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Are viable housing schemes being held back by a shortage of equity?

ended 18. September 2026

Senior development finance is widely said to remain available for good residential schemes and experienced developers. However, a recent discussion initiated by development finance adviser Peter Wade raised the question of whether equity and flexible capital have become the greater constraint.

Contributors to the discussion suggested that slower property sales are keeping developers’ money tied up in completed schemes, while high land values, construction and borrowing costs and uncertain exits are weakening the returns available to equity and mezzanine investors.

Bridging Loan Directory is looking for first-hand evidence from developers, development lenders, equity and mezzanine providers, brokers and property investors.

  • Is senior development debt readily available while equity is becoming harder to secure?
  • Is capital genuinely unavailable, or do more schemes simply no longer offer a return proportionate to the risk?
  • What profit-on-cost or equity return is now needed? Please define how your figure is calculated.
  • Are slower sales preventing developers from recycling their capital into new projects?
  • What structures are enabling schemes to proceed?
  • Have you seen a recent scheme funded, restructured, delayed or abandoned because the capital stack did not work?

Please provide figures and a recent anonymised example where possible, including the scheme, funding requirement, proposed capital structure, what prevented it working and the eventual outcome.

Responses of around 100–200 words would be ideal.

3 responses from the Newspage community

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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
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Senior debt is still available for good schemes. The bigger problem is that too many capital stacks only work if every assumption behaves perfectly.

Developers are getting squeezed from both ends: land and build costs remain high, while slower sales delay capital recycling and make exits less certain. That means equity and mezzanine investors are understandably demanding a return that properly reflects the risk.

I am seeing more cases where the issue is not “there is no money”, but “the scheme no longer produces enough margin for the money being asked to take the risk”.

The structures that still work tend to have more sponsor equity, phased drawdowns, stronger presales, better contingency and a very clear exit.

Debt can be available and the scheme can still be unfundable.

That is the key distinction. If the developer, senior lender and equity provider all need the same optimistic exit assumptions to make the numbers work, the capital stack is already too fragile.
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Stephen PerkinsVerified
Norwich Mortgage Broker and Managing Director at Yellow Brick Mortgages
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Slower sales can create a knock-on funding problem even where the underlying development is sound. If completed units take longer to sell, developers have capital tied up for longer and less equity available to recycle into the next scheme. At the same time, higher borrowing and construction costs mean investors naturally want a stronger return for taking equity risk. That combination can make otherwise viable schemes harder to stack financially. The issue may therefore be less about debt being unavailable and more about whether enough return remains after every layer of the funding is paid.
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Iain ThompsonVerified
Director at Evolve Finance
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While senior development debt remains widely accessible for top-tier schemes, the true capital constraint on the ground is the erosion of equity viability. The core of the problem isn't a lack of cash, but historical land prices; the initial prices agreed for land purchases are simply no longer viable in today's shifting market.

Because slower sales have tied up developer capital in finished assets, schemes only work if land values are fiercely renegotiated to match current construction and borrowing costs. Without these land discounts, profit-on-cost metrics collapse below the 20% minimum that mezzanine and equity providers demand to absorb the heightened exit risk.

We recently saw a residential scheme stall because the landowner refused to budge on a pre-inflation price tag. The capital stack completely broke down as the senior lender's lower loan-to-cost cap left an unviable equity gap, proving that renegotiating the land basis is now the only way to make the capital stack align.