Summer of sorrow: Property sector bears brunt of August administration spike
Nearly 2,000 businesses went into insolvency in August as economic pressures and ongoing geopolitical tensions weighed on British firms.
According to new figures the Insolvency Service released on Friday, 1,946 firms went into insolvency in England and Wales in August, flat compared to July and down from 2,007 in August 2025.
The data showed that while voluntary liquidations fell, compulsory liquidations rose eight per cent month on month and five per cent year on year. This is because creditors continue to chase debt to balance their own books, and HMRC continues to pursue tax debts to recover money for the public purse.
Administrations also jumped 44 per cent from July and 60 per cent from August 2025, driven largely by more than 250 real estate companies collapsing.
City AM revealed in June that real estate firms were going bust at the fastest rate in a decade, hit by weakening consumer confidence and spiralling building costs linked partly to the Iran War.
Benjamin Wiles, managing director of restructuring at Kroll, described the picture as “challenging”, with the news indicating “early signs of distress” among building materials businesses that have been particularly hit by the knock-on effects of spiralling energy costs on materials.
Blair Milne, partner at Azets, dubbed August a “summer of sorrow”, noting that alongside real estate administrations, the summer also saw insolvencies among brands once thought resilient to the cost-of-living squeeze, including restaurant chain Beefeater.
While parts of the hospitality sector appear to have benefitted from summer trading, Giuseppe Parla, restructuring and insolvency director at Menzies, warned more insolvencies could follow as “sector costs continue to rise” with the increases to business rates, national insurance, and the national minimum wage.
Last week’s announcement of a tourist tax and ongoing debate over bans on ‘vertical drinking’ has added further uncertainty for the sector.
Challenging Budget looms for businesses
The new data comes as the UK government faces heavy criticism from a former Bank of England chief economist over its “tax and spend socialist” commitments, amid fears of further tax rises in next month’s Budget.
Parla said that “many businesses are already holding their breath” amid rumoured tax hikes and price rises which will determine their ability to break even in an unpredictable economic climate.
Speaking to the media on Thursday, Next’s chief executive Lord Wolfson urged Chancellor John Healey to cut spending at next month’s Budget, warning, “you can’t spend your way out of a funding crisis”.