The Intermediary – August 2026 - Flipbook - Page 74
SPECIALIST FINANCE
Opinion
Time more than
discounts as newbuild sales slow
T
here is a tendency to
view unsold new-build
stock as a fairly simple
problem. If homes are
siing on the market
for too long, the
obvious assumption is that developers
will eventually cut prices until
buyers appear.
But that overlooks the reality of how
development finance works, and more
importantly, the commercial decisions
developers must make once a scheme
reaches completion.
Our latest research at Octane Capital
found that more than a quarter
of new-build homes currently for
sale have been on the market for
longer than three months. More
significantly, around one in eight have
been listed for more than six months,
while 4% have remained available for
more than a year.
Applied across England’s estimated
34,831 new-build homes currently
on the market, that suggests around
4,400 properties have already spent
more than six months searching
for a buyer.
What is perhaps more interesting
is that only 14.5% of new-build homes
currently listed have seen an asking
price reduction.
That tells us something important
about developer behaviour. For
most developers, discounting is not
simply a case of accepting a slightly
smaller profit on one property. Pricing
decisions can have consequences
across an entire scheme.
A significant reduction on one unit
can influence buyer expectations for
the remaining stock, affect valuations
and ultimately reduce the gross
development value that underpinned
the project from the outset.
Aer several years in which
developers have had to contend with
72
The Intermediary | August 2026
higher construction costs, labour
pressures, planning delays and a more
challenging borrowing environment,
protecting margins has become
increasingly important.
So, where a scheme remains
fundamentally viable and buyer
demand still exists, many developers
are choosing to buy themselves
more time rather than immediately
sacrifice value. That distinction is
important for brokers, because the
completion of a development does not
necessarily mean the financial journey
has finished.
Development facilities are typically
structured around defined timescales,
and when sales take longer than
anticipated, developers can find
themselves approaching the end of
those facilities while still holding
completed units.
Eyes on the exit
This is where developer exit finance
has become an increasingly valuable
part of the specialist lending market.
By refinancing completed schemes,
developers can repay their original
development facility and create
additional time in which to sell
remaining units in an orderly fashion.
Crucially, it can remove the pressure
to make unnecessary price reductions
simply because a loan maturity is
approaching.
It can also allow developers to
release capital tied up in completed
projects and redeploy it elsewhere,
whether that means progressing
another acquisition, starting a new
development or simply strengthening
their working capital position. That
flexibility is particularly important in
the current environment.
Our recent Developer Sentiment
Survey found that 57% of developers
are less likely to break ground on
JONATHAN SAMUELS
is CEO of Octane Capital
new schemes during 2026, while 83%
expect to use specialist finance to help
navigate current market conditions.
That caution is understandable.
Developers are being asked to
balance slower sales rates against
the need to maintain profitability,
repay existing facilities and preserve
enough liquidity to move on to the
next project.
The broker therefore has an
increasingly important role to play.
A developer approaching practical
completion may not necessarily be in
difficulty simply because units remain
unsold. In many cases, they may have
a perfectly sound scheme but require
a funding structure beer suited to the
sales phase of the project.
Identifying that requirement early
can make a considerable difference.
Rather than reaching the end of a
development facility and being forced
into rushed decisions, refinancing
ahead of maturity can give developers
greater control over how and when
they dispose of their remaining stock.
The fact that thousands of newbuild homes are spending longer on
the market should not automatically
be interpreted as evidence that
developers have mispriced them,
or that widespread discounting
is inevitable.
In many cases, developers are
simply deciding that time is more
valuable than an unnecessary
reduction. Specialist finance exists to
give them that choice. ●
