The 2026 bridging outlook – Cawood

However, the latest BDLA figures showed a powerful lending spike indicating investor appetite is clearly warming up. The industry lent £2.5bn in Q3, a 42% jump against the same period last year, with applications up nearly 12% to £11.4bn, laying a solid foundation for Q4.

So, with the Budget out of the way and two quarter-point bank base rate cuts in August and December – with more predicted – this interest rate-sensitive market has cause for optimism.

Permitted development driving change

Investor confidence is also returning, with commercial and development landlords reshaping portfolios, buying land and restarting schemes paused during the higher rate period. The changes to permitted development rights (PDR) have played a part here.

The expansion of Class MA in March 2024 removed both the floorspace cap and the vacancy test for many office to residential schemes. This brought a stronger pipeline of conversion plans submitted over 2025 and official data shows prior approval activity holding up across the year. As a result, the conversation has become more about deal type, not the approval process, and planning risk shifted more towards prior approval detail, technical compliance, build costs and exit values.

Sponsored

The new-build energy advantage

Sponsored by Halifax Intermediaries

Industrial expansion in Rochdale

We completed a recent £1m purchase bridge in Rochdale at 70% loan to value (LTV), illustrating how these themes are playing out. The property was a substantial industrial unit with a two-storey office block. The borrower planned to convert the property into six units under PDR, with a commercial term refinance as the exit. This was part of the broader investment trend to reposition older commercial stock using bridging finance and giving investors the opportunity to act quickly before moving onto longer-term funding.

Debt restructuring was another driver of bridging finance over 2025, which is expected to continue into 2026. New UK commercial real estate lending rose by 33% in the first half of 2025, alongside higher refinancing and loan syndication activity (when two or more lenders take on the loan plus the risk) as loans reached maturity. Higher rates and softer values pushed many borrowers to simplify structures and renegotiate loan terms rather than refinance.

In Orsett, Essex, we completed a £170,000 refinance at 42% LTV, which repaid existing debt secured against a tenanted commercial unit and a house in multiple occupation (HMO). The facility also supported the plan to buy more land for future development, with a commercial term loan planned as the exit. This case showed how bridging can support balance sheet repair while keeping future growth plans active.

Planning-led conversion and rebridging

Bridging can also play a key role when full planning consent is required for a conversion or light development scheme. Rebridging is becoming more common, with more borrowers looking for extra time to get consent or line up development finance in a market where planning time frames are unclear.

In another recent case, we lent a £1.25m rebridge on a vacant office block in Bracknell, Berkshire at 65% LTV, where the loan repaid the existing lender and allowed time to progress planning for conversion into 20 residential units. In this case, the planned exit is development finance and we expect to see more time-pressured cases like this as borrowers manage both planning risk and sequencing.

The adviser perspective

For advisers, lender clarity and delivery matter. Straightforward product ranges that cover residential, commercial and refurbishment and combine regulated and unregulated elements help advisers place multi-use cases with confidence. Lenders offering fast-track routes, automated valuations where suitable and joined-up legal options also reduce friction on live cases.

Looking ahead, digital progress, planning reform and a steadier rate environment have already aligned with renewed investor appetite. Securing the right lending partnerships now will drive advisers and their clients toward an even brighter 2026.