Demand for bridging and development finance climbs as developers pull back from new projects
Developer confidence in the UK property market has deteriorated significantly in the second quarter of 2026, with specialist finance demand rising as builders grow more cautious about committing to new projects, according to research from Octane Capital.
The lender's quarterly survey, which tracks developer sentiment, project appetite and reliance on specialist finance, found that just 23% of developers now expect market conditions to improve during 2026, down from 35% in the previous quarter. More than three quarters expect conditions to remain difficult.
Reliance on specialist lending has risen in response. Some 83% of developers now anticipate using specialist finance to navigate current conditions, up from 72% in Q1. Bridging finance remains the most commonly expected product, with usage intentions rising from 40% to 44% quarter-on-quarter, while development finance demand increased from 24% to 29%.
Appetite for new projects has also weakened considerably. The proportion of developers less likely to proceed with new schemes climbed from 37% to 57%, while those expecting activity to remain broadly unchanged nearly halved, falling from 43% to 23%. The share more likely to break ground held steady at 20%.
Nearly all developers surveyed (97%) reported that obstacles persist in the current market. High build and labour costs remained the leading concern, cited by 35% of respondents. Planning delays and uncertainty rose notably as a barrier, reaching 29% and ranking as the second biggest challenge.
Developers identified falling interest rates as the single factor most likely to improve conditions (23%), followed by improved lender confidence (20%) and greater availability of finance (16%).
"The second quarter has seen confidence soften further, with developers clearly becoming more cautious about both current market conditions and the prospects for the remainder of the year," said Jonathan Samuels (pictured right), chief executive of Octane Capital. "Build costs remain stubbornly high, planning delays continue to frustrate development activity, and wider economic uncertainty is making it increasingly difficult for developers to commit to new projects with confidence.
"At the same time, we're seeing specialist finance become more important than ever. The continued increase in demand reflects the fact that developers still want to transact, but they're increasingly looking for lenders that can provide the speed, flexibility and certainty needed to navigate a far more complex market. Whilst sentiment has undoubtedly weakened, opportunities still exist for those able to move decisively, and that's exactly where specialist finance continues to play such an important role."
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