Improving lending conditions have boosted developer confidence for 2026.

A survey of UK property developers by specialist lender Octane Capital, shows sentiment improving since the Bank of England interest rate cut in December.

Two thirds (67%) of developers believe property market conditions will improve in 2026; a third remain cautious.

Some 36% are more likely to progress or break ground on development or investment projects in 2026 compared to 2025, while 34% expect activity levels to be broadly unchanged. 

Just 30% anticipate scaling back.

Some 34% stated reducing interest rates as key to improving sentiment, whilst improved lender confidence (24%) and increased availability of finance (14%) also ranked high.

But 82% said they still face obstacles.

High build and labour costs remain most pressing (34%) 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, 65% said they will look to utilise specialist finance to help navigate these challenges.

Bridging finance is expected to be most commonly used (33%).

This is followed by development finance (23%), refurbishment or light development finance (18%), and development exit finance (15%).