Our View on the UK Real Estate Debt Landscape: Q&A with Firma Partners Managing Director Arrif Ali

Firma Partners' Managing Director Arrif Ali shares insights on navigating today's UK real estate lending landscape, highlighting how successful developers differentiate themselves through integrated expertise and strategic lender partnerships amid continuously evolving market conditions.

2. What advice would you give developers approaching refinancing in the current climate?
Selecting a lender who provides certainty of capital and can move quickly is crucial for giving borrowers the confidence to progress. Lender flexibility is also critical as some assets are inherently more complex and business plans may need to adapt, especially in today’s uncertain political and economic landscape. Early lender engagement will ensure an alignment of interests and an optimised funding structure.

3. How has the gap between traditional real estate bank lending and private debt funding changed over the past 18 months?
While there is an ongoing structural shift, we’ve recently seen an increase in bank appetite as they face pressure to deploy capital in an increasingly competitive environment. We have seen a particular increase in appetite for loan-on-loan structures as this can be more efficient from a regulatory capital perspective than direct lending.

4. Which property sectors currently present the most attractive lending opportunities and why?
Sectors offering predictable income streams like BTR and PRS remain particularly attractive. Supply constraints continue to support performance and the sector benefits from both meaningful scale and a persistent need for capital. Co-living models are helping to alleviate affordability constraints while also providing a differentiated and valuable product.  Whilst offices have been out of favour, certain sub-markets continue to outperform. This trend is likely to accelerate as space requirements are re-evaluated.

5. How are regulatory changes impacting the availability of development finance?
The Chancellor’s recent Spending Review reaffirmed strong political support for housebuilding. This policy direction is welcome and reflects a commitment to boost housing delivery over the long term.

However, the practical implications of recent regulatory changes continue to weigh on the development finance landscape. The Building Safety Act and Gateway process, though vital in improving safety and standards, have introduced additional complexity and delays across many residential schemes. This is in addition to a planning system which remains inefficient. These factors can impact project viability and land values, often requiring additional time and support during the pre-development phase.

Until the regulatory and planning environment becomes more predictable and efficient, access to development finance will remain selective and tailored to those able to demonstrate a clear pathway through the process.

6. What are the biggest risks facing real estate lenders in today's market?
Performance can vary greatly between individual assets and submarkets, making it critical for lenders to support experienced sponsors with strong local market knowledge and asset-specific expertise.

At the same time, macroeconomic and political volatility remain major risks, especially given how sensitive real estate is to wider market conditions. Lenders must carefully balance risk with the need to deploy capital effectively.