In the past eight weeks alone, the company's insolvency department has been appointed as LPA (Law of Property Act) receivers by many leading high street banks and other money lenders to recover more than £16.9m that is secured against both residential and commercial property.

Andrew Rodger, senior director and LPA Receiver at GVA Grimley,
explained: "Just 12 months ago we were reporting a buoyant property market and huge demand for both development and investment opportunities, but caution for the future. A year later and the credit squeeze is tightening and casualties are emerging.

"We're now finding that high levels of mortgage fraud has occurred across both the residential and commercial sectors. In many of the cases being uncovered, properties have been overvalued by creating bogus leases that show the property to have artificially high rental value or by ignoring ongoing costs such as repairs and maintenance.

"In a rising market the property's value will soon catch-up with the fraudulent valuation but when the market dips, as it is doing now, these types of cases begin to emerge as buyers find themselves in negative equity and struggle to meet mortgage repayments.

"The problem has been fuelled further by a high number of inexperienced lenders entering the market during the boom time that operated with a lack of prudence as they competed for market share.

"We're seeing countless cases where lenders didn't insist on seeing new home warranties and where there was no guarantee of quality workmanship."

He added: "Whilst most of the property market is going through a quiet time, as lending criteria amongst the banks remains tight and the investment funds shut up shop to take stock of events, the LPA Receiver
could be set for a record year.

"Those exposed to the residential market will certainly be hit the hardest. Prices are already falling and the reduction in new home sales
is leading to reduced building activity and mothballed sites.

"However long-term, this means housing demand will continue to exceed supply so whilst house price growth will be very constrained for the foreseeable future, there is light at the end of the tunnel."

GVA Grimley's latest commercial property market update reveals that investment transactions totalled £5.1bn in Quarter 2 – a stark contrast to the quarterly average of £13.4 bn in 2007 and £14.6bn in 2006.

Economic growth slowed further, with output increasing by only 0.2 per cent, well below trend growth of 2.7 per cent per year.

Mr Rodger said: "On the commercial side, many of the region's postcodes remain attractive as business addresses and over the coming months, yields look set to level off and while we will continue to experience an air of caution, we should start to see a marked improvement in the market towards the start of next year."