When you think of London’s prime property market, many would consider it one of the most resilient areas in the housing sector. If a development was delivered in the right location, buyers were not usually sitting on their hands. Yet in the past year, the sense of certainty about the robustness of the market has weakened. Sales are taking much longer and prices are showing signs of decline. Developers are discovering that projects which might once have been turned around quickly are now demanding some serious patience.
Knight Frank’s latest research shows that average prices in prime central London fell by 3% in the year to July 2025, while prime outer London managed only a modest 0.6% rise over the same period. Meanwhile, Jefferies has reported that the value of properties sold across six of the capital’s most desirable boroughs has dropped by as much as 60% in the past twelve months alone.
The catalysts for this slowdown are not difficult to identify. Government changes to non-dom tax rules have certainly reduced the amount of demand from international investors, whilst higher borrowing costs and wider economic instability continues to weigh heavily on domestic buyers. The rental market has remained relatively robust, with demand actually outpacing supply in many areas, but I believe this offers little comfort to the developers who rely on sales proceeds to repay their finance and bolster their pipeline.
The squeeze on developers
I think it is worth noting that those facing some of the most pressing challenges in light of these changes are the developers approaching completion. Development finance, in essence, is structured to be short-term, with lenders expecting repayment when the build is finished. If sales are delayed, developers face three distinct realities: 1) pay costly extension fees, 2) risk default charges, or 3) accept lower offers in order to generate liquidity more quickly.
Some developers may consider letting units temporarily, but this often locks up capital and delays their ability to progress to the next scheme. In practice, many are left with the unsavoury choices of reducing margins by selling too quickly, or holding on to stock and stalling their future plans.
The role of development exit finance
In situations like these, development exit finance can provide a far more practical way forward. Rather than being forced into quick or discounted sales, developers can refinance onto an exit facility and, in doing so, repay their original loan on time, while also easing the pressure on their finances. This type of facility tends to be priced more competitively than development finance, precisely because the build is complete and the risk for the lender is lower. On top of that, many exit loans allow interest to be rolled up instead of paid monthly, which can be a real help when managing cash flow during the sales period. Perhaps most importantly, these facilities often come without early repayment charges, so if units do sell more quickly than expected, the developer is free to settle the loan without being penalised.
Beyond easing the immediate pressure, exit finance also provides much-needed flexibility. It enables developers to complete finishing works without having to rush and to hold out for buyers who are prepared to pay full value. In some cases, it allows the release of equity for their next project. In this way, it should be seen not as a last resort but as a way of managing the transition from build to sale in an effective manner.
The opportunity for brokers
These conditions present a clear opportunity for brokers to add real value. Many developer clients who secured finance during more buoyant years are now reaching completion in a quite different sales environment. By revisiting those clients and asking how repayment will be managed if sales take longer than planned, brokers can start important conversations around exit finance.
The key considerations will be familiar: the LTV required, the term length that allows sufficient breathing space, what the interest type of the loan will be, and how quickly the lender can complete the refinance. By supporting developers through these options, I believe brokers can help them avoid unnecessary costs. It may also go some way to protect relationships with their original lenders and retain control over their exit strategy.
London Credit’s approach
At London Credit, we believe development exit finance should be seen as an integral part of a developer’s planning, not just an emergency measure. Our focus on speed, flexibility, and clear communication with brokers allows us to work across a broad range of residential and semi-commercial projects, supporting both experienced and less experienced developers. For brokers, this means a measure of reassurance that facilities will be assessed and arranged efficiently, with terms that are designed to the specific requirements of each client.
Turning slower sales into an opportunity
Let's face it, London’s property market is moving at a slower pace, and developers are feeling the effects of that. Yet while conditions are more challenging, there are solutions available. Development exit finance provides the time and flexibility needed to negotiate those longer sales cycles and protect those all-important margins.
If brokers can re-engage with developer clients and introduce exit finance at the right time, the hope is that they can safeguard outcomes and deliver the returns they were always intended to achieve.
