"This stability is crucial, as it allows developers to plan with greater intent; however, confidence alone does not remove the underlying challenges faced"
- Jonathan Samuels - Octane Capital
Developers are entering 2026 with a stronger sense of confidence, supported by improving conditions across the lending landscape, though challenges persist, according to Jonathan Samuels, CEO of Octane Capital. Specialist finance continues to play a key role in helping developers navigate these obstacles.
A recent survey of UK property developers, commissioned by Octane Capital, shows sentiment has strengthened as the lending environment stabilises, particularly following the Bank of England’s decision to cut interest rates in December.
Two-thirds (67%) of developers expect UK property market conditions to improve in 2026, while a third remain cautious. More than a third (36%) say they are more likely to progress or break ground on development or investment projects this year compared to 2025, while 34% expect activity levels to remain broadly unchanged. Just 30% anticipate scaling back activity, pointing to a generally more positive outlook.
When asked what could drive improvements in market conditions, developers highlighted stabilising lending as the main factor. Reducing interest rates was cited by 34%, improved lender confidence by 24%, and increased availability of finance by 14%, reflecting the importance of a predictable funding environment.
Despite the improved outlook, many challenges remain. A significant majority (82%) reported obstacles in the current market. High build and labour costs were 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 project delivery.
As a result, specialist finance remains central to developers’ strategies. Around two-thirds (65%) said they plan to use specialist finance to help navigate market challenges in 2026. 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%).
“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,” said Jonathan Samuels (pictured). “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.”
