Mainstream lenders' focus on larger operators is pushing viable smaller projects towards specialist finance
The past year has seen a quiet but notable resurgence of smaller property developers in the UK, with experienced operators working on projects of between one and ten units growing increasingly active across the market. Yet despite this renewed activity and continued demand for housing, many of these developers are finding that access to conventional development finance remains out of reach.
Kevin Gibson (pictured top), operations director at Ascot Bridging Finance, said mainstream lenders continue to concentrate heavily on established borrowers with substantial track records and straightforward project structures. While understandable from a risk perspective, the practical consequence is that many commercially viable smaller schemes struggle to secure funding.
"A six-unit development in Warrington, Preston or Stoke-on-Trent may be just as commercially viable as a 50-unit scheme elsewhere, but it frequently attracts less lender attention despite carrying less overall exposure," Gibson said.
He argued that smaller and medium-sized developers have historically delivered a significant proportion of new housing stock, often bringing forward sites that larger developers overlook — including brownfield land, redundant commercial buildings and opportunities within local communities. He said many of these schemes would not progress without specialist funding, particularly across parts of the North West, Midlands and Scotland.
Against this backdrop, bridging lenders have become an increasingly important source of finance. Unlike conventional credit models that rely on rigid criteria, specialist lenders can assess the broader merits of a transaction, including the developer's experience, local market conditions and the proposed exit strategy.
"Whether it is acquiring an uninhabitable property, purchasing at auction, refinancing an existing development site or funding a value-add project, bridging finance can create options where conventional funding may not be available," Gibson said.
Speed remains a key differentiator. In competitive markets, developers frequently require funding certainty within days rather than months, and a delayed decision can result in a lost opportunity — particularly where vendors or receivers are seeking rapid completion.
Gibson cautioned, however, that the current market still demands discipline. Construction costs remain elevated by historical standards, planning delays continue to affect timelines, and regional market performance varies considerably. He said both lenders and brokers have a responsibility to challenge assumptions and ensure that projects remain viable under a range of conditions.
Brokers, Gibson added, play a vital role in helping developers navigate the specialist finance market. The most effective advisers are not simply introducing transactions, but helping to shape them — understanding the borrower's objectives, identifying potential challenges and presenting cases in a way that allows lenders to reach informed decisions.
"If we are serious about increasing housing supply across the UK, supporting smaller developers is not simply desirable, it is essential," Gibson concluded.
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