Terry Woodley, managing director, development finance at Shawbrook, explores changing market conditions and why flexibility must be considered for successful development
Construction has had every reason to wobble this year. It hasn’t. Much of that is thanks to property developers’ ability to balance business ambitions with an ever-changing landscape, which has been key to sustaining building in the UK.
In a sign of the times, we’ve seen two new policy announcements in the past six months. One targets energy efficiency and ventilation; the other gives mayors more power to make planning decisions.
For developers, these announcements present major changes to how they operate, requiring them to think on their feet for developments already in the early stages. The successful developers, however, are seeing the changes as opportunities rather than additional challenges. More specifically, we’re seeing this early integration as a chance to de-risk planning approvals, build future-proof assets and secure a clear competitive edge in a tightening market.
Flexibility is the new operational default
In practice, this means building room to adjust tenure mix, phasing or specification into a scheme from the outset, rather than treating flexibility as something to fall back on later. This tends to cost little to plan for at the start but can be difficult and expensive to introduce once a scheme is already underway. Developers who build this in from day one are typically better placed to keep projects on track when circumstances change.
Regulation and wider changes in the operating environment mean developers need to become increasingly agile. This is not simply about responding to new requirements as they emerge but anticipating where regulation is heading and building sufficient flexibility into projects from the outset.
That is particularly important for developments with longer construction timelines. To avoid consequences later from early planning decisions, such as delays or additional costs, an adaptable approach helps developers respond to change without disrupting the wider programme.
In our view, successful development increasingly depends on getting ahead of that uncertainty. Early-stage planning, close collaboration with professional advisers and a willingness to challenge established approaches all help developers to work with evolving circumstances. This is not only about managing risks; it can also keep projects moving, protect value and create a smoother route from planning to completion.
Opportunities for growth in 2026
Devolution and greater local planning powers should, over time, bring decision-making closer to the markets it affects, with local and combined authorities better placed to reflect the specific needs of their areas. This is likely to create openings for SME and regional developers, whose local knowledge becomes more valuable as more decisions are made at that level. As these powers become established, the pace and consistency of decision-making will be worth watching closely.
Similarly, regulatory changes offer new opportunities to add value to the development industry. The Future Homes and Buildings Standards’ intentions to ensure energy efficiency and stronger long-term development standards can help developers stand out in their projects.
For example, developers could factor in sustainable building materials, modular construction, or green technology like solar panels or heat pumps in the early stages of planning. This would not only help the new development comply with the new Building Standards, but also offer an attractive selling point to future buyers, tenants, or investors.
The impact on exit routes
Developers are thinking more carefully about exit routes, as higher interest rates and uncertainty around buyer demand make it harder to rely on a single outcome. The key question is: if the market does not perform as expected, how can we pivot?
This means structuring schemes so units can be sold or retained and let, supported by financing flexible enough to accommodate either route.
On one residential development we supported, the original strategy was to sell both completed homes. When sales took longer than anticipated, the developer sold one and refinanced the other for a longer-term hold. It demonstrates the importance of considering alternative exit routes from the outset, so there is flexibility to respond if circumstances change.
For lenders assessing a project’s viability, a clear primary exit strategy, supported by credible alternatives, builds confidence and helps protect both delivery and value.
Having the right plans and funding in place
If there is one clear lesson from the current development landscape, it is that flexibility can no longer be an afterthought. As regulation and market conditions continue to evolve, having the right plans and funding in place will become more important.
For developers, working with specialist brokers who understand the construction sector can provide valuable insight as they navigate these challenges. Sector expertise can help developers identify appropriate funding solutions and secure sufficient finance to support projects through unexpected changes, delays or shifting market conditions. This should be a core pillar of your project planning and execution.
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