Leading U.K. banks reduced property lending last year drastically as lenders increased scrutiny over lending activity in the wake of the global credit crisis, according to The Daily Telegraph. On Monday it was reported that the leading for banks in the U.K. cut commercial real estate property lending by £17.2 billion in 2010, highlighting the cautious approach taken by lenders in issuing credit, especially involving property.

The state backed lenders Royal Bank of Scotland and Lloyds Banking Group combined for a total of £14.5 billion in cuts to loans issued last year, while HSBC and Barclays combined for an annual drop in lending of £2.7 billion. The banks’ statements showed a total of £199 billion in loans issued in 2010. The Property Industry Alliance warned that a £34.4 billion shortfall in financing for debt could trigger slumping property prices, and projected that annual real estate lending in the U.K. could fall to £100 billion over the next three to five years.

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