The number of commercial property loans being written off has dropped to its lowest level since the credit crunch, fresh figures show.

According to Bank of England data, there were £846m worth of write-offs in the commercial property sector, down 63% from £2.27bn the previous year, between October 2015 and the end of Q3 2016.

The significant decline in loan write-offs is owed in part to the fact that many banks have tightened their lending criteria to commercial property developers, according to peer-to-peer (P2P) property funding platform Saving Stream.

Many high street and some challenger banks now demand more collateral from borrowers in the shape of lower LTVs (loan-to-value), while others have also slashed their lending to property developers, even in cases where the development has been pre-let to a tenant.

But whilst the fall in bad commercial property loans is genuinely welcome news, the tightening up of lending criteria by the banks may now have gone too far, according to Saving Stream.

Liam Brooke, co-founder of Saving Stream, said: “The risk is that many sensible property investments and developments are not able to get funding from traditional sources.”

“A good crop of what are still high quality investment opportunities need funding, and P2P investors are taking on that risk that Basel III has dissuaded banks from getting involved with,” he added.