Property developers across the country are voicing their concerns over two critical issues impacting their ability to grow and remain profitable, according to new research from Shawbrook.
The research reveals that a significant number of property developers, representing a broad cross-section of the industry, believe that sourcing adequate funding is the most challenging aspect of their business. 60% of developers cited difficulty in finding the right financial expertise to guide their decisions, while the same percentage also reported that the complexity of funding options makes it harder to secure the necessary resources for their projects.
Developers are increasingly struggling to access financing, with 60% agreeing that obtaining funds for development has become progressively more difficult. Many are also concerned about the limited availability of funding options. Previous research from Shawbrook in 2024 revealed that significant numbers of developers have been rejected from accessing funding, with over a quarter (26%) having been rejected by a mainstream lender multiple times.
A lack of options is one of the key obstacles, with 59% of developers indicating that they believe the range of financial solutions available is too narrow, with 61% noting that smaller developers face even greater challenges in accessing adequate funding.
59% of developers believe that mainstream lenders favour established businesses, while 60% agree that larger businesses have an easier time securing funds. Additionally, 60% of developers agreed that smaller companies are at a distinct disadvantage when it comes to obtaining financial backing. This funding gap has led to specialist lenders coming to the market with dedicated development finance propositions, which 59% of respondents find more supportive than traditional lenders.
As a result, 35% of developers are calling on the Government to invest more heavily in infrastructure projects, while 27% are advocating for the establishment of additional funding grants for developers to help bridge the financial gap.
The skills shortage in the property development sector is another pressing concern. With ongoing talent shortages affecting the industry, developers have outlined several measures they believe the Government should take to address the issue. 30% of property developers have called for the introduction of foreign talent to fill the gaps, while 25% want the Government to support training and upskilling initiatives to ensure a sustainable workforce in the future.
Terry Woodley, MD of Development Finance at Shawbrook, commented: “Just as funding is a barrier to growth, so too is the shortage of skilled professionals. Developers will be hoping that the Government acts swiftly to attract talent and ensure developers have access to the skilled workers they need to meet the demands of a rapidly evolving market.
“Over the last five years the number of funding institutions focusing on the development sector has grown significantly. However, due to build cost inflation and base rate rises over recent years developers have found it difficult to make schemes profitable which in turn makes it harder to secure funding. These costs are now stabilising and we have seen base rate reductions which is helping developers. As the property development industry continues to work through recent challenges, specialist support will help to address these concerns, ensuring the continued growth and success of developers across the country. This will enable them to press on with projects, which will play a key role in meeting the Government’s 1.5 million new homes target.”
