‘Certainty has Become the Scarcest Commodity’: Victor Librae on the UK Lending Market at Mid-Year
Estimated reading time 3 minutes
Firma Partners Chief Executive, Victor Librae, gives a candid assessment of the UK real estate lending market at the midpoint of 2026 in this Estates Gazette feature. The year opened with cautious optimism, with inflation easing and many expecting the cost of debt to keep falling. That confidence has since softened. Lending markets remain active and liquidity is plentiful, but the assumptions behind the recovery have become harder to rely on.
Victor points to three key forces influencing lending decisions. The first is heightened geopolitical and economic uncertainty. Conflict in the Middle East and its inflationary consequences firmed debt pricing, while fiscal uncertainty at home has fed through into borrowing costs and currency markets. This is persistent, low-grade background uncertainty rather than a single shock the market can absorb, and the result is greater selectivity and a higher premium on conviction. Crucially, this is not a shortage of capital. What has changed is how it is deployed, with far more weight placed on the credibility of a borrower’s business plan and the certainty of its execution.
The second theme is the growing influence of regulation, with building safety an immediate consideration. Although the Building Safety Act Gateway process has improved, it remains one of the largest variables affecting the delivery timeline of higher-risk residential, student accommodation and mixed-use schemes. Regulation, Victor asserts, has moved to the centre of underwriting, with lenders increasingly underwriting a process and a timeline rather than only an asset. He points to Firma’s financing of Beech Street, the City of London co-living scheme sponsored by HUB and Bridges Fund Management, where Gateway was central to the delivery assessment.
The third and most critical shift is the renewed focus on sponsor delivery certainty, quality and cashflow resilience. The market is favouring transactions that do not rely on future valuation uplift, backed by sponsors able to absorb potential setbacks and deliver credible exits. Victor cites two Firma transactions as illustrations: the £113.7m first-stage development loan to DPK Group to convert disused offices at Royal Albert Dock into a major PBSA scheme and the refinancing of Clarendon Works, the award-winning Watford office scheme developed by Arada London, where the sponsor’s track record was central to the case.
Victor’s conclusion is measured. Capital is available and demand remains robust, but the deals most likely to complete are those where sponsor delivery can be relied upon. That certainty will continue to command a premium.
