The First Loss is the Best Loss – Benefits Of Employing Experienced Debt Advisory Surveyors

In this article, Chris Price looks at the current property lending environment and considers the benefit of employing experienced debt advisory surveyors when things go wrong. 

Updated Jan 2020


With the financial crash of 2008/2009 fading into the past, we ask “how long will it be before an event leads to a fall in confidence with the knock on effect on property prices?”



There are a number potential situations that appear on the horizon, which have the potential to create the perfect storm – the changing face of retail;  Brexit;  a loss of confidence in stocks such as WeWork; or conflict in the Middle East.


The one aspect of current economic life that continues to counter the above is the low interest rate environment and the ability of lenders to extend loans and pretend there is not a problem.   We do not see this changing in the aftermath of the general election or as Brexit unfolds as the Bank Of England remains under pressure to keep rates low with the economy static as we enter 2020


Prior to the financial crises most property lending was undertaken by the ‘big 4’ high street banks however this has changed with the arrival of the challenger banks, specialist property lenders and crowd funding platforms.  All have grown up in the low interest rate environment, with steadily rising property returns (except for retail) with UK annual property returns showing average growth over all sectors in excess of 8% (IPD Index).  Many of the decision makers considering loan applications have not experienced a property recession or the signs that can spell danger for a particular project.  

My advice when assessing the suitability of a loan is to consider the effect on the project of a 10% fall in capital values coupled with a 10% rise in costs. If still viable then there is a every chance of success assuming competent management, market knowledge and cost control.


As with most things in life the earlier a problem is identified the better the outcome.  In terms of property development there are several common themes – un-budgeted cost overruns; issues with planning conditions; tightening of fire and building regulations, closely connected developers and contractors; a lack of competitive pricing; rights of drainage; and difficulty in obtaining warranties and guarantees, to name but a few.

A surveyor who has experienced these issue in the past is more likely to identify these on individual projects and provide options to the lender that will seek to minimise any loss. There have been cases where I have closed sites down in order to reappraise a development which brings an end to an ever increasing cycle of errors and cost overruns.


Should problems arise what a lender needs, more than anything, is a surveyor who is looking after the lenders interest and has the experience, and confidence, to make tough decisions.  These could include working with the developer to monitor the development though an agreed course of action; change the specification to reflect planning, market, or building regulation requirements;  phase a development to minimise risk; or appoint LPA Receivers to protect the lenders position.

Mistakes are a fact of life but how you respond to these will govern whether a project makes a profit, breaks even or is loss making.

As Ryan Densham a former partner at PWC said to me on several occasions, “remember Christopher the first loss is always the best loss!”

More information: Property Debt Advisory – LPA Receiverships


If you think you would benefit from a 30 minute Complimentary Consultation contact Chris Price, Lead Director, Property Debt Advisory
(t) 0117 456 8775,  (e)


RELATED ARTICLES: [The First Loss is the Best Loss (2 of 2) – Signs that all might not be well]; [Case Studies]; [About Chris Price]

Chris Price is lead director at PACT Property & Assets Ltd with more than 30 years experience in the property sector.
An MRICS registered property valuer and fellow member of NARA (Non-Administrative Receivers Association), Chris has
been appointed LPA /Fixed-Charger Receiver on numerous properties throughout his career.

T: 0117 456 8775
M: 07979 541215