Foreword
“The banks are back, at every level of the market. That single fact has shaped almost everything else about the first half of this year.”
Andrew Robinson Partner
keenly – margins of around 1.6% for the right client and the right asset. They are cherry-picking, undoubtedly. But for borrowers who fit that profile, the quality and the cost of the senior debt now available are as good as we have seen in a long time. The mid-tier clearers are moving hard into the same commercial space while still holding their margins, and further down the challenger banks are gaining ground quickly. The challengers are winning in a different way. They are never going to compete with the largest institutions on price, so they are competing on the journey instead: bridging a client into an asset, funding the works or the repositioning, then retaining them on a commercial term product at the end of it. It is a more considered way to build a relationship, and it is working. Between them, that whole banking cohort is putting real money back into the market – and doing so just as the wall of refinancing is upon us. That appetite shows in our own numbers. Refinancing rose from 46% to 58% of the work we arranged, while purchases fell from 40% to 28%. Balance sheet lenders have been increasing leverage, trimming margins and taking a more flexible view on interest cover, and that combination has released a great deal of business that had been sitting still. Senior debt still accounts for 94% of what we placed; this has been a period of accessing better terms rather than reaching for more complex structures.
The second theme is the retreat from sale risk. Residential remains our largest asset class at £133m, but a substantial share of that is investment rather than development: schemes built to sell, now being held and exited into buy-to-let and portfolio facilities instead. Lenders have followed exactly the same logic. Products are being reshaped around retention and transition – Bridge-to-Let, development facilities with retention lines, two-to-five-year money against an operating asset. The underwriting question has quietly changed from “how does this sell?” to “what does this earn?” Where lenders have held the line is on quality and location. Our purpose-built student accommodation lending rose to £33.8m, driven by prime schemes next to Russell Group universities. That flight to quality runs through everything we saw this half, across office, student and development alike. Finally, and most tellingly, 70% of our completions came from existing clients, and we placed those 105 transactions across 65 different lenders – up from 52. Both numbers say the same thing. This is a market in which almost nothing is a rate-card exercise; every deal has to be argued, structured and matched to the right funder, and clients are leaning on their advisers to do it. It is one of the hardest markets I have worked in. It is also one of the deepest, in terms of the liquidity and the choice available to borrowers who know where to look.
The headline figures for the first six months of 2026 – £244.7m of lending across 105 transactions – sit around 12% below the second half of last year, with deal count broadly flat. Read on their own, they suggest a quieter period. Read alongside what actually happened in the market, they describe something rather more interesting: a period in which the structure of real estate lending shifted materially, even as the volume of it eased. The most significant change has been the return of the banks. Deposit- taking lenders are deploying again, and they are doing it at every level of the market. At the institutional end, names that withdrew from UK commercial real estate several years ago have come back and are pricing
3 January - June 2026 Real Estate Funding Report
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