Debt finance outlook for UK real estate: what to expect in 2026

The availability of debt finance, in all its forms, remains a critical component of the UK real estate landscape. As the market evolves in response to higher interest rates, more selective lending behaviour and shifting valuation expectations, staying informed on how these factors are influencing funding conditions is vital for sponsors, developers and investors. This insight provides a short market update from Moore Kingston Smith’s experienced debt advisory team and the high-level trends they anticipate will shape the sector in 2026.

Refinancing pressure

A growing number of assets are moving from “wait and see” to “must transact” as legacy, low-cost debt matures. Structures that worked in 2020-21 often no longer fit today’s interest rate environment.

Lender selectivity

Liquidity is returning but it’s not evenly distributed. Banks, debt funds and alternative lenders have capital, yet credit appetite is highly specific to the asset, sponsor and business plan.

Deeper scrutiny of business plans

Across both stabilised investment and development funding, lenders are testing assumptions more rigorously. Letting velocity, capital expenditure phasing, buffers for cost inflation and exit yields are all being diligenced in detail.

More creativity in the capital stack

We are seeing increased use of stretched senior, whole loans, mezzanine debt and preferred equity to bridge valuation gaps and keep projects moving.

How Moore Kingston Smith can help

As an accountancy firm with debt advisory expertise, we work at the intersection of:

• funding strategy;
• cash flow modelling and covenant headroom;
• restructuring or re-gearing existing facilities;
• transaction support alongside tax and structuring advice.

For many sponsors and real estate businesses, the question is no longer whether debt is available. It is about securing the right structure, from the right lender, on terms that reflect today’s reality.

If you would like to talk through your refinancing, development funding or capital structure options, please contact Guy Taylor.