The UK property market is beginning to stabilise after two years of disruption, with house prices rising 2.8% year-on-year and capital beginning to return to the sector.
Against this backdrop, developers and institutional investors are recalibrating their strategies, with forward funding re-emerging as a preferred route to deliver major residential and living-sector schemes.
According to Heligan Group’s latest UK Real Estate report, the shift reflects both a more settled interest rate environment and tightening availability of traditional senior debt.
Developers are increasingly turning to forward funding to secure capital certainty at a time when borrowing costs and planning delays continue to pressure viability.
HEIGHTENED INTEREST
Sectors that have remained consistently resilient – Build-to-Rent (BTR), Purpose-Built Student Accommodation (PBSA) and industrial and logistics – are now drawing heightened levels of institutional appetite.
Pension funds, long-term investment platforms and other income-focused institutions are taking advantage of the chance to secure assets at early-stage pricing, while sidestepping the volatility of the open market.
Recent forward-funded PBSA deals and renewed BTR commitments highlight that confidence is returning to the living sector, even as development starts remain constrained.
The model is allowing developers to progress schemes that might otherwise stall, while giving funders early exposure to income-producing stock in prime locations.
TURNING POINT
Sam Lewis, Director of Debt Advisory at Heligan Group, says: “The second half of 2025 marks a turning point for the UK property sector, and we’re seeing tentative but genuine signs of recovery, supported by a more stable rate environment and increased policy intervention.
“Developers and investors are recalibrating their strategies to match a market that is slowly regaining balance.
“As the traditional debt markets have tightened, developers are increasingly looking to forward funding to bridge the gap between ambition and liquidity. Institutional capital has recognised this shift and is responding decisively.”
COLLABORATION AND TRANSPARENCY
And he adds: “Recent large-scale forward-funded PBSA transactions and major BTR pipeline commitments signal confidence returning to the living sector… The key to success for both developers and investors is collaboration and transparency.”
Heligan’s report also highlights the growing importance of specialist debt advisory services. With alternative lenders, private debt funds and family offices expanding their presence, developers are seeking more bespoke financing structures.
“Put simply, developers must now put their best foot forward the first time,” Lewis says. “Forward funders expect clarity, credibility, and commitment… The forward funding resurgence will remain a defining feature of the real estate finance landscape into 2026.”
