Debt capital for the UK property market is now coming from lenders in 47 countries, a record number, according to new data.
Savills revealed at its annual Financing Property presentation in Edinburgh today that the residential and living sectors were mostly favoured, though the offices, retail and secondary logistics sectors all reported an improvement in lending sentiment compared to last year.
Craig Timney, Savills head of UK valuation operations, said: “Many lenders seem reassured by the fact that the UK is further along in its repricing cycle compared to Europe.
“Some prime sectors are even experiencing a rise in values. However, pricing uncertainty persists in certain areas, which may be dampening transaction volumes.
“This, in turn, is causing frustration among lenders due to the limited lending opportunities for new acquisitions.”
According to Bayes just over £36bn of loans were deployed in the UK in 2024, which was up on 2023 levels. Only 31% of that amount related to new acquisitions, which highlights the volume of refinancing activity that is ongoing.
Additionally, the use of Back Leverage (debt funds borrowing money from third party lenders) is becoming a notable feature coming through in lending activity.
Graeme Fraser, head of valuation, Scotland, added: “Most lending activity has naturally centred around refinancing, a fair volume of which is from incumbent lenders seeking to amend and extend existing loan agreements whilst working collaboratively with their borrowers.
“With instances of over 30 lenders often vying for the same deal, this intense competition is putting downward pressure on both margins and, in some cases, loan-to-value ratios which can lead to favourable outcomes for borrowers.”
Commercial investment activity in Q1 2025 was subdued in the UK but it was not the only country to experience a slowdown with most other major European countries also reporting Q1 investment activity below the five year average.
Mat Oakley, head of commercial research at Savills, said: “The occupational story in the UK remains solid and rental growth continues, driven by the lack of development.
“As the noise around tariffs diminishes we should see a boost in investment volumes supported by the resilient occupational story, more debt availability, higher LTVs and some distress.
From a residential perspective, Savills highlights that whilst transactional activity south of the border was impacted by changes to stamp duty thresholds, there were no such changes to LBTT in Scotland, where the number of agreed sales so far this year has exceeded 2024 levels.
Faisal Choudhry, director in Savills’ Scottish residential research team, says: “Whilst investor demand for UK-wide PBSA and multifamily living provides cause for optimism, there remains a cloud of uncertainty on possible rent controls in Scotland, with a consultation currently underway on whether to exempt certain types of properties, including the emerging build to rent sector.”
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