that the new service will greatly reduce costs for banks and other lending institutions putting properties into receivership. A large number of residential and commercial properties as well as development sites are already in receivership and a great many more are in serious trouble after falling heavily in value because of the collapse of the property market and the turmoil in the banking sector.

Declan Stone, managing director of the Dublin office of Colliers International, explained the difference between fixed charge and floating charge receiverships. He said the fixed-charge receivership would apply where a bank loan was secured on a fixed asset such as a house, office building, land or investment property.

A floating charge receivership was more appropriate where the asset was a trading company (even one with fixed assets) such as a retailer, manufacturer or service provider which continued to trade and keep on its employees.

The fixed-charge arrangement was typically a property that needed to be professionally managed and sold. Up to now a receiver, “usually on a fairly steamy fee”, acted as a middle man in appointing an agent to look after the property. “What we do now is roll the two into one and save money. Property management is not a job for an accountant but for a firm of surveyors who know what they are doing.”

HWBC Allsop described fixed -charge receivers as “property experts who could actively manage the asset; deal with tenants, rent reviews, lettings, lease surrenders and outstanding problems, collect rents and service charges, arrange insurance cover and implement necessary maintenance programmes”. The company said that in many cases the function may just be to arrange an early sale of a property in order to repay as much of the loan as possible. Though fixed-charge receiverships involving property experts have been relatively rare in Ireland, they have increasingly become the preferred choice of lenders in the UK, including Northern Ireland.

The newly formed HWBC Allsop company says it has already secured its first instructions from a number of different financial institutions. They were currently devising a strategy for the various properties and were preparing reports and their initial advices. They had yet to meet with all the financial institutions and to date had generally confined meeting with those companies who knew and used Allsops in the UK. “With the increasing focus on the levels of professional fees being charged, we will be obviously selling the cost benefit of the service”.

Simon Davidson, director of HWBC Allsop, said that over the past year its UK team had seen a considerable increase in demand for receivers with property expertise as lenders needed to release the maximum potential of the assets in a cost-effective manner. The new partnership in Ireland was providing both property receivership and management service under one roof. Up to now fixed-charge receivers in Ireland had historically come from accountancy backgrounds.