The Intermediary –- May 2026 - Flipbook - Page 58
BRIDGING
Opinion
Private credit
after the boom
R
ecent coverage of
the UK bridging and
development lending
market has rightly
highlighted growing
concerns around
underwriting standards, governance
and transparency. The failures we
have seen are not, in themselves, the
story – they are the signal.
Over the past decade, private credit
has moved from a niche strategy to a
core allocation for both institutional
and private investors. In real estate,
particularly in the UK bridging and
development space, that growth has
been rapid.
What was once a specialist corner
of the market now feels increasingly
crowded. It’s easy to see the appeal:
aractive yields, asset-backed security
and the perception of downside
protection. But as capital has flowed
into the sector, competition has
intensified and discipline has not
always kept pace.
From where we sit as a lender, we
are seeing more aggressive pricing,
deals being pushed out more widely
and, in some cases, a greater focus
on geing capital out than there is on
underwriting.
The defining feature of today’s
private credit market is not a lack of
demand for capital, it is an abundance
of it. Many funds are under pressure
to deploy, and that pressure can distort
decision-making.
In a competitive environment,
terms start to stretch. Due diligence
gets compressed. Structures get
more complex, and in some cases,
less robust. We’re seeing leverage
pushed, timelines accepted that would
previously have been challenged, and
deals re-traded as borrowers test just
how far terms can move.
This is particularly evident in
parts of the bridging market where
barriers to entry are low and oversight
is limited. The result is a market
where pricing doesn’t always reflect
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The Intermediary | May 2026
risk – and in some cases is knowingly
underwrien away.
DANIEL BENTON
is director at GRE Capital
What happens next?
The next phase of the cycle is unlikely
to be defined by growth, but by
differentiation.
Capital will become more
selective. Investors will focus less on
headline returns and more on track
record, governance and alignment.
Counterparty risk, oen overlooked
during periods of
expansion, will move
to the forefront of
decision-making.
Funding is also
likely to tighten, with
providers of back
leverage increasing
scrutiny at both lender
and loan level. In
this environment,
weaker structures and
underwriting shortcuts
will be exposed. Some
lenders will adapt.
Others will not.
Recent cases have accelerated this
shi in sentiment, the situation
surrounding Market Financial
Solutions (MFS), now subject to a
Financial Conduct Authority (FCA)
investigation, has raised serious
questions around underwriting
standards, governance and
transparency. A worldwide asset
freezing order against its CEO is
a clear reminder of how quickly
confidence can erode.
Greater scrutiny, whether
regulatory or investor-led, now
feels inevitable. The question is how
quickly standards will tighten.
While not representative of the
entire sector, these cases highlight a
broader issue: in less regulated parts of
the market, problems can stay hidden
until they suddenly surface.
Yet this does not signal the end
of private credit. The structural
drivers remain intact: banks are still
constrained; borrowers require
flexible capital; and investors
continue to seek yield and income.
The market is now entering a more
testing phase – one where access to
capital is no longer the differentiator.
Discipline is.
Investors are already becoming
more selective, with counterparty
risk, track record and alignment
moving back to the forefront.
Stronger sponsors continue to aract
capital, while weaker opportunities
struggle to get away.
Private credit will continue to play
a vital role in real estate finance. But
the conditions that defined its recent
growth are changing. The next phase
of the market will be defined not by
how much capital is deployed, but by
how well it is managed.
For lenders and investors alike,
this is where performance will be
defined. ●
