CB Richard Ellis, one of the biggest contributors to industry-wide data from Investment Property Databank, said capital values fell by 1.3 percent last month and were now 18.5 percent lower than their peak last summer.

The data showed the country's property downturn entering a second phase that would continue to put pressure on property loan covenants, with average rents slipping by 0.1 percent in June as the UK economy deteriorated, job losses grew, and corporate demand for workspace wobbled.

Insolvency expert Jon Gershinson of property consultants Allsop told Reuters there was still little evidence of debt servicing problems among commercial property investors, even though mortgage debt arrears were rising and housebuilders like Taylor Wimpey were struggling to refinance loans as UK house prices also tumbled.

As long as corporate tenants were tied down on long leases and could pay the rent, enabling landlords to service their debt, then the situation was manageable, said Gershinson, who planned to double his team of insolvency advisers in the next few months.

Gershinson was appointed an administrator over 250 unsold apartments owned by developer City Lofts, which last week went into administration, becoming one of the first major corporate casualties of Britain's property downturn.

Source: Reuters