David Brown, Planning Director, explains why robust planning insight has become a critical lens through which lenders and investors assess risk, resilience and deliverability in today’s development finance market.

The lending market has become one of the clearest indicators of how the wider development sector is evolving. From our perspective, activity at the front end of the market is strengthening. Capital is engaging, conversations are moving, and confidence is beginning to return. At the same time, there is a growing acceptance that delivery at the back end of the process remains challenging.

The market has certainly become more competitive. Margins are tighter, but primarily for the better deals. Pricing pressure is most evident on higher-quality opportunities, where lenders are competing hardest for schemes they believe can be delivered. The overall picture is less about capital retreating and more about capital being increasingly targeted, with momentum shifting quickly as individual transactions progress or fall away.

At the same time, deal attrition remains a defining feature of the market. A significant proportion of transactions continue to stall or fall over, often due to delivery risk, viability pressure or simple loss of momentum. However, what feels different now is the resilience of new deal flow. As schemes drop out, others are coming forward with greater clarity and traction, creating a sense of movement that was far less apparent even a few months ago – though whether this ultimately converts into completions remains to be seen.

This is not about blame. It reflects a more disciplined understanding of risk. With a pipeline of schemes expected to come forward, lenders are increasingly focused on whether projects are genuinely capable of being delivered, not simply approved. As a result, planning has moved firmly into the centre of early-stage due diligence.

A more selective lending environment

Over the past 18 months, the development finance market has become more selective rather than simply tighter. Rising build costs, fluctuating interest rates and increased regulatory scrutiny have narrowed margins and sharpened competition for capital. Deals that might previously have progressed with relatively light scrutiny are now examined in far greater detail, particularly where delivery risk is less well understood.

In this environment, planning is no longer a background consideration. It is a core risk factor. Lenders and funds are asking more fundamental questions at the outset. Beyond whether a scheme can secure consent, they want confidence that it can be delivered on time, remain viable within policy constraints, and withstand change over the life of the loan.

Increasingly, this includes stress-testing alternative outcomes. Lenders are considering whether a scheme still works if density is reduced, tenure mix changes, or a different use needs to be explored. Flexibility, rather than reliance on a single planning outcome, has become critical.

Planning as a front-end risk check

Historically, planning reviews were often undertaken post-acquisition, based on an assumption that a site with “good potential” would progress through the system. That approach is no longer sufficient. Policy conflict, Section 106 obligations, political change, viability pressures and evolving design expectations all introduce uncertainty that lenders need to understand before committing capital.

Importantly, planning due diligence has become commercial in nature. Lenders are increasingly seeking scenario-based advice that tests how a site performs under different outcomes, rather than relying on a single preferred scheme.

Where lending decisions are structured around one assumed planning result, risk tends to emerge later, often when flexibility is limited. By contrast, considering alternative development routes and exits at the outset allows lenders to protect position and build resilience into funding structures. In many ways, this mirrors how assets are taken to market, with multiple options explored rather than a single assumption relied upon.

Our early-stage planning due diligence typically considers:

• Policy compliance and areas of potential tension
• Legal, safeguarding or covenant constraints
• Realistic planning and delivery timescales
• Sensitivity to changing housing targets or local frameworks
• Design implications for cost and viability, including Section 106 flexibility
• Alternative land uses and exit scenarios

This level of analysis can influence whether a transaction proceeds and, if it does, on what terms. That is precisely why it now sits at the front end of lending decisions.

Learning from live transactions

We support lenders and funds across a wide range of transactions, from high-density residential schemes to complex mixed-use assets and receivership sites. In each case, our role is to stress-test assumptions and translate planning considerations into commercial risk.

In one London scheme, the planning route appeared sound, but delivery relied on third-party land being secured through a Section 106 agreement. While policy-compliant, this introduced potential programme and exit risk. Identifying this early allowed the lender to reflect that exposure in its decision-making and protections.

In another case, repeated objections from the same party indicated a heightened risk of post-consent challenge. While not a policy issue, it was a real-world factor with potential cost and timing implications. Assessing stakeholder behaviour alongside planning principles enabled a more realistic view of risk.

The commercial benefit

Planning-led due diligence is no longer about compliance alone. It is about capital protection. A commercially grounded planning review reduces the risk of funds being committed to undeliverable projects and helps borrowers understand where flexibility genuinely exists within a site.

As margins tighten and policy environments become more complex, this approach is fast becoming standard practice. Those who adopt it early are better placed to protect capital, avoid delay and support stronger lender-borrower relationships.

Talk to our team

If you would like to discuss how planning-led due diligence can support lending decisions or upcoming transactions, get in contact with David Brown, Planning Director, for an initial conversation.