The Intermediary – February 2026 - Flipbook - Page 26
BRIDGING
Opinion
The rise of
‘structured’
bridging finance
B
ridging finance has
matured significantly
over the past decade,
yet parts of the
market still treat it
as a reactive product,
only ever deployed when timelines
collapse or conventional funding
fails. In reality, bridging has become
an integral component of funding
strategies across both investment and
development-led transactions.
I’ve seen that shi firsthand. Early
on, bridging was essentially shorthand
for regulated chain break lending—
short-term, transactional and usually
pulled in at the last minute. But as
my experience widened, particularly
working with more complex, ultrahigh-net-worth (UHNW) clients,
that view quickly changed. It became
obvious that bridging wasn’t just
a fallback option, but a genuinely
flexible funding tool.
Today’s bridging market exists
because traditional retail and
mainstream commercial lenders are
structurally unable to deal with the
realities of modern property finance.
Planning delays, higher construction
costs, slower sales markets and
global economic volatility have all
contributed to an increase in scenarios
where borrowers need speed,
flexibility and commercial judgement
rather than rigid credit policy. From
a broker’s perspective, understanding
why bridging is appropriate is just
as important as understanding
how to place it.
In its simplest form, a vanilla
bridge is still driven by speed: auction
purchases, unmortgageable assets,
chain breaks or time-sensitive
acquisitions. In these cases, execution
is everything. If a lender cannot
deliver within agreed parameters, or
communicate clearly throughout,
24
The Intermediary | February 2026
the product’s purpose is undermined.
However, more experienced borrowers
are increasingly using bridging as
an intentional, structured capital
efficiency tool.
Investors may choose to lever
short-term finance to avoid tying up
cash, while developers use bridging
to control sites early, optimise
planning outcomes or manage timing
mismatches between construction,
stabilisation and exit.
Recent interest rate hikes have
meant that bridging, impacted
bridging as the cost of finance (already
at the higher end) overtook achievable
margin. Pricing has since stabilised
and expectations have reset, resulting
in these structures returning, but
only where the numbers genuinely
stack up.
The most notable growth area
remains development-linked bridging.
We are seeing increasing use of shortterm facilities for site acquisition,
planning upli and development
exits. The laer is reflected in lenders
increasingly widening their offering
and including bespoke products,
Pallas Capital included, to cater for
developers needing more time to
complete projects and, now more than
ever, time to sell.
Build costs have increased
materially, land values have remained
comparatively resilient, and end
values have soened in certain sectors.
Against that backdrop, developers are
under pressure to preserve margin and
avoid distressed sales.
Bridging provides optionality.
It’s not just projects and developers
needing short-term finance; lease
extensions are more common than
ever, raising funds for business use,
for further property investment,
to provide time for beer refinance
options… the possibilities are endless
ANNA THOMPSON
is originator at Pallas Capital
and, in many cases, the cost of shortterm finance is outweighed by the
value preserved or created.
For brokers, lender selection has
therefore become far more nuanced.
Years ago, few advisers would
interrogate a lender’s funding model.
Today, it should be fundamental.
Brokers should be assessing capital
certainty, appetite consistency and
whether a lender can genuinely
support a client’s full funding journey.
When a lender offers bridging
alongside term or development
finance, and has the expertise to
underwrite all stages credibly, there
are clear advantages. Due diligence
can be streamlined, development
assumptions stress-tested early,
valuation strategy aligned and
costs reduced through continuity.
Early repayment mechanics can
also be managed pragmatically
where facilities transition rather
than terminate.
That said, bridging remains
highly relationship driven. Integrity,
deliverability and communication
are critical. Pallas Capital is founded
on the basis of a construction
background, and here in the UK
our leadership team has possess
hands-on construction experience
and are property developers in their
own right, so you can guarantee
the loans we assess are done so with
full understanding of the asset and
funding type.
Bridging finance has moved well
beyond its historical role. Used
correctly, it is not a sign of distress,
but of intent—a tool that empowers
borrowers to maximise outcomes. ●
