Lending to the property sector is showing some signs of recovery as the long-term decline in bank finance has started to slow, according to commercial law firm EMW.

Bank lending to investors in the property sector has levelled out over the last year, down just 1% from £136.2bn in July 2014 to £134.7bn in July this year, raising hopes that lending to the sector may soon rebound after a 15% drop in the previous 12 months, from £159.3bn in July 2013.

EMW adds that lending to property investors is down 28% in total over the last five years, from £187.6bn in July 2011.

EMW explains that although banks remain cautious, the slowdown in the decline suggests that the banks’ risk-off approach to lending to property investors is almost at an end, helped in part by the number of write-offs of bad debt falling by almost half to £23.2bn last year from £44.7bn in 2013.

EMW explains that these reduced losses on property lending have freed up more capital for the banks to lend to the real estate sector. Increased capital values for commercial property in London have also encouraged banks to lend with higher loan-to-value ratios.