Lenders Aren’t Rejecting The Project

They are rejecting the Viability Case

The viability equation for residential development has changed.

Not because capital has left the market. Lenders are still active — debt funds now account for nearly a third of all residential development funding, and senior lending is available where schemes stack up.

What has changed is what "stacking up" means.

New affordable housing obligations have moved the threshold. Profit-on-GDV requirements have tightened. And with base rates settling at a structurally higher floor than the last cycle, the interest carry assumptions that underwrote many schemes five years ago no longer hold.

Developers who built their models in a different environment are finding that lenders are asking different questions — not about the asset, but about how the numbers work under the new inputs.

The schemes progressing to credit are the ones where the viability case has been rebuilt around current conditions, not adjusted from the last cycle.

Capital hasn't left residential development. The maths has changed.