Developers draw confidence from improving lending landscape
Jonathan Samuels, CEO of Octane Capital, believes that improving conditions across the lending landscape have helped to boost developer confidence heading into a new year, despite a number of challenges still remaining, with specialist finance remaining a key weapon in their arsenal.
The latest survey of UK property developers, commissioned by specialist lender Octane Capital, shows that sentiment has strengthened as the lending landscape has continued to stabilise, most notably following the Bank of England’s decision to cut interest rates in December.
Two thirds (67%) of developers believe that UK property market conditions will improve in 2026, while a third remain cautious.
More than a third of developers (36%) say they are more likely to progress or break ground on development or investment projects in 2026 compared to 2025, while a further 34% expect activity levels to remain broadly unchanged. Just 30% anticipate scaling back activity, pointing to a more positive outlook for the year ahead.
When asked what they believe will drive any improvement in market conditions, a stabilising lending landscape was the key theme. 34% stated reducing interest rates as the key factor, whilst improved lender confidence (24%) and increased availability of finance (14%) also ranked high, reinforcing the importance of a more supportive and predictable funding environment.
Despite this improving outlook, challenges remain, with a significant majority of developers (82%) said they still face obstacles in the current market.
High build and labour costs remain the most pressing issue, cited by 34% of respondents, followed by planning delays or uncertainty (20%) and funding delays (14%). Exit risk or slower sales (11%), valuation gaps (11%), and limited flexibility from mainstream lenders (10%) also continue to restrict delivery.
As a result, specialist finance is set to remain central to development strategies in 2026 and around two thirds of developers (65%) said they will look to utilise specialist finance to help navigate these challenges.
Bridging finance is expected to be the most commonly used product (33%), followed by development finance (23%), refurbishment or light development finance (18%), and development exit finance (15%).
Jonathan Samuels, CEO of Octane Capital, commented:
“Developers are clearly drawing confidence from a stabilising lending environment, particularly with interest rates now moving in the right direction and now that Autumn Budget uncertainty has lifted.
This stability is crucial, as it allows developers to plan with greater intent, however, confidence alone does not remove the underlying challenges faced.
Build costs, planning delays, and funding constraints remain an issue, which is why specialist finance continues to play such an important role.
Flexibility and speed are increasingly critical when navigating the market, and specialist lenders are well placed to support developers as they move projects forward in 2026, particularly where traditional funding routes remain constrained.”
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