BPF urges industry to protect against commercial property crash

The report, published by by the Real Estate Finance Group, which develops the themes identified in an earlier paper from October 2013 – sets out a number of recommendations which will encourage greater stability in the CRE lending market and will mitigate the systemic impact of any future real estate crashes. The key recommendations set out by the report are:
 
- The creation of a loan database which the regulator should have full access to in real time

- Regulator access to expert interpretation and analysis of market information

- Introduction of CRE finance qualifications

- Use of long-term value measures for risk management

- Better risk differentiation in regulatory capital requirements

- Encouragement of diversity of lenders 

- Regulatory governors operating consistently across the cycle
 
Ion Fletcher, Director of Policy (Finance) at the British Property Federation, commented: 

"We heartily commend the extensive work that has gone into preparing this report and welcome its recommendations. We are particularly pleased to see the level of detail concerning how best to implement the recommendations, and believe that if put into practice they have the potential to significantly lessen the disastrous impact of future crashes and bring about a healthier, more vibrant and more transparent real estate finance market. 
 
"However, as the report suggests, there is still much work to do before the Vision becomes reality and we look forward to working with the industry and financial regulators to achieve this."