Lucy Waters of Aria Finance on the need to stay nimble to protect portfolios

In just a few weeks, the consensus expectation has gone from two rate cuts this year to as many as four increases, as markets bet that the Bank of England’s hand will be forced by another bout of soaring inflation.

As a result, the decisions developers face have become more complex. Property development does not reward simplistic, rate-led decisions. Some of the greatest risks now come from mis-timed actions, whether selling completed stock prematurely or delaying refinancing in anticipation of rate changes that lenders might already have priced in.

Forward pricing means expectations around interest rates are often reflected in product pricing before any base rate change. Waiting for a turning point can increase holding costs, leading to missed refinancing opportunities and unnecessary strain on liquidity. In some cases, the cost of delay outweighs the benefit of any marginal improvement in loan pricing.

The risk is waiting for the wrong reason or acting without understanding the consequences

At the same time, developers face challenges on the sales side. Although activity has picked up modestly, house price growth remains fragile and highly regional. Forecasts for 2026 have been downgraded in several markets, particularly in London and parts of the South East. Elevated stock levels and longer selling periods continue to shape buyer behaviour and can reinforce downward price movements.

It is also important to consider the impact of war in the Middle East on buyer confidence, which underpins the UK property market. Once that confidence evaporates, whether due to rising rates or recession fears, deal volumes fall.

Selling units too early carries risks beyond the immediate transaction. Discounted sales can reset pricing across an entire scheme, undermining future values and affecting refinancing.

We often see units sold to release equity, only for developers to find lenders unwilling to refinance remaining stock at expected valuations. The result is a portfolio that appears weaker on paper, even if fundamentals have not materially changed.

That does not mean holding stock is always right. Rising unemployment and ongoing affordability pressures mean the economic backdrop is far from uniformly positive, and short-term portfolio valuations could also be affected.

Strategic choices

This means exit planning requires nuance. Developers must weigh factors including house price trends, lender appetite, refinancing options, holding costs and the wider economic climate. Decisions taken in isolation can quickly unravel under market pressure.

Confidence should not be treated as a binary switch. It has improved, but improvement is not certainty. Any gains could quickly reverse if the conflict in Iran leads to renewed price pressure and higher borrowing costs.

Flexibility is becoming a defining advantage and developers that remain nimble are better positioned to respond when conditions shift. That flexibility can take many forms, from structuring finance to allow phased disposals, to refinancing to products that provide breathing space rather than forcing rushed exits.

Selling completed stock is not the only way to manage exposure. Development exit finance can offer an alternative route to releasing capital while preserving long-term value. It is not a universal solution, but it highlights a broader point that the lending landscape has evolved and more tools are available than often assumed.

The market presents a mixed picture this year. While there were signs of returning optimism, its sustainability depends largely on developments in the Middle East.

As a result, it remains difficult to predict the cost of finance. In these conditions, the greatest risk is not necessarily waiting, but waiting for the wrong reason or acting without fully understanding the consequences.

Whether selling, refinancing or holding, the most resilient strategies will be grounded in realistic assumptions, robust advice and a clear understanding of how today’s decisions shape tomorrow’s balance sheet.

Lucy Waters is managing director of Aria Finance